On the Origin of Money

Publisher Summary This chapter discusses the origin of money. Money is used as a token in trade to reassure traders in such a sequence that they are not making an egregiously bad deal. This leads to an alternate line of investigation, recognition that a theory of a medium of exchange is inter alia a theory of the liquidity or saleability of commodities. In primitive traffic, the economic man is awaking but very gradually to an understanding of the economic advantages to be gained by exploitation of existing opportunities of exchange. Under such conditions each man is intent to get by way of exchange just such goods as he directly needs, and to reject those of which he has no need at all, or with which he is already sufficiently provided. Thus, equipped he has the prospect of acquiring such goods as he finally wishes to obtain, not only with greater ease and security, but also by reason of the steadier and more prevailing demand for his own commodities, at prices corresponding to the general economic situation—at economic prices.