The true doctrine was advocated in a classic form by Nicolaus Oresmius (ob. 1382). See his Tractatus de Origine et Jure nec non et Mutationibus Monetarum, newly edited by Wolowski: Paris, 1864. See Roscher's essay in the Comptes rendus of the Académie des Sciences morales et politiques, vol. 62, 435 ff. Based on the latter we have Gabr. Biel (ob. 1495), De Monetarum Potestate simul et Utilitate, 1542, and G. Agricola, De Re metallica, 1556, I, 4 ff. This true doctrine was acclimated earliest in England and Holland, and before the mercantile system invaded them. Compare Hobbes, Leviathan, 24, in which the concoctio bonorum is described by means of money, and the full and clear chapter 12 of Salmasius, De Usuris (1638), who, among other things, shows how Midas, who turned everything into bread, died of thirst. Petty shows very clearly that national wealth does not consist exclusively nor mainly in money. Every country, he says, needs a certain quantity of money to carry on trade. It would be a waste to increase the former, the latter remaining the same. But the precious metals, by reason of their durability and universally recognized value, possess the character of wealth in a higher degree than other commodities.
On the whole, the use of money in a nation is like the use of fat in the individual. (Quantulumcunque concerning Money, 1682.) Compare Roscher, z. Geschichte der eng. Volkswirthschaftslehre, 80 f. Davanzati and Hobbes had compared it to the blood, as has recently Schmitthenner, Staatswissenschaften, 1839, I, 459. North calls money a commodity of which there may be an excess as well as a want. (Discourse on Trade, preface and postscript.) Compare Locke, Considerations on the Lowering of Interest, 1691, Works II, 13 ff., 19. Galiani, 1750, Della Moneta, IV, holds a very happy middle place between the alchymists and the philosophic contemners of gold. See, further, Quesnay, éd. Daire, 64, 75 ff. Turgot, Sur la Formation des Richesses, § 30 ff, had many clear views on this subject. Verri, Meditazioni, 1771, II, 1, calls money the universally current commodity. The expressions, measure of value, pledge, representative of all commodities might be true also of all other wares. It cannot, however, be denied that most modern political economists have not borne sufficiently in mind the peculiarities which distinguish money from all other commodities, as is apparent from the doctrine of the balance of trade prevalent in Hume's and Adam Smith's time. To this extent, therefore, the semi-mercantilistic reaction instituted by Ganilh, Théorie de l'Economie politique, 2822, II, 380 ff., 426; St. Chamans, N. Essai sur la Richesse des Nations, 1824, ch. 3; and Colton, Public Economy for the United States, 1849, 203 ff., who bring into relief the difference between “money as the subject” and “money as the instrument of trade,” was not wholly unfounded. Ad. Müller exaggerates a correct thought, and causes it to degenerate into a species of mystic pleasantry, when he calls every individual in the state and every commodity that possesses value, in exchange or a social character, money.
The highest object of the state is to develop this money-character more and more. (Elemente der Staatskunst, II, 194, 199.) The statesman, he says, should be money. (III, 206.) A very valuable monograph on this subject is M. Chevalier's De la Monnaie, 1850, constituting the third volume of his Cours d'Economie polititique. Knies, Geld und Credit, I, 1873, is here most thorough and acute, especially in keeping separate, by well defined lines of demarcation, the five different functions of money: measure of value (by proper division into parts: price-measure), instrument of exchange, means of transportation of values, and means of storing up and preserving values.
Knies shows how the making of money legal tender by the state, although of only secondary importance, is by no means an irrelevant matter, since persons must then have it, even if they do not want it for purposes of use or exchange, to discharge their liabilities thereby etc., etc. (Tübinger, Zetschrift, 1858, 272.)
In all these cases, barter-economy (Naturalwirthschaft) meets with greater and greater difficulties as civilization advances. How, for instance, could 50 days annually of socage-service or labor be redeemed by the achievement at one time of 1,000 days of socage-service or labor? The rich man requires money principally as a means of payment, the poor man as a medium of exchange. The requirement or need of a people of media of payment is much more susceptible of extension or contraction, than that of media of exchange, made especially so by the intervention of claim-rights instead of money. (Knies, loc. cit, 200 ff.) Ravit, Beitr. z. Lehre vom Gelde, emphasizes this feature of money altogether too much after the manner of a jurist. But he is entirely right in adopting the exclusion of the rei vindicatio against the honest possessor as necessary to the completion of the idea of money.
The contrast between barter-economy and money-economy is of great and fundamental importance. It repeats itself with so much regularity in the history of every highly developed nation, that political economists gifted with perception for the historical, could not possibly overlook it. Thus, Aristotle, for instance, establishes with the utmost care and accuracy the difference between οἰκονομικὴ and χρηματιστικὴ, that is, between natural economy and artificial economy, corresponding to the difference between value in use and value in exchange. (Polit., I, 3, Schn.) Similarly D. Hume, who allows a period of luxury, culture, industry, of trade and manufactures, of freedom and circulation of money, to be preceded by one in which the feeling of wants is not awakened, in which coarseness and idleness prevail, one in which agriculture is alone pursued, and monetary economy and freedom decline, and trade by barter obtains. (Discourses, passim, especially On Interest and on Money.) A similar contrast we find frequently, and as one of his fundamental thoughts, in J. Steuart.
As to how the transition from barter-economy to monetary-economy is generally effected, see F. G. Hoffmann, Lehre vom Gelde, 1838, 176 ff. In the Tyrol, as late as 1820, the greater portion of purely mechanical work, such as that of the smith, the carpenter, and the washerwoman, were purely feudal duties. On the other hand, payment in money was the rule, in the beginning of the fourteenth century. (F. Beidermann, Technische Bildung in Oesterreich, 3.) Yet, for a long time after, the functions of a measure of value were performed by pieces of land, and those of an instrument of exchange by cattle and natural products. (Arnold, Gesch. des Eigenth., 207.) In France, money-economy, i.e., trade by money, had grown to importance earlier. (Nitsch., Ministerialität und Bürgerthum, im 11. und 12. Jahr., 143.) Even in the time of Mary Stuart, the Scotch estimated the rent of land in “cauldrons of victuals.” (Moryson, Itinerary, 1617, III, 155.) In ancient Italy, during the first three centuries of Rome, there was, with the exception of the Greek colonies, only trade by barter. Mommsen, Römische Gesch., I, 293, shows that the oldest ases were not money in the higher sense of the word, but belonged rather to the stage of barter-economy. On the other hand, we find in the time of the classic jurists, much as slavery had limited the sphere of action of money, the principle: pecuniæ nomine non solum numerata pecunia, sed omnes res, tam soli quam mobiles, et tam corpora quam jura continentur. (L. 222, Digest L. 16; compare 4, 5, 178.) Similarly in Cicero, Top. 6. De Invent, II, 21. De Legg, II, 19, 21; III, 3. Compare Dionys. Hal., N.R. IV, 15.
The use of the cauris (Cypræa moneta) in India this side and beyond the Ganges, in upper Asia, and in southern Africa depends on their employment for purposes of ornament, on their greater uniformity, and on the rarity of copper which would otherwise be better suited to purposes of change. In Calcutta, 1280 cauris are equivalent to about half a shilling. (McCulloch.) Compare K. Ritter, Africa, 149, 324, 422, 1038; Asien, I,964; II, 120; III, 233, 739; IV, 53, 420; Salin, III, 62; Botz, in the Tübinger Ztschr. Similarly among the fishing population of Northwestern America. (Stein-Wappäus, Handbuch I, 352.) Salt as money on the Chinese-Birman boundary (Marco Polo, 38), but especially in the interior of Africa, where nature does not at all produce it, but into which it is brought by caravans from the deserts, where salt is found in great quantities. M. Polo, Travels, 305, found the current price of a salt-tablet, two and a half feet long, one foot, two inches broad, and two inches thick, to be equal to the value of two pounds sterling among the Mandingos. In Abyssinia, the salt-bars are generally six inches long, three inches broad, one and a half inches thick, and they are bound with an iron ring to protect them against fracture. Sixty of them are worth one thaler. (Ausland, 1846, No. 35.) Slaves used as money: Barth, Reise, III, 338, 344. Tea-blocks in upper Asia and Siberia; and they are given by the Chinese to the Mongols as pay for troops. (Ritter, Asien, III, 252,) In Keachta, a tea-block is equal in price to one paper ruble. (Ausland, 1846, No. 20. Timkowski, Reise nach China, 143.) Date-money in the Sivah oasis. (Hornemann, Reise, 21.) Also in the Persian date-country, where, formerly, the lowest silver piece of money was coined in the form of a date (Ritter, Asien, VIII, 752, 819.)
The ancient Mexicans used as money cocoa-nuts, in bags of 24,000 pieces, cotton-stuffs, small pieces of copper, and gold dust in quills. (Humboldt, N. Espagne, IV, 11.) Cocoa-beans are still used as small change there. (Ibidem, IV, 10.) On the Amazon, wax-cakes weighing one pound are used. (Smyth, Journey from Lima to Para, 1836.) Among the ancient inhabitants of Rügen, linen (Helmold, I, 39); and still among the Icelanders, the so-called Vadhmâl. During the middle ages, 120 ells of Vadhmâl were equal in value to one milch cow or six milch sheep, or two and a half ounces of silver. (Leo in Raumer's histor. Taschenbuch, 1835, 515.) That the ancient northern mode of valuation, by the Vadhmâl and in cows is older than by the mark is shown by Wilda, Gesch. des deutschen Strafrechts, I, 331. The cod-fish money used by the Icelanders was, on account of its great commercial importance as an article of export, an advance upon the use of the Vadhmâl. Among the Caffirs, besides cauris, mats, javelins, glass corals, but particularly brass rings, are used as money. From three to four hundred of these rings are strung together, and two such strings are equal in value to one cow. (Klemm, Kulturgeschichte, III, 308, 320 f.) Ivory used as money in the neighborhood of the Portuguese colonies in Africa. (Martius, Reise, II, 670.) In Logone, Denham (1822) ff., had met with pieces of iron as a medium of circulation; but on the other hand, Barth (1849), with small strips of cotton from 2 to 3 inches in breadth, and shirts for larger sums. (A. R., III, 274, 297, 538.) In colonies, money of this nature is continued for a long time. Thus cod-fish used in Newfoundland, sugar in the English West Indies (Adam Smith, I, ch. 4), tobacco in Maryland and Virginia. (Douglas, V, 2, 389; Ebeling, V, 435 ff.) The last was related to the inspection and storage of the tobacco intended for exportation. Payment was made in orders on the stored and inspected tobacco, even as late as the end of the eighteenth century. In 1618, the forced circulation of tobacco was decreed in Virginia, and under severe penalties. (Gouge, History of Paper-Money and Banking in the United States, ch. 1.)
Engel, at the usual tariff for land and railroad freight (10 and 5 pfennigs per mile and hundredths of a mile) estimates the enhancement of the price of the following commodities, for one mile of transportation of a custom-hundred-weight (Zollcentner) at the following percentage of their average value: