This section is from the "The Science Of Wealth" book, by Amasa Walker.
Having examined the nature and functions of currency, we shall now speak of the actual money of commerce, or the universally accepted equivalent.
In all ages and countries, this has consisted of the precious metals, gold and silver, with the baser metals or alloys for fractional purposes.
Local currencies have been various. Lacedaemon had iron money. The Romans are supposed by many to have used cattle and sheep in the early periods of their history; and their coins bear the images of those animals, as indicating their value.*
* Hence called pecunia, money, from pecus, a flock.
Tobacco was once currency, and a legal tender, in Virginia.
The first currency legally established in Massachusetts was bullets. The " General Courte ordered [March 4, 1635] that bulletts of a full boare shall passe currently for a farthing a peice, provided that noe man be compelled to take above 12d at a time." Again, it was enacted " that merchantable beaver shall pass at X8 the pound." In 1637, the " Courte ordered that Wampumpege should pass at six for a penny, for all sums under 12d." In 1640 and 1641, additional laws were enacted, making wampum a lawful tender.
Many expedients like these have, at different times and different countries, been adopted to secure a temporary and partial currency; but from the days of Abraham, who paid " four hundred shekels, current money with the merchants, for the field of Ephron," to the present time, the money used in commerce has always been composed of gold and silver. These, and these only, have formed the universal medium of exchange and standard of value.
The use of these metals arises from nothing conventional. No international agreement was ever made respecting them; yet they are everywhere and at all times, without hesitation, received in exchange for whatever any one may wish to dispose of. They secure their currency simply by their peculiar adaptedness to the purpose.
What their peculiarities are we propose now to consider.
1st, They possess value, that is, have power in exchange. They cost labor, and are objects of desire. They cannot be had without labor, or an equivalent. We have already said that the article used as a standard of value must possess value in itself, since we can only compare value with value. Gold and silver have this indispensable requisite. They are subject to all the laws of value as truly as wheat or any other commodity.
2d, These metals are stable in value; that is, the most so of known commodities. They are subject to no violent changes, like flour or cotton: for example, wheat often varies from twenty-five to fifty per cent in a few months. They change in value, indeed, from age to age; but so gradually is this accomplished as to be quite imperceptible at the time.
The discovery of the Western Continent, which opened to the commercial world the accumulated treasures of Mexico and South America, caused the greatest change known to history; yet it is calculated, that from 1492 to 1650, a period of one hundred and fifty years, gold and silver fell only seventy-five per cent, equivalent to half of one per cent per annum; so that even this great change must have been so gradual as to have inflicted little injury on individuals, and could only have been appreciated by those holding long annuities or similar securities.
3d, They are conveniently portable; the most so, in fact, of all commodities existing in adequate quantity. One pound weight of gold will ordinarily command, in exchange, fifteen thousand pounds of wheat, thirty thousand pounds of Indian corn, five tons of rice, or a ton and a half of cotton.
4th, These metals are malleable. They can be wrought into any shape, will receive and retain any impression, may be divided into the minutest quantities, and again united, with the smallest possible loss. Hence they are admirably adapted for coinage, or a great variety of alternate uses.