Superphysics Superphysics
Chapters 1-2

Why we use Money

by Montesquieu Icon
4 minutes  • 830 words
Table of contents

The following people trade by exchange:

  • savages who have few merchandise
  • civilized nations who have only two or three species.

The caravans of Moors who go to Timbuktu, in the heart of Africa, do not need money.

They exchange their salt for gold. The Moor puts his salt in a heap. The Negro puts his gold dust in another. If there is not gold enough, the Moor takes away some of his salt, or the Negro adds more gold, until both parties are agreed.

But when a nation traffics with a great variety of merchandizes, money becomes necessary because a metal:

  • is easily carried from place to place,
  • saves the great expences from exchange.

All nations have reciprocal wants. Country A frequently wants much of the merchandize of Country B, when Country B has very little desire for the merchandise of Country A.

But when nations have money, they proceed by buying and selling. Those who take most merchandise, pay the balance in specie.

  • In buying, the trade is proportional to the wants of the nation that has the greatest demands.
  • In bartering, the trade is only according to the wants of the nation whose demands are the fewest.

Without such demand, the latter would not be able to balance its accounts.

Chapter 2= The Nature of Money

Money is a sign which represents the value of all merchandizes.

Metal is taken for this design, as being durable, because it:

  • consumes but little by use; and
  • without being destroyed, it is capable of many divisions.

A precious metal has been chosen as a sign, as being most portable. A metal is most proper for a common measure, because it can be easily reduced to the same standard.

Every state fixes upon it a particular impression, to the end that the form may correspond with the standard and the weight, and that both may be known by inspection only.

The Romans used sheep. The Athenians used oxen.

In Clio, Herodotus tells us that:

  • The Lydians found out the art of coining money
  • The Greeks learnt it from the Lydians
  • The Athenian coin had the impression of their ancient ox

I have seen one of those pieces in the Earl of Pombroke’s cabinet. But one ox is not the same as another ox, in the manner that one piece of metal may be the same as another.

A coin is the sign of the value of goods, paper is the sign of the value of coin.

Money is the sign and representative of a thing just as everything is a sign and representative of money.

The state is in a prosperous condition when:

  • money perfectly represents all things; and
  • all things perfectly represent money and are reciprocally the sign of each other.

That is, when they have such a relative value, that we may have the one as soon as we have the other. This never happens in any other than a moderate government, nor does it always happen there. For example, if the laws favour the dishonest debtor, his effects are no longer a representative or sign of money. With regard to a despotic government, it would be a prodigy, did things there represent their sign. Tyranny and distrust make every one bury their money. things are not there then the representative of money.

Legislators have sometimes make things representative of specie and convert them even into specie, like the current coin. When Cæsar was dictator, he permitted debtors to give their lands in payment to their creditors, at the price they were worth before the civil war. Tiberius ordered, that those who desired specie should have it from the public treasury, on binding over their land to double the value. Under Cæsar, the lands were the money which paid all debts. Under Tiberius, 10,000 sesterces in land became as current money, equal to 5,000 sesterces in silver.

The magna charta of England provides against the seizing the lands or revenues of a debtor, when:

  • his moveable or personal goods are sufficient to pay, and
  • he is willing to give them up to his creditors.

Thus all the goods of an Englishman represented money.

The laws of the Germans constituted money a satisfaction for the injuries that were committed, and for the sufferings due to guilt.

But as there was but very little specie in the country, they again constituted this money to be paid in goods or chattels. This we find appointed in a Saxon law, with certain regulations suitable to the ease and convenience of the several ranks of people.

At first, the law declared the value of a sou in cattle. The sou of two tremises was equal to:

  • a 1-year old ox or
  • an ewe with her lamb.

Three tremises was worth an ox of 16 months.

With these people, money became cattle, goods, and merchandize and these again became money.

Money is also a sign and representative of money, as explained in the chapter on exchange.

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