CH. I
THE CLASSIFICATION OF MONEY
9
The scheme of conceptions and forms, set forthabove, and their inter-relations, can be displayed in adiagram thus :
Commodity Money Managed Money Fiat Money Bank-Money
Thus we are left with four kinds of instrumentsof exchange, of which three are Money-Proper andthe fourth is not Money-Proper but an acknowledg-ment of debt.
One of the fundamental elements in the Theoryof Money is the total quantity of Money of all kindsin the hands of the public; and it often makes butlittle difference whether the money in question isState-Money or Bank-Money . The aggregate ofboth may be called Current Money. The relation-ship between Current Money and State-Money is asfollows.
The typical modern Banking System consists ofa Sun, namely the Central Bank, and Planets, which,following American usage, it is convenient to callthe Member Banks. The total stock of State-Moneyis held partly by the Public, partly by the MemberBanks, and partly by the Central Bank. The State-Money held by the Central Bank constitutes its
Acknowledgments
t
of Debt
t
Commodity Money Representative
Money