Medium of exchange

“ It is manifest that a medium of exchange is absolutely necessary to all trade beyond barter. A standard of value is highly desirable, but perhaps this is as much as can be safely asserted on that question. ”

“ As a medium of exchange, money has to be continually handed about, and it will occasion great trouble if every person receiving currency has to scrutinize, weigh, and test it. If it requires any skill to discriminate good money from bad, poor ignorant people are sure to be imposed upon. Hence the medium of exchange should have certain distinct marks which nobody can mistake. ”

“ If what is used as a medium of exchange is fluctuating in its value, it is no better than unjust weights and measures, both of which are condemned by the law of God and man; and, therefore, the longest and most universal custom could never make the use of such a medium either lawful or reasonable. ”

“ The medium of exchange function would exist in a society where business goes always in accustomed grooves, where uncertainty is banished, and where most of the assumptions [Pg 426] of static economic theory are realized. If we push static assumptions to the limit, and assume "friction" of all sort gone, assume that all goods can flow without trouble or expense to the places and persons where their values are highest, etc., even the medium of exchange function would disappear. ”

“ We cannot too strictly represent to ourselves the operation of exchange, whether conducted by barter or through the medium of money, as the mere mechanism by which each person transforms the remuneration of his labour or of his capital into the particular shape in which it is most convenient to him to possess it ”

“ Money imported on two modes; as a Commodity, and as a medium of Exchange. The degree of progress which we have now made in the theory of foreign trade puts it in our power to supply what was previously deficient in our view of the theory of money ”

“ Traders in such countries contrive to accumulate a variety of things needed by all sorts of people, that they may be ready with some kind of exchange to meet particular wants. No community, however, begins to reap the clear advantages of exchange until some universally acceptable medium of exchange is discovered and accepted. The process of developing this medium is essentially the same as that described in establishing a standard of value; and so the word money naturally represents both the standard of value and the common currency of trade. ”

“ It is evident that it is to be distinguished from the economic function of money as a circulating medium. The intragroup money needs to be especially a measure and store of value, while the intergroup money needs to be a medium of exchange. ”

“ The negotiable instrument, usually of small size but often representing a large sum of money, is used in the commerce of the world as a medium of exchange, in place of heavy and bulky coin or valuable bank notes which when lost or stolen can be passed as currency. ”

“ No one, as a rule, can live and flourish by consuming exactly what he produces and nothing else. He must use his share in what he produces as purchasing-power to secure whatever best satisfies his own wants. Money is the lubricant which facilitates this; in a word, it is the medium of exchange.
Definition of value. Value and Price.—Exchange takes place on a basis of relative values. He who sells goods or services receives something of assumed equal value in return. ”

“ Exchange constitutes an important division of the science of economics, but its social causes and effects are of even greater consequence. Exchange is dependent upon the diffusion of information, the expansion of interests, and growing confidence between those who effect a transaction. When mutual wants are few it is possible to carry on business by means of barter; when trade increases money becomes a necessary medium ”

“ Now, if an exchange could be always made and completed on the spot, each party giving and receiving an equivalent in labour or the product of labour, the whole problem of exchanges would be solved by this simple method, and there would be no necessity for a circulating medium, or for anything to perform the part which is performed by money in our existing commerce. ”

“ For that reason the money side of the equation is of course greater than the total amount of money in circulation.
II.19 The equation of exchange relates to all the purchases made by money in a certain community during a certain time. We shall continue to ignore checks or any circulating medium not money. We shall also ignore foreign trade and thus restrict ourselves to trade within a hypothetical community. ”

“ In modern societies, where the business of production is carried on to meet the demands of the market, for exchange, these use values appear as exchange values. Exchange value is the proportion in which use values of different kinds exchange for each other. ”

“ There is always this psychological, or, if you will, artistic element in exchange.
In pure Economics exchange is exactly balanced by the respective advantages of the exchangers; just as in pure dynamics you have the parallelogram of forces. ”

“ When it is remembered that in its origin money is only an instrument to facilitate exchange—we might even say to render it possible—it follows that from its earliest to its latest form the ruling influence is the need of society for the best mechanism of exchange. ”

“ But precisely on this ground do we hold the view that the current mode of reckoning in economy by exchange-value is not a dictum of the market, but, in spite of many peculiarities conditioned by the market, a dictum of economy itself. ”

“ Money, as we know it, has not yet been invented, and nearly all the trade is done by means of exchange. When it comes to be a question of how many fish have to be given for a bed, or whether a load of onions is good value for a chair, you can imagine that there has to be a good deal of argument. ”

“ In a refined state of society, when money represents the value of the exchanges, the exchange between the abundance beyond the wants of [Pg 15] the possessor of one commodity and of another is just as real as the barter of wheat for wine. ”

“ If exchange value is nothing but mere labor-time contained in commodities, how can commodities which contain no labor possess exchange-value, or in other words, whence the exchange value of mere forces of nature? ”

“ Other causes of less importance—‌interest and profits on American capital invested in Europe, for instance—‌are responsible for the existence of some quantity of exchange, but the great bulk of it originates from one of the four sources above set forth. ”

“ Thus, while commodities become use-values to each other in the process of exchange by casting off all definite forms and entering into mutual relations in their direct material shape, they must assume a new form, viz., proceed to the formation of money in order to appear as exchange values to each other. ”

“ The relations of commodities to one another remain unaltered by money: the only new relation introduced, is their relation to money itself; how much or how little money they will exchange for; in other words, how the Exchange Value of money itself is determined. ”

“ The same piece of money which is paid in one exchange to-day, may be paid in another exchange tomorrow. Some of the pieces will be employed in a great many exchanges, some in very few, and some, which happen to be hoarded, in none at all. ”

“ And, as the number of people who want things of all sorts must manifestly be greater than the number of people who want the particular thing, whatever it may be that we have to exchange, any difficulty there may be in making our exchange will generally attend the first part of it; for, in exchanging anything for money, I must find some one who wants my particular thing, while in exchanging money for a commodity, any one who wants any commodity or service will be willing to take my money. ”

“ Throughout his life he maintained the 'predominance of exchange,' exposed the 'tricks of the exchangers,' and urged that exchanges should be settled on the principle of 'par pro pan, value for value.' Naturally, therefore, he sought to revive the staple system, and appealed to the government to put down the exchangers. ”

“ That its real utility is not in changing commodities for money, but in facilitating the change of commodities for commodities. "The fact is, that all trade in the last analysis is simply what it is in its primitive form of barter, the exchange of commodities for commodities. ”

“ In like manner are languages gradually established by human conventions without any promise. In like manner do gold and silver become the common measures of exchange, and are esteemed sufficient payment for what is of a hundred times their value. ”

“ Bankers who do a foreign exchange business, keeping large balances in several European centers, are continually drawing and selling their demand drafts—‌"checks," they are called, or "demand"—‌upon these foreign balances. ”

“ Under this head, we shall have to examine the laws of currency and exchange; of which I will note here the first principles.
Money has been inaccurately spoken of as merely a means of exchange. But it is far more than this. It is a documentary expression of legal claim. It is not wealth, but a documentary claim to wealth, being the sign of the relative quantities of it, or of the labour producing it, to which, at a given time, persons, or societies, are entitled. ”

“ But the word "exchange" as usually employed means an exchange of goods between persons. It is objective exchange, and when the word is used without modification, it is to be understood in the objective sense. ”

“ P. deposits his pot, and waits awhile, there will come out two pots, both full of broth; and if Mr. K. deposits his kettle, and waits awhile, there will come out two kettles, both full of fish! That is the principle of Interest.
However, for the present, observe simply the conclusion of our social science expositor, that “the art of exchange is the only proper mode of obtaining things from one another;” ”

“ To throw away contemptuously the equation of exchange because it is so obviously true is to neglect the chance to formulate for economic science some of the most important and exact laws of which it is capable. ”

“ The value of our analysis consists rather in simplifying the problem by setting forth clearly the five proximate causes through which all others whatsoever must operate. At the close of our study, as at the beginning, stands forth the equation of exchange as the great determinant of the purchasing power of money. ”

“ Let us suppose a people shut out from external relations. A man, we shall suppose, produces wheat. He sends it to the home market, and offers it for the highest price he can obtain. He receives in exchange—what? ”

“ The purpose of this chapter is to show how, starting from the general nature of wants and the nature of goods, we can arrive at an explanation of the exchange of goods. Recognizing the simple but fundamental fact stated at the opening of this paragraph, an exchange may be seen to be a rational and a logical result when men are living together in society. ”

“ Touching the standard of the English money, that you complain of is kept low by reason of the free exchange, we can say nothing but that our exchanges are made with a mutual consent between merchant and merchant, and that the abundance of the deliverers or of the takers make the exchange rise or fall ”

“ In our opinion exchange properly speaking,—true exchange and free from the alloy of any foreign element whatsoever, has never been anything but barter; and as soon as the system of barter was left and that of money entered upon, the exchange system was rather abandoned for another system quite different, than that one form of exchange was simply substituted for another form of exchange. ”

“ But we must not overlook another factor in the foreign exchange history. A new element has arisen as a gold-producer in late years, and the importance of this new factor in the science of foreign exchanges is neither generallv recognised nor acknowledged. ”

“ By universal and free exchange,--that is, by each person being permitted to exchange what he wants least for what he wants most,--an absolutely perfect system of economy of resources is established; the whole world being included in the arrangement. ”

“ There is, indeed, a good deal to be said for the view that the conception of general exchange value could never have been formed without the previous existence of money; it has certainly support from the evidence of competent observers respecting the methods of exchange followed by savage communities. ”