The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-04-12

with which men sometimes set money
above the products TO he exchanged; and
henoe the inclination to estimate an album
dance OF money a. Of more Importance
than an abundance Of goods, the means
being thus made greater than the end.
We have seen that II In indispensable TO
distinguish In thought the function Of
money considered a. q standard OF price,
and the function Of money viewed as
medium Of exchange. As matter OF fact,
however, In early times, that article OF
general desirnbility which served a.
standard OF price was In most cases also
used as the medium Of exchange. The
distinction In that period between the
common denomination Of value and the
medium OF exchange was not sharp one;
the physical qualities Of the money COM
modify needed for one function were mixed
with those needed for the other. In recent
years, on the other hand. we can get no
clear insight into the evolution Of money
unless We clearly discriminate between
those two functions. At present. In highly
civilized countries. entirely different things
are used for the different functions; Tor
instance. gold may be adopted as . common
denomination. in which prices are expressed;
while goods may. In point Of fact. be ex-
changed by banking devices without any but
the slightest use az a medium OF exchange
Of that article which has been adopted
as the standard. In the development OF
these separate functions, IL has become
clear that money has been evolved out Of
the needs Of society as a means OF lessening
human effort. Indeed, the extent to which
the distinctions In the functions Of money
are practically worked out in any country
In fair test Of the division Of labor, the
variety OF wants and products and the
industrial civilization Of its people.
Exchange Of goods takes place. as we
all know. not merely between different
persons in the same region. but between
persons in widely separated regions. In
ternational exchange is but an example
Of extended division OF labor. Wherever
law and order were weak. or wherever
transportation became unsafe, premium
at once arose as a stimulus to save
the unnecessary use OF the common
denomination. The risk OF losing 1t In
transportation by land and sea, the rear
Of robbery, theft. or accident. especially
when large sums were TO be transferred,
furnished ever-present and urgent reason
for avoiding the actual tender Of valuable
standard as a medium qf exchange. Con-
sequently. as soon as commerce began to
develop in any considerable measure.
there was continuous pressure to discover
some means Of exchanging goods without
transferring the standard itself. THUS
in response to the monetary needs OF man.
kind took place q natural evolution, which
displayed itself In the establishment OF
the early banks. such as those OF Venice.
Barcelona and Amsterdam, where coins
were deposited. and where the title TO the
coins. or common denominator. could be
transferred without their removal. Banks
in q word, arose In response to an urgent
want Of the community. they originated
in an effort to abridge labor and save loss
In like manner the invention Of the bill OF
exchange by the Jews OF Lombardy. In the
fourteenth century, was another step in the
same evolution. by which the actual trans
fer Of the valuable standard was averted
by the devising Of another medium OF eS-
change. In quite recent times we have
seen the evolution carried still further
by the notes Of banks and governments,
and, finally, by the deposit currency OF
the check and deposit system.
We have seen that, according to our
author, money has three functions, TO Wit.
that of common denomination, or standard,
that Of a medium Of exchange and that OF
a standard OF deferred payments We have
seen what he has to say about the first two
functions. We come now to the third
function Prof. Laughlin points out that
as soon as legal conditions permitted any
permanence Of contracts, and, as soon as
the time element entered materially into
industrial relations, the third function
OF money, considered as standard OF
deferred payments, assumed importance.
This function is not different from that Of
a simple standard, except that 1t covers
COMPARISONS in which the time element
appeared. To express the exchange value
Of goods relatively to the common denom-
inator at any given time presents no diff
ficulty. in other words, prices in given
market on a given day are simple phe-
nomena. When, however. agreements
which run over considerable periods OF
time are entered into to pay and receive
certain amounts OF the common denomina-
tor, many difficulties arise from the we'll
known fact that the rates OF exchange
between the common denominator and
other goods may vary widely during the
period Of contract. Over even COM
paratively short space Of time it is impos.
sible that value ratios should remain UNI
changed.
Under the influence Of mode IN discovery
and invention, every commodity Is con-
tinually aff, CT d by alt rations, from " ar
TO " ar, or evn from week to week, In the
conditions al citing it's production. Since
no single article can scapo these changes
not evrn that one chos' n as the common
Dr. nominator-it GO without saying that
no article exists which can possibly be a
perf. ct standard Of de I, rrt PAYNE nts
No article could possibly adjust it's own
chang TO the infinite numb and range
OF chang going on in the many goods
which have to be compar d with mon y.
This inht n mt difficulty In finding standard
for time payne nts is the one around which
much Of the mons tAry discussion OF n o mt
ars has O. ntrd. It has J. d to the pro-
posals OF bimetallism. the multiple standard
and Other soho mrs. which are to b. dis
cusst d at y myth in tho work Of which the
Dr. ~ mt volume IL only thc first installm6 mt.
In q chapter on the standard gu stion. >
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