II.: Money, what, and whence it arose.

20. To avoid the great inconveniencies of mere barter, a material or commodity that should be universally accepted in exchange for all other things, was soon agreed upon; and this is what we call money. As soon as this invention became established, men reckoned the value of their goods by money; and the terms prices, buying, and selling came in use; a greater or less quantity of money going to the purchase of all things, in proportion to the respective values which before had been set upon them, as well in respect of that commodity now made money, as of one another.

Thus, money is a standard measure, by which the values of all things, are regulated and ascertained; and is it self, at the same time, the value or equivalent, by which, goods are exchanged, and in which, contracts are made payable. So that money, is not a pledge, to be afterwards redeemed, but is both an equivalent and a measure; being in all contracts, the very thing usually bargained for, as well as the measure of the bargain: Or, if one thing be bartered for another, the measure of the bargain is usually the quantity of money, which each of the things bartered, are conceived to be worth.

To illustrate this subject farther, let us suppose silver to be that commodity, which was fixed upon as money. Silver had before a known value, from its uses as a metal; and being durable, portable, divisible without loss, and of equal goodness every where, as will be explained hereafter, was found every way convenient for the purpose of money; and having been applied to that use, silver received an additional value to that which it had before, as a mere metal, from the greater demand for it thence arising. As soon as silver was made money, it was used, both as the value in which contracts were made payable, and also as the measure, by which goods were valued; and consequently, of the proportion of value of different goods to one another. Thus, as Mr. Locke observes, “the value of lead to wheat, for instance, and of either of them to a certain sort of cloth, is known by the prices of each, or their value in silver or money. As if a yard of cloth be worth or sells for half an ounce of silver, a bushel of wheat for one ounce, and a hundred weight of lead for two ounces; any one presently sees and says, that a bushel of wheat is double the value of a yard of that cloth, and but half the value of an hundred weight of lead.” And according to these proportions, any quantity of the above commodities will exchange, either for money, or for one another. So that, as before observed, money is always the standard that measures the values of commodities; and, most commonly, is also what is given for them, or the equivalent with or for which they are purchased.