Having traced briefly the history of the commerce of different nations and times, we shall now proceed to consider the nature and uses of one of the most important instruments of commerce, viz., money.

Under a republican form of government, where every citizen is interested as a factor in making the laws, either directly or indirectly, it is of prime importance that the subject of money should be understood. Under a clever play of words, politicians often deceive the masses and lead them into dangerous fallacies upon this subject, the result of which may be financial legislation of the most serious and perhaps disastrous character. Nothing which Congress can do will so directly and vitally affect the interests of the people for their welfare and happiness, or their discouragement and misery, as legislation upon this point, and likewise when questions of monetary policy arise in the executive branch of our government, the policy pursued by the president is of vital importance to the people. If, for instance, owing to changes in our financial policy there is a general rise in prices, debtors will gain at the expense of creditors; a tenant with a long lease at a fixed rental will gain at the expense of the landlord, and vice versa. Thus one class will receive greater benefit and advantage from the general wealth and prosperity of the country than another.

Importance of an Understanding of the Subject

The immense power for evil which may be caused by a government changing the currency is aptly described by Lord Macaulay when he refers to the condition of affairs in England at the close of the 16th century, when the currency was debased by Henry VIII and Edward VI. He says: "It may be doubted whether all the misery which has been inflicted on the nation in a quarter of a century by bad kings, bad parliaments and bad judges was equal to the misery caused in a single year by bad crowns and bad shillings. The evil was felt daily and almost hourly in almost every place and by almost every class." A similar state of affairs existed in France after the Revolution, when the constitutional government flooded the country with irredeemable paper money. "What the bigotry of Louis XIV and the shiftlessness of Louis XV could not do in nearly a century was accomplished by thus tampering with the currency in a few months. Commerce was dead - betting took its place." Thus we see the importance of universal enlightenment upon this subject of money, if we would protect ourselves from the evils which result from ignorance.

Man in his primitive and barbarous condition lived upon the spontaneous production of the ground. Advancing a little in the scale of civilization, he made a few rude implements such as a bow and arrow, a spear and fish-hook by which he was able to better supply his wants. Thus far his individual needs were supplied by his own efforts or those of other members of his family or tribe, but as he advances a little higher in the scale of intelligence and his wants increase he learns that it is an advantage to exchange the products of his labor for those products of the labor of others which he does not possess. The hunter exchanges a carcass of meat or a skin, the product of the chase, for a bag of corn; the herdsman exchanges with the carpenter, the tailor with the fisherman, etc. This is called barter. This is the beginning of commerce.

Money.

Effects of Changes in the Currency

Man in the Lowest Civilization Barter

Medium Of Exchange.

Here is the commencement of "division of labor," that principle which has produced such a high degree of efficiency in the arts and sciences of our time. But observe the disadvantage of the system. The herdsman may have sheep to exchange for a coat, but the tailor may not need sheep, while the carpenter may need sheep, but the herdsman may not require the services of the carpenter, and thus the difficulty would always be to find a person willing to make the desired exchange. In the early stages of society when wants are few and simple the difficulties may be overcome, but as man progresses and his wants multiply, it becomes increasingly difficult for the members of the community to make satisfactory exchanges.

From the foregoing we see that exchange is a necessity of civilized life and in order to effect exchanges to any considerable extent a "medium of exchange" (money) is necessary. The earliest form of money was probably the skins of fur bearing animals, and these are still used as a medium of exchange among the Indians in the far northern part of North America. Dried fish, shells and beads were used as money by other Indian tribes. The early Greeks and Romans used cattle and wine as money. Our own history in colonial times furnishes numerous examples of various articles having been used as money, among which may be mentioned tobacco in Virginia and Maryland and corn in Massachusetts. The Pilgrim fathers found the aborigines using wampum as both an article of adornment and a medium of exchange throughout New England. It was a kind of bead made from a species of shell found in sea water. These beads were of different sizes and colors, and their value was correspondingly different. This species of money was an important factor in the early civilization of New England. It brought the furs from the north and west to the Massachusetts colonists and they in turn exchanged these for sugar, tools and other commodities with the English and Dutch traders. During the early settlement of California by the gold seekers of '49, gold dust by weight was used as a medium of exchange.

Rising higher in the scale of civilization, we see the importance of having a better medium of exchange. It must be a commodity with great value in small compass. It must be something in universal demand, so that it will circulate widely; it must be something that is durable and will not suffer from decay or rust when stored or from wear when in use; it must be something that is divisible so that a great variety of denominations may be made for use in the multitude of exchanges large and small. All of these qualities point at once to the precious metals as the most suitable articles to constitute the money of civilized man. Gold and silver are sufficiently rare to embrace great value in small space; they are distributed over the entire globe, like the human race, and their quality is always the same wherever found. Besides, they are metals which can be readily used for other purposes than for coinage, in case there should be a temporary overproduction of them, so that their purchasing power may be said to be more uniform and universal than that of any other commodity. They are practically indestructible, being capable of resisting rust, and when combined with an alloy of harder metal, suffer little from abrasion. Gold may be refined, and alloyed, united and divided, with absolutely no loss whatever of the pure metal. Silver suffers a very slight loss under such treatment. It was soon discovered, too, that to reduce the wear and tear to the minimum the most convenient form in which the metals could be coined for use as money was round with flat sides to receive the inscription or stamp of value and milled edges to prevent clipping.