Token (currency)

“ Their defects are their weight, their intrinsic value as commodities.”—Social Science and National Economy, by R. E. Thompson, Philadelphia, 1875.
“The moment it is perceived that money is nothing but a token, it becomes evident that any token currently accepted in exchange of useful services and products of labor will perform the proper functions of money without regard to the material of which it is made; and that the less costly the material out of which money is made, the better for the community that uses it.”—Money, Currency, and Banking, by Charles Moran, New York, 1875, p. ”

“ The adjustment of the monetary circulation to the needs of trade has given rise to composite money systems, in which, whatever may be the standard, gold, silver, and paper are usually combined. Under a single gold standard paper is generally used for larger payments, while silver is used for the smaller. Both are representative money in such cases. Silver is issued as token coinage. A token coin is one whose bullion value is less than its face value and whose legal power to pay debts is limited. ”

“ It would simplify this matter very much if all would agree to call coin, or money having value as merchandise, money, and paper, or representative money, currency, or notes. It is plain that the representative money is that which must be and is principally used in this country and in all commercial countries. Coin money derives its real value in exchange, and as a measure for the exchangeable value of other products, from the fact that it costs labor to produce it; and, although government laws may foolishly try to make it pass for more than its cost value, they never succeed in doing so. ”

“ At first the thought of the great stake for which she was playing in terms of currency, with the head of Jim’s father on every note, was much with her. The amazing nature of the offer of five millions of dollars stimulated her imagination, roused her; gold coins are counters in the game of success, signs and tokens. Money alone could not have lured her ”

“ Coins, being in fact merchandise, will follow the same rules of exchange, and will be attracted to those parts where they bear a greater exchangeable or market value. The actual value of a coin in currency must be that of its intrinsic value ”

“ If the cheaper coin is forced into circulation, it will, if coined without limit, soon become the sole standard of value, and thus defeat the desired object, which is a currency of both gold and silver which shall be of equivalent value, dollar for dollar, with the universally recognized money of the world. ”

“ This can only mean 26that impressions of his signet on clay, or some other substance, were put into circulation as representatives of value, and so received by the sellers. It is in the impression of a seal or stamp upon a piece of gold or other metal that we have the origin of coined money.
The study of the early history of coined money is a most curious one. Rude peoples pass from barter to the use of metallic currency; and the most general article of wealth is taken as the standard to which, either as a multiple or a fraction, all other possessions are adjusted. ”

“ Coin is an universal sign of wealth, and will procure it every where. It will bear any alarm, and stand any shock.—On the contrary. Paper, owing its currency to opinion, has only a local and imaginary value. It can stand no shock. It is destroyed by the approach of danger; or even the suspicion of danger.
In short. Coin is the basis of our paper-credit; and were it either all destroyed, or were only the quantity of it reduced beyond a certain limit, the paper circulation of the kingdom would sink at once. ”

“ In speaking of coinage hitherto, the standard of value has been assumed to be the most important, but in fact a large proportion of our coin serves simply as currency without materially affecting the standard of value. ”

“ In Anglo-Saxon and mediæval times the want of small coins—that is, a currency representing a small value—was much felt, and this gave rise to the occasional issue of spurious, or rather base, coins to supply the deficiency, as it was found the smaller pieces—for instance, the pennies when broken up for use as halfpence and farthings—were unfit for general use among the rough-handed population. ”

“ When the gold or silver has all gone from circulation, and an equal quantity of paper has taken its place, suppose that a still further issue is superadded. The same series of phenomena recommences: prices rise, among the rest the prices of gold and silver articles, and it becomes an object as before to procure coin in order to convert it into bullion. There is no longer any coin in circulation; but if the paper currency is convertible, coin may still be obtained from the issuers, in exchange for notes. ”

“ When, however, new money, composed of some substance of supposed intrinsic value (as of gold) , is brought into the market, or when new notes are issued which are supposed to be deserving of credit, the desire to obtain the money will, under certain circumstances, stimulate industry: an additional quantity of wealth is immediately produced, and if this be in proportion to the new claims advanced, the value of the existing currency is undepreciated. ”

“ On this occasion I addressed a letter to a noble Lord, who was then Chancellor of the Exchequer, suggesting what appeared to me the proper remedy for this evil. I proposed that, with a view to the general [Pg 234] reform of the coins of the realm, all the deficient gold coins should in the first place be called in and recoined, and that in future the currency of the gold coin should be regulated by weight as well as by tale, and that the several pieces should not be legal tender if diminished below a certain weight. ”

“ Debts of 4 cents can be legally paid in one-cent pieces, of 60 cents in three-cent pieces, of 100 cents in five-cent pieces, of 500 cents in subsidiary silver, and of any amount in gold coins or in silver dollars.
12. A money inferior in general value will, so long as it circulates locally, drive a superior money out of the circulation. This proposition is a fundamental and universal one in monetary Science. The only exception to it is found in token-coins, and in subsidiary silver so far as that has the token-quality, that is, so far as its nominal is above its bullion Value. ”

“ The value of money in any country is determined by the amount existing.... The commodities would rise or fall in price in proportion to the increase or diminution of money. I assume that as a fact that is incontrovertible. However debased a coinage may become, it will preserve its mint value.... A well-regulated paper currency is so great an improvement in commerce that I should greatly regret if prejudice should induce us to return to a system of less utility.... ”

“ A bill of exchange in a silver country drawn on a gold country is nothing but the amount of silver coins of the one nation which must be given to buy a stated sum of gold coins of the other nation. The silver bill varies relatively to gold coins in proportion to the changes in the value of silver bullion relatively to gold—unless the silver coins, under the laws of token-money, are kept at an artificial value, above the market value of the silver bullion in them, by some method, more or less direct, of redemption in gold. ”

“ And similarly, if all property were to be admitted to competition with gold in the matter of representation in the currency, it is possible that the same amount of gold would still be used as money, but its value would decrease notably,—would fall, that is to say, from its abnormal, artificial, government-created value, to its normal, natural, open-market value. ”

“ It has uniformly recognized in its fiscal affairs the distinction in value between paper currency and coin. Some of its loans are made payable specifically in coin, whilst others are payable generally in lawful money. It goes frequently into the money market, and at one time buys coin with currency, and at another time sells coin for currency. In its transactions it every day issues its checks, bills, and obligations, some of which are payable in gold, while others are payable simply in dollars. And it keeps its accounts of coin and currency distinct and separate. ”

“ Under cognisability we may properly include what has been aptly called impressibility, namely, the capability of a substance to receive such an impression, seal, or design, as shall establish its character as current money of certain value. We might more simply say, that the material of money should be coinable, so that a portion, being once issued according to proper regulations with the impress of the state, may be known to all as good and legal currency, equal in weight, size, and value to all similarly marked currency.... ”

“ We will have the United States notes, the bank notes, and coin certificates, both gold and silver, together with the gold and silver itself, all in circulation. The actual amount of currency in circulation, I think, will be as large in specie times as now, and its equality and convertibility will rather increase than prevent the circulation of either. The depreciation of paper money is not necessarily caused solely by its excess, but by the uncertainty of its value and confidence in its redemption. ”

“ If the currency system of England had been of silver alone, a single enactment lessening the content of the unit coin, or crying up its denomination, would have stopped any outflow caused by under-valuation as compared with foreign money value. ”

“ Currency is a word much more comprehensive than the word money, as it may include bank bills and even bills of exchange as well as coins of gold and silver, but the word money, as employed in the grant of power under consideration, means the coins of gold and silver, fabricated and stamped as required by law, which, by virtue of their intrinsic value, as universally acknowledged, and their official origin, become the medium of exchange and the standard by which all other values are expressed and discharged. ”

“ The first and most obvious method of attaining the object is to issue a paper currency which shall be redeemable, not in gold dollars of fixed weight, but in such quantities of gold and silver bullion as shall suffice to make the required purchases. ”

“ The best illustration would probably be given by the writings of Thomas Tooke (1774-1858) , [390] [Pg 236] one of the founders of the Political Economy Club. The History of Prices is an admirable explanation of phenomena which had given rise to the wildest theories. The many oscillations of trade and finance during the great struggle, the distress which had followed the peace, had bewildered hasty reasoners. Some people, of course, found consolation in attributing everything to the mysterious action of the currency ”

“ The value of an irredeemable paper currency constantly fluctuates. The importer of goods, the merchant, the manufacturer, when offering their articles for sale, first add to the price, at which they would sell under specie payments, the premium on gold. But they know also that they run the risk of the fluctuation and possible depreciation of the paper money they get for their goods, so that, if they sell on time, the sum of paper money they receive in payment, when the purchaser pays his note, may not represent the same gold value which the same nominal sum represented when the sale was made. ”

“ A standard currency is the fundamental principle of public finance, and various countries have adopted a gold coin as their unit of value, with the subsidiary currency of silver and copper tokens. Under well-framed regulations such currencies have been found convenient and profitable. ”

“ Even gold and silver are too costly for small currency. A silver penny now weighs 7-1/4 grains, and a gold penny would weigh only half a grain. The pretty octagonal quarter-dollar tokens circulated in California are the smallest gold coins I have seen, weighing less than four grains each, and are so thin that they can almost be blown away. ”

“ We see then, that the value of gold is determined in precisely the same manner as that of any other commodity, according to the equation between supply and demand."
In the consideration of this doctrine, let us note several points in which it differs fundamentally from the quantity theory proper, and from the situation assumed in the dodo-bone illustration. First, it is not a quantity theory of [Pg 326] money. Money is not regarded as a homogeneous thing, each element having the same influence on prices. Rather, token money is the child of prices. ”

“ Had gold been destroyed as primary money by the same nations, and silver made the standard, we could have had gold in the form of token money to-day, worth, say, fifty cents on the dollar as measured in silver. ”

“ While gold coin apparently represents the value of commodities only in so far as that value is itself estimated in gold or is expressed in price, the token of value seems to represent directly the value of commodities. It is, therefore, clear why students who examined one-sidedly the phenomena of circulation of money by confining their observations to the circulation of legal tender paper money, should have failed to grasp the intrinsic laws governing the circulation of money. ”

“ It is generally well understood that it is for the advantage24 of the nation that the unrepresented paper issues should be carried as far as is compatible with their perfect convertibility and security. Every note issued in lieu of gold is obviously equivalent to the creation of so much additional capital; for as it withdraws a gold coin from circulation it enables that coin to become capital, while the note itself discharges the functions of a medium of exchange as efficiently as the coin for which it has been substituted. ”