2. But what is the foundation of this voluntary agreement to take money? A seller cannot part with his property in exchange for money which is useless to him unless it furnishes him with a guarantee that in the end he shall procure by its means as much property as he gave away. How does money supply him with such a guarantee? By the value of the metal, as a commodity, in the metal market, of which the money, the coin, is composed. The coin places in the hands of a tailor a portion of metal which is worth to a goldsmith as much as a coat is to the tailor. The one function of the tool of exchange is to give to a seller a guarantee, a thoroughly trustworthy security, that he shall get by a second purchase all that he gave away on the first. This is as truly, as essentially, the work of money as to cut is the work of a knife. This work is performed by giving value for value, and it is precisely because he gets value for value that a seller parts with his property without hesitation. He knows that the same feeling will act on every other trader; with metallic currency, with coin, every one has a complete assurance that he gets in money a commodity worth that which he is selling.
The convenience of having a common tool to serve as a medium of exchange is overwhelming; every shopkeeper will take the coin, because every one in succession is exchanging equal property for property. It is the value of the gold in the metal market which enables the tool of exchange to command equal goods in every shop. Double barter, the hat exchanged for money, and the money in turn exchanged for shoes, thus effects one exchange, a hat for shoes, by the agency of two half-transactions: such is the action of money.
But many deny the accuracy of this analysis. It is the coining, they say, the stamp impressed on the money, which gives it its value. The worth, the buying power of a sovereign, they insist, is settled by the stamp. The Mint coins an ounce of gold into £$, 17s. io^d. Here is the definition of a pound, and a pound is the meaning and worth of a sovereign. The absurdity of these assertions is so ludicrous that it would scarcely be worth the trouble to refute them, were it not for the obstinate tenacity with which so many persons cling to them, to the consequent confusion of all ideas on currency. If the stamp gave value to the coin, the same stamp on a piece of copper would bestow on it equal value with a golden sovereign, and the decree of the Mint would enable it to buy an equal quantity of goods in the shops-which, in the language of Euclid, "is absurd." If a copper coin could be obtained from the miners only at the same cost with a gold one, they both would be equally valuable; but it cannot, and so the gold smith will give a vast deal more for the gold coin than the coppersmith will for the copper one; and that is the very reason why every seller will give many more goods for the one than he will for the other. That money is a commodity, and acts by virtue of being a commodity, was clearly perceived by Aristotle. "Men agreed," he remarks, "for exchanging to give and take one of the useful things," that is, a commodity, and consequently a commodity has ever been the instrument of buying, the tool of exchange. In one country furs, in ancient times cattle, sometimes rock-salt; at this day, amongst the Tartars, small cubes of compressed tea, most frequently some metal. Aristotle's dictum is abundantly verified at the present hour, in the case of English money, for sovereigns which foreigners have purchased with their goods are constantly melted down abroad into ingots - a proceeding which could not possibly take place if the stamped sovereign were worth more than the gold it contains. It is the intrinsic value of the metal, its cost as a commodity, which does all the work of a coin.
The absurdity of the notion that the Mint, by coining sovereigns, assigns to them their value, is refuted at once by the remark that when gold was some fifteen times dearer than it is now - that is, when a quantity of other commodities fifteen times larger had to be given to the miner to persuade him to dig the same quantity of gold out of the earth - the same coin purchased fifteen times as many other goods as it would now. Prices were then fifteen times lower in nominal amount. A buyer puts his own value on his money quite as really as the seller does upon his goods. Each party values for himself his own commodity in the act of barter called a purchase. Those who bring in the Mint as a regulator of price have no conception of the answer to be made to Sir Robert Peel's famous question, "What is a pound?" The answer, no doubt, is furnished by the Mint, not in value, but in quantity. The Mint replies by setting an arithmetical sum. Given that 20 shillings make a pound and 12 pence a shilling, it de clares that a pound is that part of an ounce of gold which will produce pound3, 17s. 10 1/2d. for the whole ounce; in other words, it proclaims that in law and fact a pound is so many carats weight of gold. These carats are contained in the current coin called a sovereign; so that a pound is another name for a sovereign. Whenever a pound comes before a court of law, it will compel a sovereign to be given for a pound. Not a trace of value is contained in the expression.
3. The Mint imposes a stamp on the coin; for what purpose? To give information; to make known, on the word of the Government, that the coined sovereign handled is made of standard gold and possesses in full the prescribed weight. In the words, again, of Aristotle, "impressing a stamp on the money, to relieve men of the trouble of measuring it."As Mr Adams has well phrased it, "to save every man the trouble of carrying about with him a bottle of acid and a pair of scales." Ingots have to be tested before they are received in payment; a stamped sovereign or dollar tells every one what it is. Nothing can be more obvious than this fact; yet how many, even intelligent men, have been puzzled to say what the stamp it bears does for a sovereign.