MONEY . 1. See also:

• DEFINITION (Lat. definitio, from de-finire, to set limits to, describe)

Without some See also:

• COMMON

Its See also:

• INTERNATIONAL, THE

The value of money is inversely as general prices, falling as they rise and rising as they fall." Now the proximate See also:

• CONDITION (Lat. condicio, from condicere, to agree upon, arrange; not connected with conditio, from condere, conditum, to put together)

The See also:

• MERE
• MERE, ADALBERT (1838-1909)

An interesting but paradoxical conclusion should be noticed: it is that increased See also:

• TRADE (O. Eng. trod, footstep, from tredan, to tread; in M. Eng. the forms teed, trod and trade appear, the last in the sense of a beaten track)
• TRADE, BOARD OF

Mining, it seems, is considered there in the same See also:

• LIGHT

In regard to another form of money the effect of the amount in existence is still more decisive. This is See also:

• PAPER
• PAPER (Fr. papier, from Lat. papyrus)

The theory has some connexion with the view of " money " as consisting in the loanable capital of the market, taking shape in the cheques that transfer liabilities. Thus the rate of interest comes to form a See also:

• FACTOR (from Lat. facere, to make or do)

The conclusion is obvious that economic. progress is accompanied by a more sparing use of money. The most important aspect of the question in modern times is in relation to the division of money between countries. Regarded from this point of view, the quantity of money that a country needs is that which will keep its prices in due level with those of the countries with which it has commercial relations. For, this is the condition of See also:

• EQUILIBRIUM (from the Lat. aequus, equal, and libra, a balance)

Such is actually the case among modern savages. " It is instructive to see trade in its lowest form among such tribes as the Australians. The tough greenstone valuable for making hatchets is carried hundreds of See also:

• MILES, NELSON APPLETON (1839— )

They have been found among the Indians of See also:

• ALASKA

On the testimony of an See also:

• EYE
• EYE (O. Eng. edge, Ger. Auge; derived from an Indo-European root also seen in Lat. oc-ulus, the organ of vision (q.v.)

Reasons for their See also:

• ADOPTION (Lat. adoptio, for adoptalio, from adoptare, to choose for oneself)

Silver holds a more prominent place than any of the preceding metals. Down to the See also:

• CLOSE
• CLOSE (from Lat. clausum, shut)
• CLOSE, MAXWELL HENRY (1822-1903)

There has been a long process of selection and elimination in the course of monetary history. First, it is See also:

• PLAIN (O. Fr. plain, from Lat. plenum)

Articles otherwise well fitted for money-use, e.g. precious stones, suffer through the difficulty of estimating their value. Finally, it results from the function of money as a standard of value that it should alter in its own value as little as possible. Complete fixity of value is from the nature of things unattainable; but the nearest approximation that can be secured is desirable. In early societies this quality is not of great importance; for future obligations are few and inconsiderable. With the growth of See also:

• INDUSTRY (Lat. industria, from indu-, a form of the pre, position in, and either stare, to stand, or struere, to pile up)

The elimination of the cheaper metals leaves silver and gold as the only suitable materials for forming the principal currency. Of See also:

• LATE

The cubes of gold employed by the Chinese may have been the earliest coins. Modern authorities accept the view of See also:

• HERODOTUS (c. 484-425 B.C.)

Another question was in respect to the limits of size that were most suitable for coins. Here the lower limit is prescribed by the convenience of the users. Coins that are easily lost, or picked up with trouble, such as the British threepenny piece and the See also:

• AMERICAN

There are accordingly reasons for adopting a medium size in preference to large or small coins. The actual coins issued have, of course, to be adapted to the requirements of the particular community. Even prejudices must be taken into due account. The designs employed in connexion with coinage have proved a fruitful field for the student of See also:

• NUMISMATICS
• NUMISMATICS (Lat. numisma, nomisma, a coin; from the Greek, derived from voj4 u', to use according to law)

There does not appear to be any strong technical See also:

• REASON (Lat. ratio, through French raison)

With the establishment of larger states the See also:

• CONTROL (Fr. contrdle, older form contre rolle, from Med. Lat. contra-rotulus, a counter roll or copy of a document used to check the original; there is no instance in English of the use of " control " in this, its literal, meaning)

A currency system is never an arbitrary creation; it must grow slowly out of the habits and customs of the community, and must subserve its economic needs. No sudden change at the caprice of the state is likely to continue. Further, it is clear that no government can determine the results of its interference; these will depend on the existing conditions and will conform to economic law. Monetary history is See also:

• RICH, BARNABE (c. 1540-1617)
• RICH, CLAUDIUS JAMES (1787-1821)
• RICH, JOHN (1692-1761)
• RICH, PENELOPE, LADY (c. 1562–1607)
• RICH, RICHARD, 1ST BARON RICH (1490?-1567)

This is composed of several elements, viz. (I) the cost of manufacture, just mentioned; (2) the loss through the wear which money under-goes in the work of circulating; and (3) the interest on the capital sunk in the monetary stock. A country with a metallic circulation of £See also:

• IOO

The only effective mode of pre-venting depreciation is by limiting the amount of paper money to that of the metallic money previously in circulation. The easiest way to accomplish this is to leave the use of the paper currency optional by making it convertible into coin at the will of the holder. The amount of the circulation is thus automatic-ally fixed by the action of the community. An evident disadvantage is the necessity of keeping an adequate reserve of coin to meet actual and prospective demands. For ideal See also:

• SECURITY (Lat. securus, free from care, safe)

It does not follow that it is the most important or the earliest kind of representative currency. As W. See also:

• BAGEHOT, WALTER (1826-1877)

Since that date the extraordinary development of See also:

• DEPOSIT (Lat. depositurn, from deponere, to lay down, to put in the care of)

The mines of See also:

• LAURIUM
• LAURIUM (Aabptov, mod. ERGASTIRI)

All the temples, too, were receptacles for the precious metals, so that the stock accumulated at about 300 B.C. must have been very great. The only causes which tended to diminish the store were the losses arising from See also:

• WARS

225.) Without placing much value on this necessarily conjectural estimate, it is safe to assume that, this period marked the highest point of See also:

• ACCUMULATION (from Lat. accumulare, to heap up)

Though 1492 is the date of the first landing, yet for some time no important additions were made to the supply of money. The See also:

• CONQUEST

The next important date for our present purpose is the year 1848, when the Californian mines were opened, while in 1851 the Australian discoveries took place. By these events an enormous mass of gold was added to the world's supply. The most careful estimates fix the addition during the years 1851-1871 at£5oo,000,000, or an amount nearly equal to the former stock in existence. The problems raised by this phenomenon have received careful study. The See also:

• MAIN (from the Aryan root which appears in " may " and " might," and Lat. magnus, great)
• MAIN (Lat. Moenus)

It may be added that the difficulty of tracing the effects of this great addition to the money stock is a most striking See also:

• PROOF (in M. Eng. preove, proeve, preve, &°c., from O. Fr . prueve, proeve, &c., mod. preuve, Late. Lat. proba, probate, to prove, to test the goodness of anything, probus, good)

By this change the difficulties that had led to the agitations for " free silver " in the United States, and for " international bimetallism " in Europe and in India were removed, showing the close connexion between the production of the precious metals and the economic, especially the monetary, policy of all periods. The modes of consumption of the precious metals—under which their use is included—are of equal importance with those of their production. Classed roughly, they come under three heads, viz. (I) their use as merchandise, (2) their use as money, (3) the " drain" to the East. With regard to the first, though precise data are not available, it may be said with some confidence that the demand for See also:

• PERSONAL

See also:

• HUMBOLDT, FRIEDRICH HEINRICH ALEXANDER, BARON
• HUMBOLDT, KARL WILHELM VON (1767-1835)

It follows that the amount of the former metal produced depends more on accidental circumstances, in contrast to that of silver, which is affected by the standard of mining skill. The mines of Nevada were exceptional in their possessing both metals and in nearly equal value. The gold-mines of South Africa have come to be worked at deep levels and therefore are technically in the same class as silver ones. In fact, there is a pronounced tendency all the world over towards the system of capitalistic working. 8. Review of the History of Some Important Currencies.—Monetary theory requires to be elucidated by the constant reference to history; just as in turn the history of currency has to be interpreted by the aid of general principles. Each country has its peculiar problems, which call for special treatment; though at the same time there is no way of avoiding the operation of those economic conditions and forces that are to be found in all countries. The first decisive fact that emerges from the vast material presented by the history of money is the tendency at most periods towards deterioration. In the time of purely metallic currency debasement is the most serious danger; when representative money has come into being extravagant issues of paper are chosen as the readiest way of evading the limits of a sound currency. It is perhaps too extreme to say that monetary history is altogether made up of accounts of debasements and over-issues. The truth is better expressed in the proposition that there has been a constant struggle between the influences that make .for deterioration and those that give support to the maintenance of a good currency condition. There is also the See also:

• CHEERING

See also:

• EXPERT (Lat. expertus, from experiri, to try)

Only one doubtful instance of debasement can be found in the subsequent history of See also:

• ATHENS
• ATHENS ['AN vat, Athenae, modem colloquial Greek `Ath va]

A long course of debasement is the characteristic aspect of the currency system. " Under the empire," we are told, " the history of the silver coinage is one of See also:

• MELANCHOLY (Gr. µe)tayXotia, from µEtas, black, and Xotii, bile)

The only coin at first in use was the silver See also:

• PENNY (Mid. Eng. peni or peny, from O. Eng. form penig, earlier penning and pending; the word appears in Ger. Pfennig and Du. penning; it has been connected with Du. pand, Ger. Pfand, and Eng. " pawn,". the word meaning a little pledge or token, or with G
• PENNY, GIANFRANCESCO (1488–1528)

But gold was treated as a commercial money, to be used as subsidiary to the standard silver. Its value was therefore varied from time to time to meet the difficulty that local bimetallism is certain to cause, in consequence of the undervaluing of one or other metal. During the 17th century the most noticeable monetary events are: the proposals for depreciation, of which the most remarkable was that of W. See also:

• LOWNDES, THOMAS (1692-1748)
• LOWNDES, WILLIAM THOMAS (1798-1843)

Unfortunately the legitimate profit from this source was not sufficient to satisfy the wants of the royal See also:

• TREASURY

The See also:

• FRANC

9. Some General Questions respecting the Constitution of Money. —The consideration of the history of currency systems naturally suggests the general problems that the more advanced countries have had to encounter. Of these, some may be described as formal, i.e. they relate to the arrangement and the definition of coinage and standards. Others are in essence issues of principle involving the most complicated theoretical doctrines, on which there is even yet sharp See also:

• DIFFERENCES, CALCULUS OF (Theory of Finite Differences)

Quite distinct from both the actual coins and the unit of value is the money of account, though in practice it is usually identical with one of them. In Russia in early times the rouble was an imaginary money of account not coined, while the copper copeck was the unit of value. Connected with the distinction between the coins and the unit is the highly important one between standard and token money, the former being of full power for discharging debts, and in the case of most systems only of equal value to the metal out of which it is made, while the latter is rated at a nominal value higher than that of its material. The silver and copper coinage in England and the smaller coins in the Latin See also:

• UNION
• UNION (known locally as Union Hill and officially as Town of Union)

The fact that money has to circulate amongst all classes of society makes it indispensable that it should be suited to the wants and even the prejudices of the users. Many curious instances of preferences for particular coins or special forms of paper money can be given. The Austrian Maria See also:

• THERESA, ST (1515-1582)

In business transactions inferior articles are taken only at a lower price. The explanation is easily understood, when furnished; it consists in stating the difference between a commodity which is sought for its use, and money which is taken as merely a medium of exchange. Provided that coin is not too See also:

• BAD, BCD

In truth it may be said that most of the monetary transitions have been due to the operation of the force indicated in Gresham's Law. The importance of the law lies in the warning that it gives against the attempt to reform a degraded currency by the issue of better money. Such " operations of the mint are," in Adam Smith's See also:

• JUDGMENT

The Latin and Scandinavian unions, as also Germany and the United States, have several binary coinage series. But no country adopts a purely binary scale. England in part retains the old " duodecimal " division in the relation of the shilling and the penny. Nearly all civilized nations have come to accept the system of Decimal Coinage (q.v.), though in their actual currencies they admit certain divergences from the strict decimal system. The convenience of having the monetary scale of accounts in accordance with the arithmetical scale will probably secure the ultimate victory of the decimal system everywhere, in spite of the objections to it on the ground of its having only two factors—2 and 5—as against the larger number of the duodecimal scale (2, 3, 4 and 6). The immense trouble involved in altering accounts and the difficulty of overcoming the hostility to change felt by the ordinary members of the community are the obstacles that prevent the adoption of the decimal system in England. Connected with the See also:

• COMPOSITION
• COMPOSITION (Lat. compositio, from componere, to put together)

Under the Roman See also:

• HEGEMONY (Gr. i7ye,uovia, leadership, from it-yo-Oat, to lead, the leadership especially of one particular state in a group of federated or loosely united states. The term was first applied in Greek history to the position claimed by different individual

The condition of things when money is coming into being is characterized by the weighing or measuring of the substances used for aiding the course of exchanges. It has therefore been called the system of " currency by weight." In strictness, it is better regarded as the stage before the introduction of real money; and thus outside the field of currency systems proper. The simplest system of currency seems to be that in which the state coins ingots of different metals and allows them to circulate without assigning any ratio for their respective values. Such an inconvenient form is not likely to be of long continuance; but it has sometimes arisen at a later time through the introduction of foreign coinages. See also:

• HOLLAND
• HOLLAND, CHARLES (1733–1769)
• HOLLAND, COUNTY AND PROVINCE OF
• HOLLAND, HENRY FOX, 1ST BARON (1705–1774)
• HOLLAND, HENRY RICH, 1ST EARL OF (1S9o-,649)
• HOLLAND, HENRY RICHARD VASSALL FOX, 3RD
• HOLLAND, JOSIAH GILBERT (1819-1881)
• HOLLAND, PHILEMON (1552-1637)
• HOLLAND, RICHARD, or RICHARD DE HOLANDE (fl. 1450)
• HOLLAND, SIR HENRY, BART

Hence there almost inevitably follows the use of other metals, which are better suited for certain particular uses. Thus silver is at once too heavy and too light. To pay £See also:

• I000

Local or national bimetallism comes to be unsustainable, and is replaced by other currency types. The most remarkable is that known as the " composite legal tender " system. Its object is to combine any advantages of multiple legal tender with the maintenance of the single standard principle. One metal is selected as the standard and is legal tender to any amount; other metals are utilized for the purpose of token currency. Thus in the system of the United Kingdom gold is the only standard coinage; but silver and copper are employed for the lower coins and for smaller payments. The establishment of this ingenious arrangement is rather the outcome of the circumstances that governed the English monetary situation in the 18th century than any refined considerations of theory; but its justification on grounds of principle is furnished in See also:

• LORD
• LORD (O. Eng. hldford, i.e. hldfweard, the warder or keeper of bread, hlIf, loaf; the word is not represented in any other Teutonic language)
• LORD, JOHN (1810-1894)

In this case also the origin of the system was not theoretical, it was the result of the fall in the value of silver and the fear entertained by the French government that gold would be displaced by the cheaper metal. The temporary expedient of limiting the coinage of standard silver has developed into the maintenance during more than See also:

• THIRTY

The state issues paper money which may be either convertible or inconvertible, or if it refrains from so doing, the banks take up the task and supply a medium of exchange in the form of notes, or by a later development through providing for the use of cheques by their customers. An inconvertible paper currency has some pronounced See also:

• AFFINITIES

The most conspicuous is that known as " international bimetallism," which was designed to obviate the evils said to result from the See also:

• DEMONETIZATION

The influence of See also:

• CUSTOM (from O. Fr. costume, costume or coustume; Low Lat. costuma, a shortened form of consuetudo)

The first established conclusion is the impossibility of obtaining an absolute and invariable standard. The best that can be hoped is a near approximation by balancing the elements of fluctuation. The construction of the most suitable monetary system is a work of practical adjustment. The influence of the actual conditions, which has been already emphasized, See also:

• HELPS, SIR ARTHUR (1813-1875)

The at-tempts to supersede it involve the rejection of the rule of economic law. The See also:

• FOUNDATION (Lat. fundatio, from fundare, to found)

Thus by directing consumption, states are controlling production, and therefore—within limits—fixing the relative value of the two metals. This power has been shown in the stability of the ratio during the continuance of the French double-standard (1803-1873). The possibility of maintaining a given ratio being thus established, the See also:

• ARGUMENT

The See also:

• CRUCIAL (from Lat. crux, a cross)