OH. I

THE CLASSIFICATION OF MONEY

15

alleged to have been anciently current in China, andalso those of John Law and other precursors, the histori-cal importance of Representative Money dates fromso recent an epoch as that of the French Revolution ,the exigent consequences of which led to the adoptionnot merely of Representative Money but of FiatMoney for many years in what were then the leadingfinancial centres of the world, France and England.

Nevertheless, whilst Representative Money is arelatively modern device, it was, as we have seen,adapted and taken over by the State from a far moreancient contrivance of private finance—namely Bank-Money. The earliest beginnings of Bank-Money , likethose of Chartalist Money, are lost in antiquity.Perhaps Bank-Money , especially in the shape of Billsof Exchange and letters of credit for travellers abroad,may have existed almost as long as Money-Proper.For the use of Bank-Money depends on nothingexcept the discovery that, in many cases, the trans-ference of the debts themselves is just as service-able for the settlement of transactions as is thetransference of the money in terms of which theyare expressed. A title to a debt is a title to moneyat one remove, and, to the extent and within thefield that confidence is felt in the prompt converti-bility of the debt into the money, the element ofremoteness is irrelevant to the serviceability of Bank-Money for settling transactions. Bank-Money in theshape of Bills of Exchange was not less useful andnecessary in the ancient world than to-day for the pur-pose of settling transactions at a distance, owing to thecheapness of its cost of transmission as compared withthe costs and risks of transporting Money-Proper.

(vii.) The Evolution ok Managed Money

That species of Representative Money which Ihave called Managed Money is, as the diagram shows,