Chapter 5 On the Origin and Utility of Money

Once the division of labor is fully established, the produce of a man's own labor can satisfy but a very small part of his desires.Most of his desires must be satisfied by exchanging the surplus labor products that he cannot consume by himself for the surplus of other people's labor products that he needs.All men then live by exchange, or, to a certain extent, all men become merchants, and society itself, strictly speaking, becomes a commercial society. But at the beginning of the division of labor, the effect of this exchange force is often extremely insensitive.Assume that A holds a certain commodity, which cannot be consumed by himself, but the commodity held by B is not enough for his own consumption.At this time, A is of course willing to sell, and B is of course willing to buy part of the remaining items in A's hands, but if B does not hold the item A's desire, the transaction between them will still not be realized.For example, the butcher puts the meat he can’t consume in the store, and the brewer and the baker are both willing to buy what they need, but at this time, suppose they have no other kind of meat to trade except their own manufactured products. and the ale and bread which the butcher now requires, are supplied, and there is no possibility of commerce among them.The butcher cannot be a merchant to the brewer and baker, and neither can the brewer and baker be customers to the butcher.In this way, they cannot help each other.However, since the establishment of the division of labor, thoughtful people in all ages and societies have, in order to avoid this inconvenience, kept with them at all times, besides the produce of their own labor, a definite quantity of certain objects which, in his mind, Take it and exchange it with anyone's products, and there will be no rejection.

Various objects have been successively thought of and used for this purpose.Savage societies are said to have used cattle as the common medium of commerce.Livestock is undoubtedly a very inconvenient medium, but we have discovered that in ancient times, the number of livestock was often used as the evaluation standard for exchange, that is, livestock were exchanged for various items.Homer once said: Diomede's armor is only worth nine oxen, but Grokas' armor is worth a hundred oxen.Salt is said to be the medium of commerce in Abyssinia; certain shells in some parts of the coast of India; tobacco in Virginia; dried fish in Newfoundland; sugar in our West Indian colonies; Use hides or tanned hides.As far as I know, there is still a village in Scotland to this day where ale and bread are purchased through the medium of iron nails.

In every country, however, it seems, from irresistible reasons, that at last the men have decided to use metal, rather than other goods, as a medium.Metal is not easy to wear and tear.Compared with any other goods, there is no shame.Moreover, it not only has great durability, it can be divided at will without any loss, and it can be melted into the original shape after division.This property is absent from all other durable commodities.This characteristic of metal makes metal a suitable medium for commercial circulation.Suppose, for example, that there were no other things to exchange for salt but cattle, the person who wanted to buy table salt would buy at one time the value of a whole cow or sheep, and he could not buy less than this limit, because he used The items purchased for salt cannot be divided, and if divided, they cannot be restored.If he wants to buy more salt, he can only use two or three cows or sheep to buy double or triple the amount for the same reason.Conversely, if he trades metal instead of livestock, his problem will be easily solved. He can only divide a considerable amount of metal according to his current needs to buy items of equivalent value.

The metals used for this purpose vary from country to country.The ancient Spartans used iron, the ancient Romans copper, and all the citizens of rich and commercial countries used gold and silver.The metals originally used as a medium of exchange appear to have been rough bars, without any stamping or casting.Pliny quoted the ancient historian Timias as saying: Until Servius.Until the time of Tullias, the Romans had not minted currency. They used unmarked copper bars to buy the items they needed. In other words, these thick bars were what was used as currency at that time. There are two great inconveniences in the use of metal in such crude conditions.The first is the trouble of weighing; the second is the trouble of testing.A small difference in weight of precious metals can make a big difference in value.But to weigh such metals correctly requires at least very fine weights and balances.The weighing of gold is especially a delicate operation.It is true that base metals are slightly less weighed, and have no great effect on value, so that careful weighing is not necessary.However, if a poor person buys and sells goods worth one copper plate, he also needs to weigh the weight of this copper plate every time, which will inevitably make people feel extremely troublesome.The work of testing metals is more difficult and cumbersome.Unless a part of the metal is placed in a crucible and melted with a suitable melting agent, the results of the test are very unreliable.Before the coinage was instituted, unless it passed this difficult and tedious test, it was very easy to be greatly deceived.What they sell may appear to be a pound of pure silver or copper, but mixed with it are many of the coarsest and basest metals.Progressive nations, therefore, have found it necessary, in order to avoid this evil, to facilitate trade, and to promote the development of industries and commerce of all kinds, to affix a public seal upon certain quantities of particular metals which are commonly employed in purchasing goods.Thus came the coinage system and the bureaucracy called the Mint.The nature of this system is similar to the system of linen and woolen censors.The task of these inspectors is to determine the weight of various commodities in the market and standardize their quality by stamping public seals.

The public seals which were first stamped on the metals of money seem to have been for the purpose of ascertaining the quality or fineness of the metal which must be ascertained and which is most difficult to ascertain.The engraving at that time was very similar to the purity marks engraved on silver vessels and silver bars today.Similar is the Spanish mark, which is inscribed on the bullion, but which is attached to one side of the metal and does not cover the whole.It determines only the purity of the metal, not its weight.According to legend, Abraham weighed four hundred shekels of silver to Ephron as a price for the fields of Makpela.It is said that the shekel was the currency circulated by merchants at that time.However, the circulation of metal currency at that time was the same as the granting and receiving of gold bullion and silver bars today, regardless of the number, only the weight.In ancient times, when the Saxons came to rule England, it is said that their elders were not expropriated in currency, but in kind, that is, all kinds of food.The custom of paying in money was first instituted by William the Conqueror.However, the currency included in the national treasury at that time was collected by weight rather than by number for a long period of time.

It is troublesome and difficult to weigh metals without error.This leads to the coinage system.The inscriptions on the coin cover not only the sides of the block, but sometimes its edges as well.This kind of engraving is not only to determine the purity of the metal, but also to determine its weight.Since then, coins have been minted as they are now, and they are all given and received by number, without the trouble of weighing. The denominations of those coins appear to have been intended to indicate the weight or quantity contained within.Roman coinage began with Serbias.At the time of Tullias, the Roman coin AS or Pondo contained a Roman pound of pure copper.Aspen or Pond, like our Troyes, is divided into twelve ounces, each containing an ounce of pure copper.In the days of Edward I, a pound contained a toll pound of pure silver.A dime seems to be more than a Roman pound, and less than a Troyes.The Troyes pound was not adopted by the British mint until the eighteenth year of Henry VIII.Troyes is a city in the Champagne department in the north-east of France, and at that time people from all over Europe frequented its market, and everyone was therefore familiar with and respected the trade-offs used in this famous market.In the time of Charlemagne the French currency, the livre, consisted of a troyeon pound of pure silver.The Scotch pound, from Alexander I to the time of the Bruce, contained a pound of silver of the same weight and fineness as the British pound.The penny, the currency of England, France, and Scotland, at first contained silver weighing a penny, that is, one-twentieth of an ounce, or one-two hundred and fortieth of a pound.The shilling also seems to be the name of weight at first.The law of Henry III at that time stipulated that when the quarter of wheat was worth twenty shillings, the best wheat bread worth one copper plate must weigh twelve shillings and fourpence.However, the ratio of shillings to pence, or shillings to pounds, does not seem to be as stable as the ratio of pence to pounds.The sou or shilling in ancient France sometimes contained five pence, sometimes twelve pence, and sometimes twenty or even forty pence.Among the ancient Saxons, a shilling seems to have consisted of only five pence at a certain period, and its content probably varied in much the same way as that of their neighbours, the Franks.Although the value of the pound, shilling, or pence has varied greatly in France since the time of Charlemagne, and in England since the time of William the Conqueror, the proportions to each other seem to have remained the same as at present.I believe that the monarchs of all countries in the world are greedy and unfair.They deceived their subjects by successively reducing the true weight of the metal originally contained in the money.In the later period of the Roman Republic, the Roman Aspen was reduced to one twenty-fourth of its original price, and the content was called a pound, but it was only half an ounce.The English pound and envoys are now worth about a third of what they were then; the Scottish pound and pence are about one-thirty-sixth of their original value; one-sixth.By these means princes and states were able to apparently pay their debts, and perform contracts of every kind, by relatively small sums of silver.In fact, the creditors of the government are thus deprived of some of their due rights.The government allowed all other debtors in the country to have the same privileges as the king, and they could also repay the amount borrowed before the currency was reformed in the new devalued currency.Such measures, therefore, have often favored the debtor to the detriment of the creditor; and have sometimes produced revolutions in individual property far greater and more general than public catastrophes could produce.

But it is in this condition that money becomes the common medium of commerce in all civilized nations.Through this medium, all goods can be bought and sold and exchanged for each other. I shall now discuss the laws by which men exchange money for goods, or only goods for goods.These laws determine what is called the relative value or exchange value of commodities. It should be noted that the word value has two different meanings.Sometimes it expresses the utility of a particular item, and sometimes it expresses the purchasing power of another kind of goods obtained by the possession of one thing.The former may be called use-value, the latter exchange-value.Things of great value in use often have little or no value in exchange; conversely, things of great value in exchange often have little or no value in use.For example, water is the most useful, but we cannot buy anything with water, nor will we exchange anything for water.Diamonds, on the other hand, though of little use value, require a great deal of other goods to be exchanged for them.

In order to examine the principles governing the exchange-value of commodities, I shall endeavor to elucidate three points: First, what is the real measure of exchange-value, that is, what constitutes the real price of all commodities, Secondly, What are the parts which make up the real price, Thirdly, what are the circumstances which make some or all of the above prices sometimes higher than their natural or ordinary price, and sometimes lower than their natural or ordinary price?In other words, what are the reasons why the market or actual prices of commodities sometimes do not exactly coincide with the prices of common nature?

Regarding these three issues, I will try my best to give detailed and clear explanations in the following three chapters.However, some places seem to be redundant, and readers should be patient; although I have tried my best to explain some places in detail, I am afraid that the explanation is still not clear enough, so I ask readers to experience them carefully.Because my requirements are very clear, I am often not afraid of cumbersomeness.But for an extremely abstract question, even if you think hard and hope to understand it, there may still be some things you don't understand.chapter Five