BOOK III.

EXCHANGE.

CHAPTER VII.

§ 1. Having proceeded thus far in ascertaining the general laws of Value, without introducing the idea of Money (except occasionally for illustration), it is time that we should now superadd that idea, and consider in what manner the principles of the mutual interchange of commodities are affected by the use of what is termed a Medium of Exchange.

In order to understand the manifold functions of a Circulating Medium, there is no better way than to consider what are the principal inconveniences which we would experience if we did not have such a medium. The first and most obvious would be the lack of a common measure for values of different sorts. If a tailor had only coats and wanted to buy bread or a horse, it would be very troublesome to ascertain how much bread he ought to obtain for a coat, or how many coats he should give for a horse. The calculation would have to be started over on different data every time he bartered his coats for a different kind of article;