Among writers as late as John Stuart Mill, there is practically no separation of these functions. The term money was applied indifferently to an instrument which served only as a medium of exchange, or only as a standard, as the case might be. Obviously, it would not be possible here to summarize all the different ways in which the functions of money have been viewed: they vary with each writer. In the main, there is a discussion upon the merits of the following separate functions:
1. A medium of exchange.
2. A standard, or measure of value.
3. A standard of deferred payments.
4. A legal means of payment.
5. A store of value.
6. A means for transferring value or capital.
The most recent German writer, the distinguished scholar, Helfferich, in an epoch-making treatise,[1] holds that there are only two primary functions of money, neither being secondary to the other: (1) Medium of exchange, (2) means of payment. He does not regard the standard function as essential to the conception of money, believing that any such service as may be included under a measure of value has been derived from the two primary functions given above. With several other writers, he finds that the medium of exchange was the thing which first developed, and then came into general use as a standard, or measure of value. He practically defines money as everything serving to facilitate exchange between economic factors. Thus, Helfferich would hold that the state, by giving legal tender power to things worthless in themselves, such as irredeemable paper, created a means of payment for debts, and therefore he would include even such instruments as these under money, because they fall under one of his primary divisions.
Whatever conclusions may be reached in regard to the functions of money, their application to the system of any one country would raise difficult questions as to the classification of money. If one of the necessary functions is lacking to any one form of money, is it, or is it not, true money? For instance, in the United States, no one would hesitate to say that gold coin is true money, and yet it is very little used as an actual medium of exchange. Therefore, we may easily call that true money which does not serve principally as a medium of exchange. Also, silver dollars, and French five-franc pieces, in the so-called 'limping gold standard,' could not be called true money in all senses, because their value is dependent on a primary form of money. Like national bank-notes and greenbacks, they are only 'surrogates' they are, perhaps, legal, but not economic, money in the fullest sense.
- ↑ 'Das Geld,' von Karl Helfferich, Leipzig, 1903, 8vo, pp. x + 590.
