that the metals were best fitted to serve as a medium of exchange. Metallic money in some form was used at a very remote time in the world's history. Recent excavations in Egypt, Greece, Babylon and elsewhere have brought to light coins that were in use among these ancient peoples. It appears that at first the baser metals, like iron, tin and bronze, were used. Ancient Greek and Latin writers mention lead as having been used as currency. In this country the Massachusetts settlers used lead bullets for change, at the rate of a farthing each. In the days of the Roman Emperors, series of tin coins were issued, and tin halfpence and farthings were used in England as late as 1691. Copper has been used as money in all ages. The early Hebrews used copper coins chiefly, and the Roman coins were made of copper until displaced by silver. Because of its low and fluctuating value, however, it is unfitted for money, except in coins of small denominations. Nickel is used at the present time as an alloy with other metals. Belgium, Germany and the United States use it in their coinage. One objection to it is the wide fluctuation in the price of the crude nickel. Platinum, one of the comparatively rare metals, found principally in the Ural Mountains, has been experimented with by Russia. It possesses great density and durability and it is slow to tarnish. few years' experience with it, however, led the Russian government to abandon its use as money. Because of its relative scarcity the value of the metal is unstable; furthermore, the cost of making the coins is very high, owing to the extremely high point at which platinum melts.

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Gradually, as the standard of life and the level of prices rose and a more valuable unit came to be needed, the cheaper and heavier metals were displaced by silver and gold, which are in use as money to-day in every civilized nation in the world. Gold does not admit of division into coins small enough for pocket change, so silver and some of the baser metals, like nickel and copper, are used in coins of small denominations. A consideration of the qualities which a good medium of exchange should possess will

show why gold has been adopted as standard money practically all over the world.

7. Qualities of a good medium of exchange.-The first requisite in any commodity which is to serve as money is that it shall be something in unfailing demand, something having wide acceptability. It must exist in sufficiently large quantities to meet the needs of exchange or trade, yet not so abundantly as to lose its desirability. Money should be durable so that it will not lose its exchange power through decay or deterioration. The notes issued against tobacco in Virginia could not be kept safely for more than a year owing to the deterioration in the value of the stored tobacco. The commodity to serve as money must admit of division into small units in order that it may be used in transactions involving small amounts. Many commodities of varying values are constantly being offered in exchange for money. It must be able to accommodate itself equally to the purchase of a paper of pins and of a horse. The medium of exchange should be homogeneous or uniform, that is, all parts or units of it should have uniform value. It should also be portable; it should have large value in small bulk so that considerable amounts of it can be carried conveniently from place to place. The lack of this quality of portability was one of the chief drawbacks to the use of the beaver pelts of New England and the tobacco money of Virginia. There was a difference of as much as ten shillings per hundredweight in the value of tobacco notes, according to the location of the warehouse where the tobacco was stored. Another requisite of a good medium of exchange is cognizability. It must be something that is easily recognized by its color, form, weight, or other distinctive qualities. Metal coins which can be stamped or certified as containing a certain weight of metal of a certain fineness meet this requirement fairly well. Originally gold and silver coins passed by weight, but the stamping of coins with their money value saves weighing and examination at each transfer and makes it more difficult to circulate counterfeit money. Finally, a good medium of exchange should

have stability of value, so that when contracts are made involving the payment of money in the future, both parties will feel assured that they will have the same absolute and relative position to each other at the end of the contract as they had at its beginning. Most commodities that have been used as money have lacked this important quality of stability. Even gold fails to retain perfect stability of value. It is subject to less fluctuation in value than most other commodities, however, and so is best suited to serve as standard money.

Long experience has shown that gold and silver possess these desirable qualities in a larger measure than other commodities; consequently they have come into universal use as money. Because of their beauty and luster they have always been in demand for ornamental and decorative purposes. Gold and silver are fairly durable; and their durability as coins is increased by mixing with them some harder metal, such as nickel or brass. They are readily subdivided to make coins of different denominations, and they are easily recognized. They have large value in small bulk and can be carried about on the person or be transported in large amounts with little difficulty or expense. Finally, gold and, to a lesser degree, silver have a greater stability of value than most other commodities because of the comparatively limited supply and the elasticity of demand for them. Though great quantities of gold and silver are produced each year, the cost of production remains comparatively high and the annual addition to the world's total supply is comparatively slight. On the other hand, the demand for gold is very elastic. In addition to the world-wide and constant demand for it as money, it is widely used in the arts, in dentistry, book-making, and for other non-monetary purposes. Doubtless "the continued use of gold and silver for money rests very largely on convention, not on the intrinsic factors of beauty and scarcity. Once established as the money metals, they retain their position to a great degree by force of custom. . . . The fact that gold and silver are used as money keeps up their

value; the fact that they are valuable gives them utility for display; and this in turn serves to sustain their value for monetary as well as for non-monetary uses."1

8. Coinage. The practice of coining money began some hundreds of years before the Christian era, probably about 900 B.C. It is supposed that the first coins consisted of a certain quantity or weight of metal stamped with some seal or symbol indicating their weight so that they would not have to be weighed at each exchange. The English pound sterling was originally a pound weight of silver. Other familiar examples of coins which represent weights are the Greek talent, the Jewish shekel and the French livre. The earliest coins were stamped only on one side, and they were not so designed as to prevent alteration. Accordingly, unscrupulous merchants began to stamp smaller quantities of the metal and to pass it as full weight. This deception and the practice of clipping or otherwise subtracting parts of the coin lead to more careful and elaborate coinage. The whole face of the disc was stamped on both sides and the name of the authority certifying the weight was inscribed on the coin. Strict laws were enacted forbidding the mutilation of coins. About the middle of the seventeenth century England began to serrate the edge of coins, a process called "milling."

At first pure metal was used in gold and silver coins. In this form, however, they abraded or wore away rapidly with frequent handling, so it became customary to add to the pure metal some harder metal called "alloy." Dishonest traders then began to make coins with less of the precious metal and more of the cheap alloy. Hence, it became necessary to indicate in some authoritative way the fineness of the metal as well as its weight. Most countries now make their gold and silver coins nine-tenths fine, that is, nine parts of pure metal to one part of alloy, usually copper. Gradually the right to coin money was restricted to a few reputable persons, and finally it was brought under governmental control. Even when the right of coinTaussig: Principles of Economics, Bk. I, p. 229.

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age was restricted to the sovereign, abuses continued. For many centuries the royal authority debased the coinage by reducing the weight and increasing the amount of alloy of the coins issued under royal decree. Thus, the English pound sterling, which originally contained a pound of silver, was reduced finally to about half that amount.

The early American colonists were greatly embarrassed in their business transactions by the lack of "change" or coin. The small supply of coin they brought with them was soon drained off to Europe to pay for imports. Wampum, the currency of the Indians, was clumsy and poorly adapted to the purposes of general trade. They had to resort largely, therefore, to barter or to the use of staple commodities, called "country pay." To establish a basis of value in exchange, the General Court of Massachusetts fixed the price of all commodities by law, which led to great confusion and dispute as to the value of different articles.

After the colonists had begun to trade with the West Indies, Spanish dollars current in all the possessions of Spain, were imported and came into wide circulation. The Spanish dollar or "piece of eight," as it was called, was subdivided into eight reals, valued at 12 cents. These coins, however, were not of uniform value in the different colonies. The eighth part of a dollar was a shilling in New York, 9 pence in New England and Virginia, and 11 pence in Pennsylvania. Moreover, these coins had been debased by clipping and sweating, and when they were sent to England in exchange for goods, they were received only at the actual value of the metal in them. The coins that remained at home consisted largely of debased and depreciated pieces so poor that people were loath to accept them at all.

To remedy this difficulty, the General Court of Massachusetts in 1652 established a mint for the coining of shillings, six-penny and three-penny pieces. One side of the shilling was stamped with a pine tree, hence the name "pine tree shilling." The colony did not operate this early