Opinion | Menger: On the Origin of Money

Original title: "View | Menger: On the Origin of Currency"

Original source: Ethereum Enthusiast

Editor Note: This article is the Chinese translation of the essay "On the Origins of Money" published in 1892 by Karl Menger, the founder of the Austrian school, and translated by the version of the Mises Institute. In this article, Menger not only uses the inconvenience of barter to explain the economic subject's need for highly marketable commodities, but also points out that such a medium of exchange can arise spontaneously.

Introduction

Since ancient times, social scientists and pragmatic economics Scholars have paid particular attention to the phenomenon that certain commodities (in advanced civilizations, minted gold and silver coins, and later, notes representing these coins) became the generally accepted medium of exchange. Even the most ordinary of intelligence knows that men are willing to give up commodities they possess for exchange only if they are more useful to them. In a country, however, each economic unit is willing to exchange its commodity for some apparently useless little piece of metal, or a bill representing it; Understand, even such a brilliant thinker as Savigny[1] found this "incredible".

[1]: "Savigny" here should be Friedrich Karl von Savigny (1779 ~ 1861), a famous German jurist Home, founder of the Historical School of Law. ——Translator's Note

We must not attribute this strange phenomenon to the manifestations of coins or bills. Putting these forms aside, go back to the early stages of economic development, or to put it bluntly, the economic forms that still exist in some countries and regions today; where people still use unworked precious metals as a medium of exchange, or other Some specific commodities, such as cattle, hides, tea, salt blocks and shells, etc. As long as we are confronted with this phenomenon, we need to explain why economic man is willing to accept certain goods (even though they do not need the commodity, or the demand for it is saturated) in exchange for everything they sell in the market, while they are buying When you want the product you want, you will use this product first to negotiate the price.

From human to social phenomena From the day they think about it, scholars have been constantly exploring the relationship between the nature and specific characteristics of money and the necessary conditions for the realization of traffic. Philosophers, jurists, historians and economists, even naturalists and mathematicians have studied this age-old conundrum. Among the vast literature and materials, there is no well-read person who has not left a few words. What is the nature of those little bits of metal and paper? They seem useless in themselves, yet perversely pass through people changing hands again and again in exchange for useful goods, each so eagerly exchanging his own for them. So, does money emerge naturally from the commodity world, or is it purely a heresy in the economic world? Are the factors which determine the commodity form and exchange value of money the same as those which determine the form and value of other commodities? Or is money different from other commodities, a special product formed under convention and authority?

Theoretical attempts so far

So far, although historical research The overall level of research has been greatly improved, and people have invested a lot of time and effort in solving the above problems, but the final research results are not directly proportional. There is no satisfactory explanation of the mysterious phenomenon of money; no accepted theory of the two most fundamental questions of the nature and function of money. Therefore, until today, we have not formed a satisfactory theory of money.

In explaining the function of money as the most generally accepted medium of exchange, generally accepted political agreements [2] or legal provisions are often the first things that come to mind. But to answer this question from a scientific point of view, we must use a set of generalized (general) and homogeneous (homogeneous) theories to explain the behaviors that humans take when they participate in currency circulation; specifically, these behaviors Undoubtedly beneficial to the public interest, yet seemingly in conflict with the closest personal interests of the participants. Given the circumstances, what better explanation could there be than attributing the above-mentioned series of actions to causes outside the purview of the individual? The above difficulties can be solved by assuming that a commodity (such as precious metals in reality) is promoted as a medium of exchange by political agreement or law in the public interest; and this assumption is so obvious and logical, because metals The shape of the coin seems to be a symbol of state rule. In fact, this was the view of Plato, Aristotle, and Roman jurists, and it was followed by medieval thinkers. Even more recent monetary theory does not go beyond this point of view [3].

[2]: The term used here is "convention", which has a meaning of "convention, or generally accepted as a proper way of doing things by members of society", The other two meanings are related to politics, one is "a large formal meeting held by people with the same interests or tendencies, or a large gathering of a political group", and the other is "a political agreement signed by national leaders or politicians". Considering that "convention" and "law" are juxtaposed here, the meaning should be closer to politics, so it is translated as "political agreement". ——Translator's Note

[3]: Cf. Roscher, Systblockquote Der Volkswirthscaft, I sec. 116; my Grunsatze der Volkswirischaftslehre, 1871, p. 255, et seq.; M.Block, Les Progres de la Science economique depuis A.Smith, 1890, II. p. 59, et seq. —— original note

But upon closer inspection, the assumptions behind this theory raise serious doubts. If, under the influence of the letter of law or political agreement, a common medium of exchange had arisen, such an event, both of great significance and inevitable notoriety, would surely remain in the memory of mankind, let alone Money is used in so many places. However, no single historical monument gives reliable information on the affairs of state recognition of an existing medium of exchange, or mentions its adoption by people of relatively older dynasties, let alone traces the economic civilization of money use up.

And, in fact, most monetary theorists do not stop at the above explanation of money. Aristotle, Xenophon, and Pliny all noted that precious metals were especially suitable for currency and coinage. On this basis, John Law, Adam Smith and their disciples tried to further explain the specific characteristics of precious metals that were chosen as the medium of exchange. Moreover, it is clear that even if laws and political agreements select precious metals for their suitability for money, that implies a careful selection of these metals and a practical method of selection, which itself is very important. historic. Nor are the above theorists honest about the problem that needs to be solved, which is to explain how to enhance the status of certain commodities (precious metals in some cultures) among commodities as recognized mediums of exchange. This question involves not only the origin and nature of money, but also the status of money relative to other commodities.

The mystery of the origin of the medium of exchange

In the original commodity circulation In primitive traffic, Homo Econ gradually, but very slowly, realizes that the trading opportunities that exist can be exploited to economic advantage. Given that all primitive civilizations are very simple, the first thing that the economic man involved in the transaction noticed, and the only thing he cared about, was what he got directly. Only the use value of what he intends to obtain is the only consideration when he participates in transactions. In this case, each economic man only wants to obtain the goods that are directly useful to him in the exchange, and rejects those goods that he does not need at all, as well as the things that he already fully owns. Obviously, in the above case, the number of transactions is very limited. Imagine how seldom it is that one thing owned by one man is worth less in use than another thing owned by another! While the opposite is true for the latter (hence the willingness to trade), it's even more rare for these two to happen to meet! Furthermore, when the supply and demand do not match, for example, if you want to exchange an indivisible commodity for a commodity in the hands of different people, or if a certain commodity is only in demand at a certain period and only provided by a few people, It is even more difficult to achieve a direct barter exchange! Even relatively simple circular demand situations—economic unit A needs goods in B's hands, B needs goods in C's hands, and C wants goods in A's hands—are often difficult to arise under the rules of barter.

If the goods are not fundamentally different, that is, in terms of marketability (Absatzfahigkeit), then the above-mentioned problems have no effect on the formation of circulation (the progress of traffic ) would be an absolutely insurmountable obstacle, as well as for the production of goods that are sold infrequently. The fact that each commodity is marketable in a different way is crucial to monetary theory, and indeed to market economic theory in general. Insufficient consideration of marketability in explaining the phenomena of exchange not only tragically undermines the scientific character of our subject, but is one of the main reasons for the backwardness of monetary theory. The theory of money is necessarily based on the theory of the marketability of goods. As long as we understand this point, we can understand that the almost unlimited marketability of money is just an example in general economic life phenomena, that is, the different degrees of marketability of commodities are common, and the marketability of money only represents to one degree.

MERCHANTABILITY

There is an obvious mistake in the field of economics, that is, it is believed that at a specific point in time and in a specific market, there is a quantitative exchange relationship between all commodities, in other words, they can be freely exchanged with each other in a certain amount. For example, in a given market, 1000 lbs of one item = 200 lbs of another item = 3 lbs of yet another item, and so on. However, it is not. Even the cursoriest observation of market phenomena reveals that if we have bought a commodity at a certain price, we cannot immediately sell it at the same price. We see how irrational this notion is when we try even once to sell immediately on the same market what we have just acquired, whether it be clothes, books, or works of art. At a specific point in time and in a specific market, the price at which people are willing to buy a certain commodity and the price at which they are willing to sell this commodity are in two diametrically opposite intervals (are two essentially different magnitudes).

This is true both at wholesale and retail prices. Even easily marketable commodities like corn, cotton, and pig iron cannot be sold at the price they were bought for. If the theory of "objective equivalent in goods in exchange" is correct, trade and speculation will become the easiest things in the world. If this theory is true, goods can be exchanged arbitrarily at a given point in time and in a given market according to a quantitative relationship—in short, goods can be sold at the bid price. In this sense, therefore, there is no general marketability of goods at all. In the most organized markets, we may be able to buy whatever we want at a particular time at a certain price (i.e., the bid price), but even in such markets we can only discount them (i.e., Sell Price) Sell[4].

[4]: We must distinguish between a higher buy price and a (lower) sell price. The former is the price that buyers are willing to accept when they want to buy a commodity at a certain point in time; the latter is the price that a buyer is willing to accept when they want to get rid of the commodity within a certain period of time. The smaller the difference between the buying price and the selling price of an item, it usually indicates that the item is more marketable. ——Original Note (Translator's Note: This sentence explains the buying price and selling price, but the original English sentence is quite difficult to understand, such as "purchasing prices for which the buyer is rendered pable through the wish to purchase at a definite point of time", which reads as if the purchase price is completely determined by the buyer, but Menger could not have made such a mistake. There are two explanations that do not contradict the Austrian school: (1) Geer is emphasizing the subjective willingness of individuals to make them willing to accept higher/lower prices; (2) Menger is emphasizing the value of this kind of control over goods in time.)

It can be seen from the transaction situation and the market situation of a particular commodity that the loss incurred by the seller who has to sell the commodity within a certain period compared with the current buying price is A highly variable quantity. If a commodity such as corn or cotton is sold in an organized market, sellers can sell any amount of the commodity at any point in time, at the current price, or slightly lower. Sellers who wanted to sell goods like cloth and silk in bulk at will generally got much lower prices. How much worse would it be if the seller had to sell astronomical instruments, anatomical preparations, Sanskrit writings, etc., within a certain period of time, which did not sell well!

Suppose we are based on the ability of a commodity to sell at the current buying price at any point in time; We can evaluate the marketability of such commodities by the discount degree of the input price, and we will see that there are significant differences in the marketability of different commodities. And, despite the enormous importance of this phenomenon, economics has not studied it in depth. This is partly because the study of the price phenomena described above has focused almost exclusively on the exchanged quantities of commodities, while neglecting the ability of commodities to be sold at normal prices. Another part of the reason is that in the study of the marketability of goods, a completely abstract method is adopted, which does not take into account all the circumstances that should be considered.

Generally speaking, sellers in the market will never ask a price casually, and will always sell at a price that is in line with the general economic situation. If we are to inquire into the degree of salability of commodities in order to find their relevance to real life, we have only one place to start, and that is the ability of commodities to be sold at prices consistent with general economic conditions, that is, economic prices. [5]. The degree of marketability of a commodity depends on the expected size of the commodity that we can successfully sell at a price consistent with general economic conditions, that is, the economic price.

[5]: Under certain circumstances (including disasters and accidents), certain commodities can be sold for almost any price Merchantability is irrelevant. To inquire into these circumstances can only be concluded that all commodities are equally marketable. If a commodity has a high degree of marketability, it must at any moment be easily sold at a price consistent with, or not deviating from, general economic conditions—that is, economic or near-economic prices. ——Original note

The price of a product can be judged to be uneconomical from the following two aspects: (1) affected by factors such as mistakes, ignorance, and fickleness (2) Only a part of the supply can be used to meet the demand, and the rest does not flow into the market for some reason, so that the price does not match the actual economic situation.

In addition, it is also necessary to consider how quickly (in time) the commodity can be sold at an economical price, which is of great significance to the study of the degree of marketability of the commodity. No matter how small the quantity demanded of a commodity, or how low its marketability may be for other reasons, the owner will eventually be able to sell the commodity at an economic price if he is willing to wait long enough. However, such situations (willingness to wait) usually do not exist in actual business operations. So, on a practical level, there are big differences between commodities. For some commodities, our expectation is that they can be sold at economic or near-economic prices at any time, while for others we do not expect this, at least not so high, and these The owner of the commodity must wait a longer or shorter period of time before he can sell it at an economical price, or else reduce the price more or less within reason.

In addition, the quantitative factor in the merchantability of goods must be taken into account. Thanks to the development of markets and speculation, some goods can be sold at any time at economic prices or near economic prices in any quantity. Other goods can only be sold in small quantities at economic prices that match the gradual increase in effective demand and, as the quantity supplied increases, the price falls relatively.

The reasons for the differences in the degree of marketability of goods

Based on experience See, in a given market, the ability of a good to sell at a price that is economical (economic price) at any point in time depends on the following:

The The number of people on the demand side of the commodity, and the degree and intensity of their unmet or frequent needs

The purchasing power of the demand side

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The relationship between the unsatisfied (total) demand of the good and its availability

The divisibility of the good, and the ability to adapt to the needs of individual consumers

The development of the market, especially the development of speculation

The number and nature of restrictions on the trade and consumption of the commodity at the political and social level

We have analyzed the The degree of marketability at a particular point in time. Using the same method, we can further analyze the time and space constraints on the marketability of different commodities. From these two perspectives, we can find that the marketability of some commodities is hardly restricted by place or time, while others are more or less affected.

The marketability of goods is mainly limited by the following space:

Demand for goods is disturbed by space

The degree to which the product is suitable for transportation, and the ratio of transportation costs to the value of the product

The extent to which different types of goods have been developed in the means of transportation and exchange

The local expansion of organized markets, and the "arbitrage" between these markets Intercommunication

In cross-regional trade, especially cross-border trade, different restrictions are imposed on the commercial interoperability of different products

The marketability of goods is mainly limited by the following time:

Whether there is long-term demand for goods (not affected by price fluctuations)

The durability of the item, i.e., whether it is suitable for storage

The cost of preserving and storing the item

Interest Rates

Cyclicality of the Market

The development of speculative activity, especially with regard to futures trading

The political and social constraints on commodities over time

The above circumstances determine the different degrees of marketability of goods and the different constraints in time and space, which explain why some goods can be easily sold in a particular market, that is, can Sell any quantity at any point in time at a price consistent with general economic conditions, and the marketability of some goods is subject to strict space and time constraints: even within the limits, such goods are still difficult to sell, and In the absence of strong demand, the price must be reasonably reduced to sell.

On the origin of the medium of exchange[6]

For a long time, It is a cliché in the study of exchange phenomena that some goods are in greater, longer-lasting, and more real demand than others, which in some respects are less popular. The former because there is a demand for it from those who can and are willing to traffic (traffic) it, which is more common and which, because of its relative scarcity, cannot always be met. Moreover, it is always more desirable to a man who wants to exchange what he has for a particular commodity, if he sells such commodities in the market, than if he sells commodities which do not have this advantage (or at least not comparable to it). welcome. In this way, he can not only buy what he wants more easily and safely, but also at a price that corresponds to the general economic situation—the economic price—because the commodity he exchanges is relatively stable and common. demand. If someone sells a commodity with a low degree of marketability in the market, the biggest idea in his mind is to exchange this commodity for the commodity he just needs, or in the case of not being able to directly conclude a transaction, exchange it. The goods in hand are more marketable other goods. In this way, of course, he cannot immediately achieve the ultimate goal of the transaction, that is, to buy the commodities he really needs; however, he is one step closer to the goal. Compared with only thinking about direct exchange, an indirect exchange can ensure that he can achieve his goal in a more economical way. In fact, this situation seems to be very common. As men become more aware of their own self-interest, each will be guided by his own economic interest in exchanging commodities destined for exchange (his own "commodities") for other commodities also destined for exchange but marketable. Stronger commodities do not need to be bound by conventions, nor compelled by law, nor even have a moral heart to take care of the public interest, (they will naturally do so).

[6]: Cf. my article on “Money” in the Handwurterbuch der Staatswissenschaften (Dictionary of social science), Jena, 1891, iii, p. 730 et seq. ——Original note

As the space involved in trading activities becomes larger and larger, the time interval required to meet material needs becomes longer and longer. Individuals, driven by their own economic interests, learn to shrewdly exchange less marketable goods for a particular class of goods. In addition to having a high degree of marketability in a specific region, such commodities have a high degree of marketability in any time and space. Commodities of this class possess characteristics such as high price, ease of transport and suitability for storage (which are related to their stable and widely distributed demand), so as to secure to their owners a right to be exchanged for all other commodities at an economic price, Not limited to "here" and "now", but almost unrestricted by time and space.

As people become more aware of these economic benefits, the class of goods that are most marketable in time and space will be available in any market market. Everyone accepts for his own benefit that other people exchange such goods for less marketable goods in his own hands, and will gladly accept such an exchange; this behavior has changed from a flash of inspiration to a tradition. , and finally become a habit of economic activity. Their superior marketability, which in fact stems from the comparatively poorer marketability of all other kinds of commodities, alone is sufficient to make them a generally accepted medium of exchange.

The reason why there is such a widely applicable medium of exchange, habit is obviously a very important factor. From the perspective of their own economic interests, everyone engaged in transactions will exchange commodities with a low degree of marketability for commodities with a high degree of marketability. However, the reason why people are willing to accept a commodity as a medium of exchange is because they know that some economic agents are interested in this commodity and will accept it from others in exchange for their own commodity, even if the commodity itself is of great interest to others. They may be completely useless. What is certain is that this recognition will never be formed in all parts of the country at the same time. At the beginning, a small group of economic entities will first realize the advantages of this commodity in exchange. This advantage does not depend on whether this commodity is a medium of exchange recognized by the public, but because in any case, The economic subject who uses this kind of commodity for exchange will be closer to his exchange goal, so as to obtain the useful things he really needs. But it is an accepted fact that the best way to enlighten a man about his own economic interests is to show him how others have used the right means to successfully protect their own economic interests. Obviously, for a commodity to become a generally accepted medium of exchange, it will depend on the economic interests of those economic agents with discerning and superior ability to accept it, on the one hand, and on the other hand, it will take a long time , the degree of marketability of this product is higher than that of other products. In the process, practice and custom will go a long way toward making this commodity (the most marketable commodity at any time) not only accepted by many (eventually all) economic agents, making them willing to sell the less marketable ones they have commodities in exchange for them; moreover, they accept them with the expectation that they will sell them. Goods that are thus generally accepted as a medium of exchange are called Geld (money) in German, the noun form of the verb gelten (to pay, to perform). Other countries name their currencies primarily by material [7], shape [8], or even type [9].

[7]: Keseph (silver) in Hebrew, argurion (silver) in Greek, argentum (silver) in Latin, Argent (silver) in French and so on. ——Original note

[8]: "money" in English, "moneda" in Spanish, "moeda" in Portuguese, and "moeda" in French "monnaie", "maoth" in Hebrew, "fpus" in Arabic, "nomisma" in Greek, etc. ——Original note

[9]: "danaro" in Italian, "dengi" in Russian, "pienondze" in Polish, Bohemian "penise" in Asian and Slavonian, "penge" in Danish, "penningar" in Swedish, "pens" in Hungarian, etc. (i.e., denare = Pfennige = penny). ——Original note

It is not unreasonable to want to construct a medium of exchange in the form of legislation so that it serves the public welfare (in the most significant sense of the word) Possibly, it is like making other social institutions. However, this is not the only way money is born, nor is it the main way. There are still many details to dig deeper into the process we described above, but if we stop at calling the process of currency origin "organic", or currency as "antique" or "product of primitive times", then It's all very one-sided. Leaving aside these ancient fallacies, the only way we can fully understand the origins of money is to learn to see the establishment of a social process as an unintended and spontaneous Efforts are made to discern differences in the degree of marketability of commodities [10].

[10]: Cf. on this point my Grunsatze der Volkswirtschaftslehre, 1871, p. 250 et seq. br>

How to identify which goods can be used as a medium of exchange

Goods with a high degree of marketability become " Currency", the first effect of which is to greatly increase its already high degree of marketability. Any economic agent that brings a less marketable commodity to the market in exchange for another commodity will be more inclined to exchange commodities that can be used as money. For this kind of people, after exchanging commodities with lower salability for commodities with the highest salability like money, they can easily exchange for any kind of commodities in the market in equal amounts. The probability is high, but it must be so. They are completely in control of these according to their preferences and choices. Pecuniam habens, habet omniblockquote rblockquote qublockquote vpt habere. >On the other hand, they will find themselves more or less at a disadvantage when they put commodities other than money on the market for sale. In order to obtain equivalent purchasing power over the goods sold in the market, they must convert their goods into money. His economic weakness is reflected in the fact that he must overcome certain difficulties before realizing his goals; but these difficulties do not exist for those who already have money in hand (or have already got overcome).

This makes more sense in real life, because for those who bring less marketable goods to the market for exchange, this kind of Difficulties were not easy to solve, partly due to circumstances beyond his own control. The lower the marketability of the commodity held by the trader, the higher the possibility of needing to make a profit when exchanging, otherwise he can only wait for an opportunity to exchange at the best price. In the era of money economy, if someone wants to exchange any commodity other than currency for other commodities in the market, it is impossible for him to complete the exchange immediately or at the optimal price within any predetermined time period. The less salable an economic agent gets on the market, the lower his economic position will be compared to those market participants who hold money when exchanging their target goods. Suppose a person who owns a large amount of surgical instruments has to exchange these surgical instruments into currency due to sudden misfortune or pressure from creditors. The price of this batch of surgical instruments is highly variable, no, for such a low degree of marketability, God knows what it will eventually sell for. All such exchanges subject to the time factor can be called forced sales (comppsory sales) [11]. Another assumption is that he wants to immediately exchange the commodity that has become money for other commodities on the market. He can certainly achieve his goals, and at a price consistent with general economic conditions. The conventions of economic behavior make us so confident that we can buy anything on the market at any time at an economic price corresponding to the general economic situation; ), any purchases in daily life are comppsory purchases. However, it is the opposite to sell goods in a hurry, which usually puts the parties at a disadvantage in the exchange; this has made everyone aware of this phenomenon. Therefore, the characteristic of commodities that have become money is that as long as we hold this commodity, we can control any commodity in the market at any time (at the right time as we think), and usually at a price that is in line with the economic conditions at that time. price. Other commodities, on the other hand, do not have such control, and are at least relatively different, if not radically different, because of time and price constraints.

[11]: Here is an explanation of why a rush sale, especially in situations such as seizure of goods, usually results in financial loss to the owner of the goods, and, basically In general, the less marketable the commodity, the greater the loss. Properly discerning the non-economic nature of the above situation will inevitably lead to the reform of the existing legal mechanism. ——Original note

Therefore, after a commodity with a high degree of marketability becomes currency, it widens the distance from other commodities in terms of marketability. This gap is no longer gradual, but must be regarded as absolute to some extent. Common practice and law, largely in line with the prevailing notions of everyday life, divide commodities into two classes from the point of view of traffic—those that become money, and those that do not. Commodities that become money. We found that this difference is fundamentally due to the difference in the degree of marketability of the above-mentioned goods-a difference that is very important in real life and is further exacerbated by state intervention. Moreover, this difference is also reflected in language expressions, for example, "currency" is different from "commodity", and "purchase" is also different from "exchange". However, this is only a preliminary explanation of the superiority of the buyer over the seller, and although we have identified the main reasons, it is not quite sufficient.

How Precious Metals Became Money

In different regions and The commodity with the highest degree of marketability varies from era to era. Therefore, in different periods, the same country may use different commodities as currency; in the same period, different countries may adopt the same commodity as currency. The reason why precious metals can be regarded as a medium of exchange by today's countries and even other countries in history, and are accepted by people living in advanced economic civilizations is that precious metals far exceed other commodities in terms of marketability, and at the same time they (attributes) It is also very suitable for the subsidiary function of currency.

At the beginning of civilization, there was no population center, nor was there a strong desire and thirst for precious metals; Sexual aesthetics became the material of choice for plastic and architectural decoration, mostly for ornaments and containers. Although precious metals are inherently scarce, they are relatively evenly distributed geographically and are easier to extract and process than other types of metals. Furthermore, the available supply of precious metals is so small a proportion of the total demand for them that there is always a large portion of the supply that cannot be met, at least not all, to a very high degree - more or less higher than those of more important commodities that are more supplied. In addition, since precious metals can meet various exchange needs, the class with the highest exchange efficiency in the community will want to obtain precious metals, so the actual desire for precious metals is greater. However, due to the strong divisibility of precious metals, only a small part of precious metals can be spent in the individual economy to meet the needs of exchange, and the classes with lower exchange efficiency also have actual desires for precious metals. In addition, the marketability of precious metals is not strongly limited by time and space. On the one hand, demand for precious metals is not limited in spatial distribution, and transportation costs are low relative to real value; on the other hand, precious metals are extremely durable and cheap to store. In a national economy that has passed its initial stage of development, there is no other commodity whose marketability is so basically unlimited-whether in terms of individuals, quantities, space or time-in terms of precious metals. There is no doubt that long before precious metals became a recognized medium of exchange, they met the practical needs of many people at any time and place, regardless of the quantity of them circulating in the market.

This leads to a situation which is of special significance for making precious metals money. For all persons in this situation, as long as they hold precious metals, they can exchange them at any time on any market for any quantity of precious metals, and at any time at a price consistent with the general economic situation, that is, the economic price. exchange, which is subject to the merchantability standard. The most efficient traders will want to avoid price fluctuations caused by timing, sudden events or unexpected circumstances. Precious metals satisfy their desire to be strong, enduring, and ubiquitous more than any other type of commodity. Primarily due to their costpness, durability, and ease of storage, precious metals have become the most popular stores of value and the most favored commodities in trade.

Under these conditions, the wiser trader develops an ingrained belief, and then as the situation becomes more generally understood, everyone develops a The idea that commodities intended to be exchanged for other commodities must either be precious metals, or be exchanged for precious metals, or commodities that can satisfy one's own needs in this direction (for precious metals). However, by virtue of this function, precious metals have become the most common medium of exchange today. In other words, everyone will try to exchange their commodities for precious metals, usually not for the purpose of consumption, but purely because of the second-to-none marketability of precious metals, and the purpose is that exchanging them for precious metals will bring them immediate benefits other merchandise. The above situation occurs not because of accidents, state coercion, or agreements formed spontaneously by traders, but because people have an understanding of their own interests. Therefore, once the supply and trading volume of the precious metal becomes large enough, countries with more developed economies will accept the precious metal as currency. In the same way, once a commodity becomes money, its value will increase.

Another important reason behind this development is that exchange ratios between precious metals and other commodities fluctuate more or less less than Fluctuations in Exchange Ratio - This stability arises from the unique production, consumption and trading conditions of precious metals (often referred to as the "intrinsic value" that determines their trade value). This also explains why everyone will first choose precious metals as a reserve commodity, or exchange their existing commodities for precious metals, before successfully exchanging for commodities that are directly useful to them. In addition, precious metals have homogeneity and can be used as substitutes for debt repayment, thus giving birth to a form of contract that is easier to bring about liquidity; this also greatly improves the marketability of precious metals, enabling them to become currencies. Finally, precious metals are highly recognizable by their distinctive colour, sound and weight, and can be more easily controlled by imprinting a permanent stamp; Regions use precious metals as currency.

The impact of sovereignty

Money is not created by law. Fundamentally speaking, currency is social and not determined by the national system. Sanctions by state power are another concept. But, on the other hand, under the recognition and management of the state, the social system of currency has been perfected and adapted to the varying degrees of needs brought about by the evolving trade, just as customary rights have been perfected and Adjust that. Originally, precious metals were priced by weight like other commodities, and their inherently high marketability was greatly enhanced when they were minted into coins. The state administration, on the one hand, covers all classes of value (levels of value) through a fixed currency system; on the other hand, it earns public trust by minting and maintaining coins, as far as possible against risks related to authenticity, weight and purity. The above two points have become recognized as the important functions of administrative organs.

Because (1) there are multiple commodities competing to become currency; (2) the current standard introduces a variety of insecure factors in the transaction; (3) must Carrying out multiple commodity transactions (in order to exchange for their own target commodities), various countries have encountered difficulties in transaction and payment methods, prompting certain commodities (that meet legal standards) to be legally recognized as the standard currency. In countries where multiple commodities are recognized as legal means of payment by default, the law and evaluation system also fixes the exchange ratio between these commodities.

However, these measures did not give value to the precious metals, they only perfected their function as money.

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