It was during the Christmas holidays that I was writing these chapters. My brain was "logy" with the weight of many volumes of scientific economics, and I was puzzled how the abstruse reasoning of the economists might be made into "cheerful reading" for the average man. A bright young girl relieved my distress. I asked her drearily, "What is money?" and her quick answer was quite in the spirit of the holiday season. "Why," she said, open-eyed, "it's to buy things with!" The scientific economist would have said, "Money is a medium of exchange," or, as one brilliant writer phrases it, "Money is the conceptual machinery of exchange." But this lecture-room language would have been not a whit more accurate—money is "to buy things with!" The economist would probably have added, "Money must also be a legal tender," meaning that the government must see to it that money is just as good six months or six years from now as it is to-day, so that it can be used to pay debts with; otherwise the stores would not be able to have "accounts" with their customers, and general business would be very hazardous; there could be no "credit" at all.

As our conversation continued, it became evident that two other uses or definitions of money were very clear in the mind of this American girl. She was wholly delighted when, after half an hour, she discovered that she "knew a lot" about economics. For instance, early in the year she had deposited some money in the savings bank so that she would have it ready for Christmas. She had just drawn it out and was gleefully telling how "This year's Christmas money comes as easy as finding it."

"But you denied yourself and saved it," I remarked.

"Yes, but that was months and months ago, so long that I have forgotten that part of it."

"But," I continued, "wait a minute; you did deny yourself and saved the money, even if it was months ago. How much did you save?"

"Two dollars," very promptly.

"That is, you denied yourself ten months ago and the self-denial went into the two dollars; is that right?"

"Yes, sure!"

"Then where has it been all these months?"

"Cold storage!" with a ripple of fun. It seemed so altogether jolly that she was not averse to learning Richard T. Ely's definition on the spot: "Money must serve as a store or receptacle of value." The definition lost all its schoolbook dreariness when she recognized that this was what made Treasure Island so exciting; the buried gold was keeping an immense value "in storage" and Long John Silver was determined to get it out!

We were moving on so capitally that I began to have real hope that the "average man" would not find the study so dismally dull as I at first had feared. I determined on a final venture.

"What is the value of your new coat?"

"Seventeen dollars," the bright girl answered.

"And your school hat?"

"Two dollars and a half."

"What is your class badge worth?"

"Three dollars."

"And your fountain pen ?"

"Two dollars."

"Now, why do you constantly say 'dollars'?" the examination continued. "Why not say your class badge is worth thirty quarts of milk, and your fountain pen is worth six dozen oranges and your hat is worth five pounds of candy?"

"Why, the idea! people couldn't carry all that stuff when they go shopping, it would be stupid— except a pound of the candy! The storekeepers wouldn't take it, anyway. But they do want money, and you can carry all the money you need right in your purse."

" 'Convenient,' is that the word ?"

"Of course money must be convenient." I said she was a bright girl.

"But did you not have a list of Christmas presents you wanted to buy?" I asked. "You wrote that list in your own room before you drew your money out of the bank. Why did you say these things would cost so much money when you had no money with you, and were not in the store at all, but just thinking about them in your own room?" I intended this for a poser.

"People must think of money when they think of things they would like," with a puzzled look.

"But why?"

"O, I don't know! If they didn't, they would never know how many things they could afford."

The kitten was arching its back for a romp, but I ventured one more: "Is it because money is the measure of value?" But the kitten had won out, and the bright girl was half way down the stairs. After all, it was hardly fair to make her sharpen my dull pencil, especially during vacation week. I excused myself on the specious ground that the bright girl needed a little private teaching in economics, but, as the problem simmered in my mind again, it became perfectly clear that it was I who had been taught. A young girl's naive answer to my economic "poser" had shot to the core of the economic definition of money.

"People must think of money when they think of things they would like."

They simply must, and that is the whole of it! Whether this ultimatum comes as the quick answer of an American schoolgirl or the weighty conclusion of a learned economist, it matters not at all. The fact is the vital thing. One illustration is as good as a thousand. A farmer sees a horse at the county fair which pleases him; he needs a horse and would like to possess this one. Inevitably the question comes, "What is it worth?" The farmer may have made up his own mind on that point, yet he asks the question in order that he may get the opinion of the "owner"; in any case the value of the horse, whether mentally judged or openly expressed, is always in terms of money: "It is worth two hundred dollars." Even if the farmer has in mind a "trade" without the use of money at all, and says, "I will give these two cows for your horse," nevertheless money is present in his mind. He is calculating, on the basis of an even trade, that if the horse is worth two hundred dollars the cows are worth one hundred dollars each. Money is as truly a part of the transaction as if the farmer counted out government bills for the horse and received them back again for the cows. He was making mental use of money in order to measure the comparative value of the horse and the two cows, just as he would make physical use of a surveyor's chain in order to measure the comparative area of two fields. It is always so. We cannot think of absolute value in an object, any more than we can think of absolute space in the universe; we must mentally measure it, or at least try to do so. This is why writers on economics maintain as an axiom that "Money is the measure of value." At first it seems like running round in a circle, for we immediately confront the question with which this chapter opens, "What is money?" But this need not give us a moment's pause, for, in its simplest sense, money is anything that will pass freely from hand to hand as a medium of exchange, or, in the words of the bright young girl, "to buy things with." The very poor in India use shells for their small transactions; in mining camps gold dust and nuggets are frequently employed; in early frontier days the pelts of otters, beavers, and other furry animals passed for money; and during the American Civil War leaf tobacco was good currency among the soldiers. Any useful or desirable article will answer for money in a community, at least temporarily, if the people will agree to accept it. Five pins "for admission" were perfectly good money in the days of our nursery concerts.

But for many reasons coins made of the precious metals, gold and silver, have been found to be best adapted for money, and all civilized nations now use these metals for their standard, with other metals, such as copper, for subsidiary use. In addition, governments and banks issue notes, or promises to pay, which most people are willing to receive in place of coins. In the popular sense—and we do not care to go further than this —these coins, legally minted, and these notes, properly issued, are "lawful money." It is this lawful money, dollars and cents, which is always the measure of value. Men must hold it in their minds for this purpose just as a cloth merchant holds a yardstick in his hand. "If they do not, they will never know how many things they can afford."

But the power to measure value goes far beyond the ability to purchase. Thus a poor man without money can accurately measure value to thousands and even millions of dollars. He can understand the worth of buildings and equipments, yachts and automobiles, coal mines and wheatfields, which he does not expect to possess. Alas, a man's power to measure value which he cannot "own" is the bitter tragedy of poverty!

The measurement of value is an unconscious habit. We have become so used to it that we are not aware of the process; but, if we are required suddenly to measure value with an unfamiliar system of money, we at once become conscious of what has been silently going on in the back part of our mind. Travelers have interesting and often costly experiences before they discover this. An American will make a purchase in London for "two pounds." But "two pounds" means nothing to him; he must work backward and think of "ten dollars," before he finds himself measuring, awkwardly enough, the "value" of his purchase. He makes another purchase in Paris for "forty francs," and is a little jarred to be spending so much money; then he remembers he is spending "only eight dollars" and is comforted. But it would have been well had he remained uncom forted. Americans traveling abroad are constantly making the mistake of measuring "foreign value" by means of "home money," a thing manifestly difficult if not impossible. If an American will live abroad long enough to get his "measurements" and his "values" adjusted to each other, he will find that forty francs mean full forty francs—if not a little more!

This, then, is the principal use of money—to measure value. Even without money we could still "barter." Gold and silver, though unminted into coins, and all the precious gems, could be universally used, as they are still used in the Orient, as a "storehouse" of value. But money has higher uses in a nation's life. Banks are something more than safety deposit vaults; they are authorized public stations where values of all kinds can be measured and registered. The Secretary of the United States Treasury needs other qualifications for his high office than blunt honesty and a good understanding of combination locks; he must be an expert in determining whether or not the authorized currency of the country is accurately "geared" to the value of crops and manufactures and commerce, for money must measure the value of them all. Without money there could be no widely accepted standard, no measuring instrument, which all the people could use in building up the colossal fabric of a nation's life. It would be like building a cathedral without plummet, line, or square.