The Natural Law of Money

A excerpt from the beginning of:

CHAPTER I.

THE BEGINNING OF MONEY.

IT may be well to explain at the outset what is meant to be conveyed by the phrase "the natural law of money." While it is true that money is a product of man's labor, and that it derives all its usefulness from the actions of men, it was not planned and brought into existence with an intelligent prevision of its nature and workings. It would be more correct to say that it came into use because it possessed inherent properties which fitted it for certain services, and that men appropriated it when they felt the need of the services. This they did individually, without any concert of action, for money was circulating everywhere in the world before men even thought of making laws for its regulation. When an individual uses money, he is governed in what he does with it purely by his own interests, and he does not concern himself about what becomes of it after it passes out of his possession; thus it circulates indefinitely, impelled always by the motives and interests of individuals acting independently of each other; yet it is found to move and perform its functions with the regularity of a natural law.

The material of which money is composed may be almost any product of man's labor; it becomes money only when it is used as the common medium of exchange. Before the appearance of money in the world, exchanges of commodities were made in a very crude way. If a man had a dog that he wanted to exchange for a sheep, he could not make the exchange until he found some one who had a sheep and wanted a dog. But in the course of time man discovered that, among the commodities produced by him, there was always some one commodity in more general use and demand than others, and this he seized upon as his medium of exchange,—it became his money. Having done this, he was no longer obliged to wait until he found some one who had the particular commodity he wanted, and who also wanted his commodity; he stood ready to accept the commodity in general demand, because he could more readily exchange it for the commodity he wanted, and so, by a double turn, could save time and better accomplish his purpose.

This first way of making exchanges has been named barter, and the second, trade.

Here we see how money first came into use in the world. A great variety of articles has been appropriated for use as money at one time or another. We cannot mark the dates in history when these various commodities came to be used, as it was not the age, but the stage of development of the particular country, that created the need for them. We may find in the world to-day among primitive communities the crudest kinds of money that have ever been used. Step by step, and keeping even pace with increasing knowledge, have man's wants multiplied, and his implements for supplying those wants improved. He did not need money while he was hunting with his dog in the primeval forest, and living upon edibles already in existence; nor did he need it when he began to herd animals and to till the soil. Living in tribal isolation, and having no other bond of sympathy with his fellow-man than kinship, it was not until he was impelled by his necessities to exchange commodities with other tribes that he began to use money.

We can hardly overestimate the importance of money as a civilizing agent in the world; there can be no trade or commerce without it; man must have it, or go back to barbarism. By employing one of his commodities as a medium of exchange, he made a big stride forward; a new era was begun. His small beginnings were the seeds of the industrial progress we see around us. Impelled by want, producer meets producer, each having what the other needs for his own use or for the use of the tribal family; an exchange takes place, which is barter; and this form of traffic goes on increasingly until the need is felt for a medium of exchange; when that medium is found, man has become a trader. He has discovered that there is profit in these exchanges, and he no longer confines his trading to his immediate wants, but trades for profit as well. Every want that he satisfies stimulates into being other wants, and so his trading goes on increasing and extending. He has found in profit a new incentive to industry, a spur to continued exertion. But to succeed in his new occupation he must live in peace; his strength must not be wasted in the petty, but deadly, warfare he has hitherto carried on with neighboring tribes; he endeavors therefore to keep on good terms with them. He has already begun to add other ties to the bond of blood-relationship,—ties of self-interest, which grow gradually into friendship, into the merging of tribe with tribe, into a large political community, and finally into a nation.

We see from what has been said that man had no preconception of money: he felt the want of something...