PATER'S CHATS WITH THE BOYS.

Otago Witness, Issue 2928, 27 April 1910, Page 85

PATER'S CHATS WITH THE BOYS.

QUALITIES NECESSARY IN A COINAGE. A fortnight ago I wrote a Chat on "What is a Shilling Worth?" and in it I asked the question, "What is money?" "which I answered by saying what were essentials in anything standing for money. The essentials I mentioned were—(l) portability, (2) utility and value, (3) indestructibility, (4) homogeneity, (5) divisibility, (6) stability in value, and (7) cognisability; and then I wrote a few lines upon portability. To-day I'll take .up the other points, though, of course, very briefly. UTILITY AND VALUE. I might say at the outset that I am mainly indebted for my ideas to "Money and the Mechanism of Exchange," a volume published many years ago in the International Science series, and written by W. Stanley Jevons, M.A., F.R.S., a professor of logic :jnd of political economy ; and, as far as I know, his remarks upon money—as far as I am using them, at any rate —are as good to-day as thea. "Since money has to be exchanged for valuable goods, it should itself possess value, and it must therefore have utility as the basis of value." Sometimes, as in the case of bank notes and other paper money,, and in.our bronze and silver coinage, "force of habit, convention, or legal enactment" . may cause these, to be accepted, but it is only as long as we have faith in those issuing the paper; and in the case of coinage other than gold, they are accepted only for small values and not beyond the countries of issue. Time and experience have proved that the only metals endowed with singularly

useful qualities are gold and silver. If they could be got in sufficient quantity, many household utensils, ornaments, fittings, etc., would be made of them; and as they are esteemed in all countries they possess a utility and a value which place them first as substances to represent values. INDESTRUCTIBILITY. Money must not deteriorate in value or decrease in quantity. Liquids may evaporate, metals may rust or wear away, most articles are perishable, and so on ; but gold and silver when slightly alloyed by the addition of copper or tin become harder, and stand a great deal of wear and tear. This wear and tear on the face of the coin is reduced to a minimum by the raised milled edges, which protect the relief designs from rubbing away. HOMOGENEITY. “All portions or specimens of the substance used as money should be homogeneous —that is, of the same quality,— so that equal weights will have exactly the same value.” Modern Governments, with the assistance of science, are able to produce a metal which, is according to a defined standard, and which, when bearing the official stamp, is accepted in all parts of the world. _ A British sovereign stands for integrity, and is recognised everywhere. I once travelled with a rather rough, uncouth Scotchman, who didn’t know a word of anything but English—and Scotch. I asked him how he made his way through Russia, Japan, etc., and his brief answer was “the suvrun.” “What?” said I. “The suvrun,” said be ; and this was repeated rather impatiently the third time. Then it dawned upon me that he was saying “The sovereign.” T And that was so. The alloy used in coining is known to be so perfectly uniform in fineness that no two sovereigns can differ materially in value; and so exact is their weight that sovereigns can he weighed out instead of counted. If my young readers should at any time reach Sydney or Melbourne, try to arrange a visit to the mint in each of those cities. It is very tantalising to see workmen handling bars of gold as if they were so much hoop-iron and sovereigns by the basinful. The delicate machinery used, too, is extremely interesting. But 1 must hurry on. DIVISIBILITY. Almost everything can be divided? but a substance used in making coins must not increase or decrease in value through subdivision. Diamonds can be divided, for instance, but it is said that, within certain limits, a diamond increases in value according to the square of the weight. Supposing a diamond of 4 carats were worth £2O, then one twice as heavy would be worth £2O x 2 x 2, or £80; one three times the weight, £2O x 3 x 3, or £IBO, and so on. Diamonds, therefore, would not do for a measure of value and a medium of exchange, apart from the fact that it would be difficult, if not impossible, for the average person to know the quality of the diamond. Here, again, gold and silver officially stamped to a defined standard answer the purpose better than anything else. STABILITY OF VALUE. I am afraid that I cannot explain this as I should like. We can all see that there should be no change in value if possible, because a rise or fall would do immense harm. It might be reasoned that a change in value would mean as much gain to some as others lose; “but,” says Jevons, “a person with an income of £IOO a year would suffer more by losing £lO a year than another would gain by having £lO added to his £IOO. This we do know, however, that money does increase and ■ decrease in value as if it were an ordinary commodity. I have £IOOO in the bank and get £5 per £IOO, or £SO interest • but the bank may reduce the £5 to £4 per £IOO, or £4O. This is saying, in effect, that the £IOOO has fallen in value to £BOO. On the other hand the rate of interest might advance to £5 per £IOO, which is equal to making the £IOOO up to £I2OO. Perhaps, however, the best example of the depreciation of money in value is in connexion with the silver coinage in India, where silver was, at one time, the standard. An Anglo-Indian servant, when he entered the Indian service, was paid perhaps 6000 rupees a year, with the guarantee of a pension of 3000 rupees. But when he entered the service, 10 rupees could oe exchanged for a sovereign, so that on retiring he could exchange his 3000 rupees pension for 300 sovereigns. Now, however, on account of the large production of silver making silver cheap, rupees can be exchanged only on the basis of 15 for the sovereign, so his pension directly he goes to a country with a gold standard becomes reduced to two-thirds what he expected. Even money, then, has no real stable value; indeed, it is said that wheat would be a better standard to use. A gold coinage for large values and for international purposes, however, seems to find most favour.” . CO GNIS ABILITY. Any coin, to pass as a standard value, must be easily recognised. Diamonds wouldn’t do, nor, indeed, would anything requiring expert knowledge to assign a value. Gold, silver, copper, bronze, brass, etc., are recogised by their colour, density, hardness, “so that it is very easy for a person with very slight appearance to distinguish one metal from another. Their malleability [this applies especially to gold and silver] enables us to roll, cut, and hammer them, into any required form, and to impress a permanent design by means of dies.” This cognisability, helped by the ease with which an official stamp can be put upon alloys, is clearly an essential * in making any alloy a, measure of value and a medium of exchange. The subject is, perhaps, a dry one, but, even so, it is interesting.