Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1896-07-29
Functions of Money.

among political economists as to the
number of functions which money
performs. According to a majority
of writer's these functions are two: to
act as a measure of value and as
medium of exchange. In the defn1-
ton quoted last week from Jevons we
notice that he adds two others, hold
inc that it is a distinct function of
money to act as a standard of value
and as a store of values. But money
as a measure of value and money as
standard of value are generally the
same thing By saying that money
is measure of value we mean that 1t
is an instrument by which the com
parative value of commodities eX-
changed is estimated, and in terms
of which debts are expressed. Now
Jeyons discriminates between debts
due in short periods and debts run
ming for long periods, and 1t is the
relation of money to the long debt
which he calls it's use as a standard
of value. This function, then, is SIM
ply a further division Of the function
measure of value, and Uhe utility OF
the division consists in the emphasis
which it gives to the fact that money
itself is subject to variation IN value,
and. therefore, however it may per-
form its functions as a measure OF
value for brief periods, it may be I'M
IL % 90 this for long periods. Walker
adopts this distinction of JevOns, but
S. 2gests as better term for 1t ''stand-
a d of deferred payments.
/ buti is it a distinctfunctiOn OF money
to serve as a store of value? Under
circumstances where it is desirable to
put property into small compass, as
! for the purpose of transportation or
| concealment, money certainly affords
! one means for accomplishing that pur-
pose. But other articles besides
money are suitable for this purpO e
and are so used, such as diamond S
! and the precious metals In the form
oI bullion. The truth is simply this,
| that the quality which fits an article
! for use as a store OF value, viz, large
! value in small bulk, is also one OF the
qualities which tit ii for use as money.
Some writer's have objected to the
term measure OF value with reference
to money because the measure OF
values by money is not strictly analo-
gous to the process OF physical meas
urement. In case of the latter we
| have an invariaDle standard, arbitrar
! iIv determined, and hence we have an
unvarying result. The process OF
physical measurement consists simply
in applying this invariabie standard
to the thing to be measured. But
money is not such an invariable stand
ard, and with a variable standard we
must have varying results. When we
measure the value OF commodities by
the fundamentally Of money, If we
! would approach any degree OF accur-
acy, we must estimate the exchange
power of a given amount or money
and compare with this the article
whose value we wish to measure. We
muse never for a moment forget that
| in the measurement of values no lnUdr
| iG6Le standard is possible. The value OF
metallic money is produced by the
same causes which produce the value
of commodities. Ricardo says: Com
modities measure the value Of money
n the same manner as money meas
ures the value of commodities. We
speak of rise or fall in the value
Chat is, the purchasing pOWer) of
money, just as we speak OF a rise OF
fall III the value OF goods. Value is
not an absolute but a relative quality.
Mo-ey, then, has three functions.
1t is q measure Of value, a standard OF
exchange. These three functions
should be very clearly Disseminated,
because, while it is desirable and
usual that the same substance be
selected to perform all of these func-
lions, it IS not absolutely necessary
that it should be so. A substance
which is well fitted to perform one of
these functions may not be fitted to
perform the others, and the perform
ance of these functions may be distrib-
uted among as many different arti-
cles. Jevons gives the following illus
tration: In the reign Of Queen Eiiz-
abeth, silver was the common meas
ure OF value. Gold was employed in
large payments in quantities depend
ing upon its current value in silver.
while corn was required by legisla-
tive enactment to be the standard of
value" that, is, the standard of de-
ferred payments in drawing the
leases Of certain college lands.n In
the wholesale market and in interna-
tional trade values invaribly are ex-
pressed IN terms of money, but money
is seldom used in actual transactions,
the exchanges or transfers of goods
being generally effected by means of
some of the credit substitutes for
money. In the retail trade we meas
ure values by the legal tender dollar,
but a vast portion of the actual trans
actions are effected by the use of the
subsidiary COINS whose va1,7o ic in