The herald., 1895-06-09

our property, as letters were invented TO
express our ideas: and both those lnstl-
tutions, by giving more active energy TO
the powers and passions OF human ma
ture have contributed to multiply the OBJ
jects they were designed to expTess.-Glb-
bon.
1t would be we'll for us before proceed
ing further to clearly understand what is
money, what are Its real functions, and
whyis it so necessary that iJshoald have
permanent and stable value.
A clear and careful description OF mon
ey has been given by Mr.. Francis A.WallS-
er, the distinguished American econo-
mist He defines money as that whlch
passes freely from hand to hand through
out the community in final discharge OF
debts and full payment for commodities,
being acceptedkequally without reference
to the character or credit OF the person
who offers it and without the lnten ton
OF the person who receives 1t TO cons ume
il or eniov it or apply it to any other use
than in turn to tender it to Others in dis
charge of debts or payment Tor conn nod
lties.H' From this it should be noted that
it is the essence OF money that 1t saould
be capable of making immediate payment
either to satsfya seller or 4 cr'.dltor.
There must therefore be no doubt as to It's
Il
paw it with something worth $500.
Money is often spoken of loosely as the
same thing as capital, but they are differ
ent.
Before anything is money it must be
such that you can go into the market ana
Immediately use 1t IN purcnm9sslns com,
modities or paying debts. The plant OF
a railway and the machinery OF a mill,
so long as they are in full use, are cap
ital. and are capital which has probably
once been money, but they are money no
longer because you cannot use them IN
making payments, though they nave,
nerhaps become more valuable than they
ever were.
IAN instance of this is to be noted in
the closing of so many banks in the early
summer Of 1893. Those banks had capital
in plenty, but they were wanting IN the
ready money to meet the demands OF de-
postors. This ca pital was locked up in
promissory notes, unpaid balances. bLnk
buildings, ETC., etc., which were probably
we'll worth the value of the investment
hut tney were not money and could not
be disposed of without considerable de-
lay.
about money owing to the delus1on re-
ferred to in former article, that the
government can create money at Will.
This the government can not do. Money
is commodity Just as groceries, gram,
boots etc.. etc., are commodities, and
it is subject to exactly the same laws. 1t
is equally correct to say that the price OF
a horse is 200 bushels of wheat as to say
that it is 500, for the value of money,
like the value of anything else, is purely
a question of supply and demand. For
this reason the government cannot Gre
ate money but it can manufacture money
lust as mill can grind wheat into flour,
or a bootmaker can manufacture leather
IS he must grind wheat enough to be
worth So Ii the bootmaker wants 80 for
pair OF boots he must put enough leath-
er or work into the boots to make them
worth that amount. In Just the same
way the government must put enough
gold or silver into coin to make 1t actu-
ally worth 50. If the coin Is made OF a
greater or of a less amount then Just 10
an equal extent will be the gain or loss to
the person who accepts 1t or to the gov
ernment which redeems 1t.
"All great economic truth is essentially
the same, wherever it is applied. The
same laws govern the small trading of the
SIMPLEST community and the large and
complicated transactions OF countries like
the United States. The same laws
which govern the financial TRANSACTIONS
of one man or of q company formed Of
half dozen men govern the transact
tions OF city with so, 900 inhabitants, of
a state with 5,000.0 000 or OF the United
States with TO- 900 900. There is absolute
ly no difference between a promissory
note for $100 payable on demand and
given by a single individual OF good
standing and possessing certain known
Collaterals, and a treasury note for SIM
liar amount also payable on demand and
issued by the government Both prom
issory note and treasury note are payable
IN the end in gold coin or its equivalent.
This is the difference between money and
currency: Money itself is something real
while currency may merely be repre-
sentative of money, and poor one at
that.
The functions OF money are three in
number: "a the common medium by
which exchanges are rendered possible. G.
the common measure by which the com
parative values OF those exchanges are
estimated and 6 the standard by which
future obligations are determined. "rhe
most important. says Professor Basta bic,
sis the first, that of facilitating ex-
change. The mere consideration OF indus
trial organization shows that it is based
on the division OF employmentS and the
earliest economic writer's saw clearly that
division OF employments was rendered
possible only by the use of a medium OF
exchange. They saw, moreover, that
this was not feasible without some object
which all would be willing to accept fol
their peculiar products, for otherwise
the dlflCulJy OF BeLllnB buOSe tOEetDel
whose wants were reciprocal would be
complete hindrance to the developmen
of exchange. which alone made divisio OIL
of labor possible.
"a second function hardly inferior ir
importance to the one Just mentioned il
that of affording ready means OF esti
mating the comparative value of diiferen
commodities. Without some common
comm odity as standard of comparison
this would be almost impossl bic. III
tailor had only coats and wanted to bu'
bread or a horse, it W ould be very trouble
some to ascertain how much bread h
ought to obtain for a coat or how man
coats he should give for a horse; and a
the number OF commodities to be deal
with increased the problem would be
come harder. for each comm odlty woul
have to be quoted i'll terms of every othe
commodity John Stuart MlD. Indeed
it may be reasonably maintained tina
the idea of general value could not b
formed without the existence of money
and all that is known of savage race
tends to bear ont this view.
"Another function of money come
into being with the progress of society
One OF the most distinctive features {
advancing civilization is the increasin
tendency of people to trust each othei
Thus there is continual increase il uh
relations of contract, as may be seen
examining the development of our leg:
system. Now a contract implies som,
thing to be done in the future, and fr
estimating .the value Of that future act