Page:EB1911 - Volume 18.djvu/728

Rh capable of being divided without loss of value, and, if needed, of being reunited. Most of the articles used in primitive societies—such as eggs, skins and cattle—fail in this quality. Money should also be durable, a requirement which leads to the exclusion of all animal and most vegetable substances from the class of suitable currency materials. To be easily recognized is another very desirable quality in money, and moreover to be recognized as of a given value. 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 industry and commerce and the expansion of the system of contracts, covering a distant future, the evil effects of a shifting standard of value attract attention, and lead to the suggestion of ingenious devices to correct fluctuations. These belong to the later history of money and currency movements. It is enough for the ordinary purposes of money that it shall not alter within short periods, which is a characteristic of the more valuable metals, and particularly of silver and gold, while in contrast such an article as corn changes considerably in value from year to year.

From the foregoing examination of the requisites desirable in the material of money it is easy to deduce the empirical laws which the history of money discloses, since metals, as compared with non-metallic substances, evidently possess those requisites in a great degree. They are all durable, homogeneous, divisible and recognizable, and in virtue of these superior advantages they are the only substances now used for money by advanced nations. Nor is the case different when the decision has to be made between the different metals. Iron has been rejected because of its low value and its liability to rust, lead from its extreme softness, and tin from its tendency to break. All these metals, as well as copper, are unsuitable from their low value, which hinders their speedy transmission so as to adjust inequalities of local prices.

The elimination of the cheaper metals leaves silver and gold as the only suitable materials for forming the principal currency. Of late years there has been a very decided movement towards the adoption of the latter as the sole monetary standard, silver being regarded as suitable only for a subsidiary coinage. The special features of gold and silver which render them the most suitable materials for currency may here be noted. “The value of these metals changes only by slow degrees; they are readily divisible into any number of parts which may be reunited by means of fusion without loss; they do not deteriorate by being kept; their firm and compact texture makes them difficult to wear; their cost of production, especially of gold, is so considerable that they possess great value in small bulk, and can of course be transported with comparative facility; and their identity is perfect.” The possession by both these metals of all the qualities needed in money is more briefly but forcibly put by Cantillon when he says that “gold and silver alone are of small volume, of equal goodness, easy of transport, divisible without loss, easily guarded, beautiful and brilliant and durable almost to eternity.” This view has even been pushed to an extreme form in the proposition of Turgot, that they became universal money by the nature and force of things, independently of all convention and law, from which the deduction has been drawn that to proscribe silver by law from being used as money is a violation of the nature of things.

A question of far more importance, both politically and economically, is that of the issue of money, and the power of the state in regard to it. In the ruder societies, where money was not sharply distinguished from commodities, no difficulty presented itself. Skins, shells or cattle were money—so to speak—by the force of things; and the same condition persisted as long as crude metals were employed. But with the introduction of coinage the idea of a regulating authority came into being. The necessity of enforcing contracts and the parallel system of penalties made it incumbent on the ruler and judges to provide due standards of payment. The combined effect of these influences was reinforced by the establishment of the rudimentary forms of state revenue, which made it a matter of interest to the ruler to provide a good medium of payment. Accordingly, with the origin of the organized state, we find the coinage as a special prerogative of the king, though 