Money is one of those terms which political economists have borrowed from popular speech and found ill-adapted to their purposes. In spite of numerous attempts to make a suitable definition, it still lacks the precision and definiteness of meaning which should characterize scientific terminology. Popular usage is tolerably consistent and clear, but fails to include under the term all the instrumentalities which belong together in any scientific treatment of the subject, and political economists are not agreed regarding the point to which the popular meaning of the term should be extended. Even if these difficulties were removed, however, one not easy to overcome would still remain. All are agreed that under the head money we must include both the standard of value and the medium of exchange, two instrumentalities which perform very different functions, and the distinction between which is apt to be minimized, if not entirely overlooked, when an attempt is made to include them under one definition.

In order to avoid this difficulty and to promote clearness of thinking, we shall discuss first of all the functions of the standard of value and the medium of exchange, and, so far as possible, defer the use of the term money until the student is prepared to form an independent judgment regarding the meaning which ought to be attached to it.