Modern Economic Problems / Economics Volume II

when the ratio between the value of money and the price of the goods which each individual is purchasing becomes the same as before. The money being doubled, prices must be doubled, and likewise for any other change in quantity.

general expression of purchasing power, and comes to symbolize all other wealth, it often assumes undue and exaggerated importance in men's eyes. Money is but one of many forms of wealth. It constitutes but a small percentage of the total wealth of a country, and it is far from being the most indispensable to human welfare. Yet its importance, as a whole, in determining the form of industrial organization is enormous. In a society without money, industrial processes would be very different, and trade would be hampered in manifold ways.

A man takes it not to get enjoyment out of it directly,

But among all the kinds, in each country some one kind is found standing preëminent and in a peculiar position, as the standard money to which the value of all the other kinds of money is in some manner adjusted.

The standard usually is a quantity of metal of a certain weight and fineness

§ 2. #Alternative uses of the money-good.# Let us consider the problem of money-value as it would present itself if only one kind of commodity money were in use.

circulation of money differ greatly.[7]

purchases on credit, running accounts at the stores for a month. Then on pay day he spends his entire month's wages the day he receives it, and goes without money for the rest of the month. His average monetary demand throughout the month would then be about equal to one day's wages. Evidently any person's cash reserve may be expressed as that proportion of his income that is to him of more value retained in

The actual money in use in almost every country to-day consists of a wide and confusing variety: gold, silver, nickel, copper, paper in various forms, issued by various authorities under various conditions as to amount and as to seigniorage.

but also those of all agencies such as mer