CHAPTER 1

THE CLASSIFICATION OF MONEY

(i.) Money and Money-of-Account

Money-of-Account, namely that in which Debts andPrices and General Purchasing Power are expressed,is the primary concept of a Theory of Money.

A Money-of-Account comes into existence alongwith Debts, which are contracts for deferred payment,and Price-Lists, which are offers of contracts for saleor purchase. Such Debts and Price-Lists, whetherthey are recorded by word of mouth or by book entryon baked bricks or paper documents, can only beexpressed in terms of a Money-of-Account.

Money itself, namely that by delivery of whichdebt-contracts and price-contracts are discharged, andin the shape of which a store of General PurchasingPower is held, derives its character from its relation-ship to the Money-of-Account, since the debts andprices must first have been expressed in terms of thelatter. Something which is merely used as a con-venient medium of exchange on the spot mayapproach to being Money, inasmuch as it may re-present a means of holding General Purchasing Power.But if this is all, we have scarcely emerged from thestage of Barter. Money-Proper in the full sense of theterm can only exist in relation to a Money-of-Account.

Perhaps we may elucidate the distinction betweenmoney and money-of-account by saying that the money-