It is perhaps not necessary to dwell on the traditional definition of money as being a medium of exchange, a measure of value, a medium for deferred payments and a store of value. Many primitive societies, including the feudal régimes of the middle ages, have conducted most of their exchanges without the intermediation of money. In medieval times, for instance, rents were paid in labour or in kind; thus landlords obtained what they wanted by the direct service of their tenants and the tenants produced most of what they needed for themselves. The advantage of having money as an intermediary in a society in which the division of labour is carried to an advanced stage is obvious. If the producer can sell his product to those who need it most and buy what he requires from a different set of people, namely, those best able to produce the things that satisfy his needs, welfare will clearly be increased. Barter, the direct exchange of commodities for commodities, lingers on in backward societies, and even in certain international transactions. An efficient international monetary system has not yet been extended to all parts of the world.
KeywordsPrecious Metal Silver Content Foreign Exchange Market Unlimited Quantity Legal Tender
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- 1.Some standard books on the subject are: R. Ruding, Annals of the Coinage of Great Britain, 3 vols (3rd edn, 1840);Google Scholar
- W. A. Shaw, History of Currency, 1252–1894 (1895);Google Scholar
- A. E. I. Feaveryear, The Pound Sterling: a history of English money (1931).Google Scholar
- 1.For the Indian system, see especially J. M. Keynes, Indian Currency and Finance (1913).Google Scholar