CH. I

THE CLASSIFICATION OF MONEY

11

Finally in Chapter 3 we shall further analyseCurrent Money as follows :

Current Money

Income-Money

Business-Money

Savings-Money

(vi.) Illustrations from History

Some historical examples will serve to illustratethe argument. The beginning of Money-Proper isoften associated by historians with the first coinage,in regard to which the statement of Herodotus thatit began in Lydia in the sixth or seventh century b.c.may still be credited. But I do not think that theact of coinage effected so significant a change as iscommonly attributed to it. It was, perhaps, the firststep towards Representative Money, or at any ratea step which made easier the subsequent transi-tions to Representative Money and to Fiat Money.But it is probable that the fundamental transition,namely the transition to Chartalist or State Money,long preceded it; just as the next important step,namely to Representative Money, was long subse-quent.

For Chartalism begins when the State designatesthe objective standard which shall correspond to themoney-of-account. Representative Money begins whenmoney is no longer composed of its objective standard.Fiat Money only appears when the State goes a stepfurther and abandons the objective standard. CoinedMoney, which the State alone can mint and whichmay have a value superior to that of the commodityof which it is composed, is at the most a first step inthe direction of Representative Money. Thus Coin-age is not one of the three vital innovations in theevolution of Money, and truly Representative Money