Money serves also as a standard of value. It is a common denominator to which all other values may be reduced. We speak of wheat as being worth two dollars a bushel, meaning thereby that two dollars exchange for a bushel of wheat. Similarly we speak of corn being worth a dollar a bushel, oats fifty cents a bushel, and eggs twenty-five cents a dozen. Here we have but four facts to remember, the prices of the four commodities under consideration expressed in a money unit. Without the use of money the number of relative values possible to express among the four commodities would be as follows:

One bushel of wheat =

two bushels of corn

= four bushels of oats = eight dozen eggs.

One bushel of corn

= two bushels of oats = four dozen eggs.

One bushel of oats = two dozen eggs.

Expressed in the form of a ratio the relative values to remember would be:

Wheat: corn:: 2:1.

Wheat: oats:: 4:1. Corn : oats:: 2: 1.

Wheat: eggs:: 8:1. Corn: eggs:: 4: 1. Oats : eggs:: 2:1.

Thus it is to be seen that there are six barter relations, whereas but four appear when money is used. As the number of commodities increases, the advantage of employing a money unit becomes more evident: ten different commodities, having a total of ten different values expressed in money, have forty-five relative values when expressed in terms of each other.

One of the curious things about a money unit is that the unit itself does not necessarily have to exist. The money unit of the United States is the gold dollar (23.22 grains of fine gold), yet at the present time the government does not coin gold dollars. Furthermore, prices would not differ in the least from what they are, had no gold dollars ever been minted. Thus, the disappearance of every gold dollar in existence would affect not in the least the money unit of the United States.