WHAT IS MONEY?

Press, Volume LXXI, Issue 21631, 15 November 1935, Page 15

WHAT IS MONEY?

COMMON MISUSE OF WORD The term money is probably out.' <■'. the most misunderstood words lr. "-ie world. "A fertile cause of cmu;:-;^. arises from the different meaMiu's given to the word money.'' writer Eric j M. Carter in an article on "The Benisii Monetary System," in the "Accoutii - ] nnt" (London). "For instance. ■• i often hears it said 01 a matt \.::: '■■-.. ! has plenty oi money when Ik- ma;- : ■ liic moment have kareiiy .1 s ; -;:i.: - . his pocket and no baias.ee at a.s car. 1 What is here meant :s that hi ••-* ; plenty of possessions 01 vaneU; -:'.- which can be exchanged in:<e o..:ik notes and coins h he wishes i-'.-" '*<■> speak 01 such things as 'noises. '..-.-":, or investments as it they were rae-ac. . |:s a confusion 01 terms v.-hich.. :;ua_a J intelligible enciuo. in ordinary c■- - versation, is quite misleading v.:..;'. .1 ; comes to serious discussion 0: m.'.etary problems. Apain. writer-- .: . •

nnanciai papers spec.-, ci >.:.;....- jnoncy. They say. for instance, 'a. ' "money is cheap or near wive,: '.:" mean that loans can be- secured .- lower or higher rates of iaUaae . is incorrect, however, to call a l'_a-i money, for loans and money arc different things. "If this misuse of the word money were confined to ordinary converse!: :o;i ' it would not matter much, but uaier- ■ j lunatcly professional economists them- : I selves are not in asri'ee.'iion: as to ':<* I meaning of the word. . I '-Professor Carman in his book "Medj cm Currency,' when dtscussiiti; the soi called quantity theory ci mono;-, as- ! sumes that money must be iaken to j liiomi our national currency 'i.e. bank I notes and metal coins* and nothing j else. On the other hand. Mr G. H. D. - j Cole, in his 'lntelligent Man's Gu.de ' I Through World Chaos." employs the ■; word 'money' in a sense ihat include.. • not only bank notes and coins bu'i also ■ ■ depositors' balances in joint-sleek . ■ banks. ! "There is a school of economists. I ! am told, who declare that there is no 5 such thinf a? mraipv thnv vn-.- it <irr..

s : i=ucn ining as money: iney say it sim- ! ply doesn't cxi.st though they permit i us to speak of 'monetary systems.' ■ ! "Tliese different idea l - about the word 11 money show that, great care is needed ■ in employing it if we are (o avoid ■ confusion of thought, but the win; 1 j must be a useful one. otherwise it 1 j would not be there. 1 i ''The underlying idea conveyed by ' j the word money, whenever it is used, ' i is 'purchasing power," and if I were to j attempt, a definition I should state it

j to be 'any form of purchasing powej that, is in general circulation as a J j medium of exchange.' This definition, : ! however, is incomplete unless we have- • j clearly in our minds the nature and : I functions of a medium of exchange."'