WHAT IS MONEY?
Uncle Sam: At our talk last Wednesday evening we all agreed upon two facts, and these were fundamental to the consideration of a financial and banking system for me.
The first fact was this: that Gold is the Standard of Value all the world over, as well as our standard.
The second fact: that a Standard of Value was something by which the value of all other things is measured.
It must necessarily follow then, and be perfectly clear to all of us that everything we produce, and everything that we buy and sell is measured by Gold. In other words that Gold is our money and that our money is Gold.
Mr. Lawyer: Uncle Sam, you say "Gold is our Money." Now, it seems to me as though there must be something done to gold to make it money, even though all our money is gold.
Mr. Banker: Yes, something is done to gold to make it money, and to circulate it as money. Just three things are done to gold to make it possible to circulate it as money.
First, we have established a degree of fineness. The gold coin we circulate as money is nine-tenths pure gold, or nine-tenths fine, and one-tenth of cheaper metal. This is added to give it an increased hardness so that the loss by rubbing the gold against other things will not be so great. This loss is called the abrasion of gold.