MONEY ( THE SUPPLY OF MONEY )

CHAPTER ONE 

WHY TEACH ONESELF ABOUT MONEY ?

This blog is about money.
      Since Stanley Jevons published his book on money nearly three quarters of a century ago, there has been a long succesision of works on this subject. Before 1914 these Publications reached only a very limited circle af readers since they were primarily intended for economists, for it is only during the last twenty years that the general readers has begun to take an interest in the subject. New books on money have not, how ever, Flowed out from the press in the reguler stream. Instead they have tended to appear in clusters : as, for instance, in the early 1930s, and yet again after the second World War. Two of these periods, it will be noticed, followed upon great wars when the value of money was threatened, and the third was a period of trade depression which some writers thought a more complete control of money might at least have assuaged.

Monetary Stability-Few Books on Money
       In spite of the tremendous industrial and social changes of the Victorian Age, its chief characteristic when we look back appears now to have been the general stability of things in those days. The Victorians themselves were not unaware of this. Though they would have been the first to agree that change must take place-for were they not fervent believers in progress?-basically they considered that they were living in a stable society. Superficially things might change-for the better, of course-but they never expected any fundamental change to take place in their way of life. and to them nothing was more stable than money. It is true that the prices of things in general varied somewhat from time to time, and the in creasing scale of production was gradually making many manufactured goods cheaper than they had ever been before, but price changes were almost imperceptible and show to take affect. It is true also that some bank faliures occured; but as the century progressed these became fewer, and sunch untoward happenings were to be regarded as being due to the incompetence, mismanagement or criminality of a few particular bankers, and were certainly no to be taken to be an indication of the instability of money. The idea that money it selft could fail them, that people could lose confidence in it or that it could become worthless was unthinkable to Victorian England. There were occasional financial crises, but these seemed to affect only a few people in the "City" and not the general public. Parliament interfered as little as posibble, but when it did it was to try to safeguard the value of money. The Bank Charter act of 1844 aimed at restricting the issue of bank-notes the belief that money consisted primarily of cash, though we shall see later that long before the reign of Queen Victoria came to an end cash had ceased to be the chief kind of money in use in this country.
        In spite of some fluctuations in prices and a financial on banking crisis or two, there was then no serious change over a considerable period of time in the quantity of goods that could be bought for a gold sovereign. People in those days never spoke of changes in the value of money. They could not conceive, for example, of a sum of money at one time buying only one-fortieth of what is would have bought at another, as has been the experience of all Frenchmen who have reached middle age. As for the collapse of the German mark and other currencies after the first world war or of the Hungarian and Chinese currencies more recently, such events would have been income Prehensible to all except a few economists of Victorian England. Under the conditions of their time, it is not surprising, there fore to find that people generally had little interest in money at any rate, as a subject of theoretical study.
        As an instrument by whose aid they could satisfy present wants, as something that could be stored and used later to satisfy some future want, as something that could be lent or invested in order to provide them with an income, or as a means to power, they had the greatest Posibble respect for with their origin in many different countries, about money, but most English ones belong to the sixteenth, seventeenth and eighteenth centuries. A few are cynical in tone, but most of them express appreciation of the power of money. Consider the following :

• ready money is a ready medicine.
• Beauty is potent, but money is omnipotent.
• Love does much but money does all.
• For age and want save while you may.
• No morning sun last a whole day !

Such an attitude to money could arise only in times when money could be relied upon to keep its value.