Chapter 5 Chapter 4 The Origin and Utility of Money

When the division of labor is fully established, the products of one's own labor cannot fully satisfy one's own needs.Most of the goods he needs are the products of other people's labor, and he must exchange the surplus of his own labor products to satisfy his needs.Therefore, if all people want to live, they must rely on exchange.In other words, all men become merchants to some extent, and society, strictly speaking, becomes a commercial society. However, the role of this exchange force is often not obvious at the beginning of the division of labor.For example, A holds a certain item that cannot be consumed by himself, but B does not hold enough item for his own consumption.At this time, A is naturally willing to sell part of the remaining items in his hands, and B is also willing to buy this item from A, but because B does not have the items that A needs now, they still cannot reach a deal.For another example, the butcher sells the meat that he cannot consume in the store, and the brewer and the baker both need a portion, so they are naturally willing to buy it, but if they only have their own manufactured products for exchange, and the butcher now needs a portion. The ale and bread were supplied again, and the deal was likewise impossible.At this time, the butcher is not a merchant to the brewer and baker, nor is the brewer and baker a customer of the butcher.In this way, they cannot help each other.

Since the establishment of the division of labor, methods of avoiding this inconvenience have been devised by thoughtful people.He has not only the products of his own labor with him, but also a certain amount of certain items-in his opinion, no one will refuse to exchange such items for any products. People have thought of and used various items in order to find such items that will not be rejected by anyone.It is said that, in savage societies, livestock was once the common medium of commerce, that is, livestock could be exchanged for various goods.Obviously, livestock is an extremely inconvenient medium, but we find that the evaluation standard of ancient exchanges is often the number of livestock.Homer once said such a sentence: "The armor of Diomede is only worth nine cows, but the armor of Grokas is worth a hundred cows." It is said that as a commercial exchange medium, Abyssinia used Salt, certain shells in some parts of the Indian coast, tobacco in Virginia, dried fish diced in Newfoundland, sugar in the English colonies of the West Indies, and hides or tanned hides of choice in several other countries.As far as I know, there is a village in Scotland where ale and bread are still bought by means of iron nails.

However, due to irresistible reasons, metal finally became the medium that all countries decided to use.Metal compares favorably with any other cargo.It is not easy to wear, not only has strong durability, but also can be divided at will without loss, and can be melted back to the original shape after division.This property of metal is absent from all other durable objects.Therefore, metal became the most suitable medium in commercial circulation. For example, assuming that only livestock can be exchanged for salt, then those who want to buy salt, the value of buying salt at one time must be equivalent to the entire head of livestock.Because the cattle or sheep he used to buy salt cannot be divided, and even if they can be divided, they cannot be restored.In the same way, if he wants to buy more salt, such as double or triple the amount, he can only exchange it with two or three cows or sheep.On the contrary, assuming that he uses metals to trade with others, then he can only divide metals equivalent to the value of this amount to the other party according to the amount he currently needs.In this way, the problems caused by the exchange of livestock are solved.

As for which metal to choose, it is not the same in each country.The ancient Spartans used iron; the ancient Romans chose copper; and all the rich merchant nations chose gold and silver.When metals were first used as a medium of exchange, they were rough, uncast bars without any imprints.The ancient historian Timias recorded this situation, and Pliny quoted him as saying: "The Romans in the time of Servius Tullius had not yet begun to use minted money to buy what they needed. The items used as currency at that time were thick copper bars without engravings." There are two great inconveniences for metals in this crude state: first, it is inconvenient to weigh; second, it is inconvenient to test whether it is true or false.

As precious metals, even a small difference in weight can make a big difference in value.But to accurately weigh such metals requires at least extremely precise weights and balances, and this is especially true for gold.Of course, if it is a base metal, the value will not be much different if the weight is slightly lower, so there is no need to carefully weigh it.However, for a poor man, if he only buys and sells goods worth one copper piece at a time, it will be extremely troublesome to weigh this copper piece every time. Testing the authenticity of metals is even more difficult and cumbersome.In order to obtain reliable test results, a part of the metal must be taken out, put into a crucible, and then melted with an appropriate melting solution.Before the implementation of the coinage system, people could only use this difficult and cumbersome test method in order to avoid being greatly deceived.A pound of metal, which men sell their goods for, may appear to be pure silver or copper, but may be mixed with the coarsest and cheapest metals, and not at all equal to the value of the goods.

This disadvantage affects the convenience of transactions and hinders the development of various industries and commerce.Progressive nations, therefore, have found it necessary to divide and stamp certain quantities of particular metals, with which goods are commonly purchased.Thus, there was a coinage system, and the government office called the mint also appeared.The coinage system is similar to the linen woolen inspection system.The task of the inspector is to determine the weight of the currency metal and classify the quality of the currency metal by stamping the public seal. Initially, the purpose of stamping coinary metals with public seals seems to have been to ascertain the quality or purity of the metal, which must be ascertained and is the most difficult to ascertain.The public seal at that time was similar to the purity marks engraved on silver vessels and silver bars today.Similarly, there is the Spanish-style mark that is only engraved on one side of the gold bar instead of covering it, which only confirms the purity of the metal, and does not indicate the weight of the metal. It is recorded in the "Old Testament": Abraham used four hundred shekels of silver as a price in order to obtain the Markpela field in Ephron.The currency circulating among merchants at that time is said to be the shekel.However, the circulation of metal currency at that time was only concerned with weight rather than quantity, just like the granting and receiving of gold and silver bars today.It is said that when the Saxons came to rule England, the revenue they collected was not currency but kind, that is, various grains.It was not until the first period of King William the Conqueror that taxes were paid in currency for the first time.The currency that was included in the national treasury at that time was also collected by weight for a long period of time.

To weigh metals without error is not only very troublesome, but also extremely difficult.In order to solve this problem, people introduced the minting system.Both sides of the coin were covered, sometimes even the edges.Both the purity and weight of the metal are established when the coinage is stamped.From then on, coins were all given and received by number, thus avoiding the trouble of weighing. Apparently, the name of the coin was originally intended to indicate the weight or amount of metal.Rome began to mint currency from the time of Servius Tullius, when the Roman coin As (AS) or Pond (Pond) contained a Roman pound of pure copper.Like our Troyes pound, the aspen or pondot is divided into twelve ounces, each ounce of aspen or pondot containing one ounce of pure copper.In the time of Edward I, a pound of pure silver contained a pound of tour, which seems to have been more than a pound of Roman and less than a pound of Troyes.It was not until the eighteenth year of Henry VIII that the British Mint began adopting the Troyes pound.Troyes is a city in France, located in the Champagne province in the northeast of France. It was a famous market at that time, and people from various European countries kept coming and going. Therefore, everyone is familiar with and respects the measurement standards it uses.The French currency of the time of Charlemagne, the Liver, contained a pound of pure silver.

From Alexander I to the Bruce period, a pound of Scottish coins contained a pound of silver of the same weight and purity as a pound of British coins.The penny used in England, France, and Scotland originally contained silver weighing one penny (twentieth of an ounce), or one-two hundred and fortieth of a pound.Originally there seemed to be a shilling as a name for weight.During the time of Henry III, the law stipulated that when a quart of wheat was worth twenty shillings, a piece of fine wheat bread worth a copper plate must weigh twelve shillings and fourpence.But the ratio of pennies to pounds seems to be more stable than the ratio of shillings to pennies and shillings to pounds.In ancient France, the pence contained in the soul or shilling was also unstable. There were cases of five pence, twelve pence, and even twenty or even forty pence.In ancient Saxon the content of a shilling fluctuated roughly in a similar manner to that of its neighbor Frank, and even seemed to contain at one time only five pence.

In France, though the value of the pound, shilling, or pence has varied greatly since the time of Charlemagne, the relation to each other has remained almost as unchanged as it is now.This has also been the case in England since the time of William the Conqueror. I believe this, that the sovereigns of all nations are avaricious and partial, defrauding their subjects, and successively reducing the true weight of the metal in which the money originally contained.For example, Aspen in the late Roman Republic was actually reduced to one-twenty-fourth of the original amount. Although it was called a pound, it was actually only half an ounce.Another example is the current pound and pence. The pound and pence in England are only about one-third of the original, Scotland is reduced to one-thirty-sixth of the original, and France is even reduced to one-fifty-sixth of the original.

In this way princes and states were able to pay their debts and perform various contracts with smaller quantities of silver.In effect, they deprive creditors of some of their due rights.The king has such a privilege: use the same amount of newly devalued currency to repay the arrears before the currency reform.Now, by taking this measure of reducing the weight of the currency, the government is extending this privilege to other debtors in the country.This measure, which favors the debtor, actually hurts the creditor, and its effects on private property are sometimes far greater and more general than public catastrophes.

Even under these circumstances, however, money became the common medium of commerce in all civilized nations.Since the emergence of money, all goods can be bought and sold through it. When people exchange, whether they exchange money for goods or goods for goods, they must follow certain rules.These laws determine the relative value and exchange value of commodities. It should be noted that the word "value" has two different meanings, one is the utility of goods, and the other is the ability to buy other goods obtained by possessing something.We call the former use-value and the latter exchange-value.Things with great value in use do not necessarily have value in exchange; conversely, things with great value in exchange do not necessarily have value in use.Water, for example, though it has the greatest utility, cannot be used to buy anything, nor need anything be exchanged for it.Diamond drills, on the contrary, have little use value, but their possession requires a great deal of other goods. It will help us to discuss the principles governing the exchange value of commodities by elucidating the following three points: 1. What is the real measure of exchange value, that is, what constitutes the real price of all commodities? 2. What are the components of the real price? 3. Sometimes, part or all of the real price is higher than the natural or ordinary price. What is the reason for this situation?That is to say, what is the reason why the market price or actual price of a commodity sometimes cannot be exactly the same as its natural price? In the next three chapters I shall endeavor to elaborate on these three questions.However, in order to explain the problem clearly, some places will inevitably be a bit long-winded, please bear with me; when faced with an extremely abstract and complicated problem, even if you try your best to explain it clearly, it is inevitable that the explanation is not clear enough, please read Experience carefully.