Canaan. Abraham purchased the field of Machpelah for a burying place, with silver. It then passed by weight, as appears from Gen. 23: 16. In later times, it became the practice among nations that used the metal currency, to fix upon it a stamp or inscription. The stamp answers two important purposes: First, it expresses the value of the piece, thereby saving the trouble of weighing it; secondly, persons are less liable to be imposed on by adulterated and counterfeit coins. Before money was coined, the pieces of metal had to be assayed in order to ascertain the quality. The stamp of the government now placed upon the pieces, is evidence of the purity of the metal, as well as of its value. And though counterfeit stamps are sometimes put upon base coin, the cases are comparatively uncommon; and the counterfeit coins may generally be detected by careful observation. §898. The advantages of gold and silver as a circulating medium, are numerous. (1.) They may be divided into parts so minute as to admit of being exchanged for articles of very small value. (2.) They are uniform in quality in all parts of the world; any quantity of the silver and gold of one country being of the same value as an equal quantity of the same metals of another country. And the quality is not altered by time or weather. (3.) They are not subject to the same degree of loss by wear as other metals. (4.) Their dearness renders a very small amount of weight sufficient to buy commodities of great value: it is therefore of easy transportation. (5.) They are capable of receiv. ing the impression, by which their weight and purity are certified. § 899. But it may be asked, Wherein consists the necessity of employing both gold and silver in the use of money ? Why may not either the one or the other be dispensed with? If silver only were used, the quantity necessary to represent a large amount of value, would contain too much weight What metals are now in general use as money? Wherein consists the convenience of having the metals stamped or coined? § 898. State the several advantages of gold and silver as a circulating medium. § 899. Why is not one of these kinds of metal sufficient? Why is copper necessary? and bulk to be convenient in extensive commercial transactions. On the other hand, if gold alone were used in the capacity of money, being sixteen times as dear as silver, a piece of gold equal in value to the smallest silver coin, would be too small for ordinary use. For the same reason, a cheaper metal than even silver is necessary. The smallest silver coin in the United States, is a half dime, or five cent piece. A smaller piece of money in bulk would be inconvenient. Hence, to represent smaller value, copper is used. CHAPTER XV. Sundry Facts concerning Money. $900. ALTHOUGH in making exchanges value is given for value, it will be readily seen, that the value of the money employed in effecting the necessary exchanges in a com. munity, is much less than the total value of the property to be exchanged. One reason is, that all exchanges are not made at the same time. A small sum, therefore, may an. swer as the medium of exchanging a large amount of property. This may be illustrated thus: The 901. A farmer sells to his neighbor wheat to the value of five dollars, and pays the money to the merchant for goods. The merchant buys a hat for the same money. The hatter pays it to the tailor for making a coat. tailor pays it to his journeyman for labor; and the journey. man again pays the same money for merchant's goods. Thus we see, that commodities and labor to the value of thirty dollars have been exchanged with five dollars; and the same five dollars, if kept in steady circulation a whole year, may be used to exchange values to the amount of a thousand dollars. § 900. Why is not so great a value of money required to make the necessary exchanges in a community, as the value of property to be exchanged? § 901. Illustrate this by an example. Another. § 902 § 902. Another reason why a small amount of money is sufficient for the purposes of exchange, is, that a large proportion, sometimes much the greater proportion, of the exchanges of property, is made in kind; that is, one kind of property is exchanged for another. One man may wish to dispose of his horse, and buy a pair of oxen; and if the owner of the oxen wants a horse, an exchange may be made without the use of money, except what may be necessary to pay the difference, in case the property exchanged should not be of equal value. Thus also a country merchant may exchange the greater part of his stock of goods for the productions of the country; and these he may again exchange with the city wholesale merchant for a new supply of goods, with a small amount of money. § 903. As in exchange value is always given for value, the whole business of the exchange of a community requires a quantity of money of a certain amount of value. For, if it requires ten dollars' worth of money to pay for ten dollars' worth of wheat, the greater the number and amount of exchanges there are to be made within a given period, the greater must be the value of the circulating medium to accomplish these exchanges. § 904. But the quantity of money and the value of money, are not the same thing: the quantity may be either greater or less at one time than another, when the value is neither increased nor diminished. The value of the money required for the purpose of conducting exchanges, be the quantity great or small, must always be in proportion to the total business of the national exchange. Suppose the cir culation of the United States to be 60 millions of dollars at the present time; and that, by some circumstance or other, 20 millions should leave the country, or be otherwise with. drawn from circulation: if the business of national exchange should not be diminished, the 40 millions remaining in cir culation, must possess the same value as the 60 millions do What other reason can you give, why a small amount of money an swers the purpose of exchange? Explain this by two examples. §903. When the value of the property to be exchanged is increased, is a greater value of money also required? § 904. Explain the difference between the quantity and the value of money. Give an example. at present. And it is evident, that every four dollars must represent the same value as is now represented dy six dollars. § 905. Now suppose that the quantity of money remain the same, and that the national products be diminished one third. As the amount of exchanges would, in this case, be one third less than before, and as the 60 millions would be used in the business of exchange, every six dollars would represent no greater value of property than four dollars do at the present time. If the present price of flour is four dollars, it would, in the case supposed, be six dollars; that is, every six dollars would represent as many barrels of flour as every four dollars do now. § 906. Hence we learn how to account for variations in prices. There are always circumstances arising, which affect either the amount of exchanges, or the quantity of the circulating medium. If both increase or diminish in the same proportion, prices will not change in consequence. But when, as above supposed, the quantity of money used for purposes of exchange is reduced, less must be given for products bought with it; and we therefore say, prices are fallen. On the other hand, when the amount of products to be sold is diminished, or the quantity of money is increased, more money is paid for the same products; and in this case we say, prices are risen. 907. Hence we learn, also, the causes of the abundance and scarcity of money. Money may be said to be abundant, when there is more than enough to effect the necessary exchanges of the country; and scarce, when the quantity is insufficient for this purpose. When a nation buys more of other nations than it sells to them, it must pay the difference in money; and thus a part of the money having left the country, the amount remaining may not be sufficient for the purpose of exchange. And on the other hand, when a nation exports more than it imports, and re 905. Give another example, in which the products instead of the money are diminished.. § 906. How do you account for the fluctuaations in prices? § 907. When is money properly considered scarce, and when abundant? What will produce a scarcity, and what an abundance of money? ceives the balance in money, there may be more than the business of exchange requires. In the former case money would be considered scarce; in the latter, abundant. But there may be other causes, than the importation and exportation of money, for its abundance and scarcity. CHAPTER XVI. The Nature and Utility of Banks.-Banks of Deposit and Exchange. 908. THE first institution of banks, it is said, was in Italy, where the Lombard Jews kept benches in the market places, for the exchange of money and bills; and banco being the Italian name for bench, banks took their title from this word. The first banks are supposed to have been only banks of deposit, places where persons deposited or laid up their money for safe keeping, to be ready when called for. §909. But it may be asked of what use banks of this kind are; and whether a man's money may be kept in a bank more safely than when it is in his own keeping. Deposits of money in a hundred different places, would afford more frequent opportunities for robbery, than when made in one place. And nearly the same care and precaution would be necessary to secure one thousand dollars in each of the one hundred different places, as to secure one hundred thousand in a single place. Money may therefore be kept more safely, and perhaps more cheaply, by depositing it in a bank. § 910. But the utility of banks of this kind, consists, chiefly, in their being employed in the business of exchange. In this respect, they effect a great saving of labor. This is done upon the principle of a division of labor. In large § 908. What kind of banks are the first said to have been? § 900 Of what benefit are banks as institutions of deposit? 6910. F |