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This control may be exercised in two ways: first, the monopoly may decide upon the quantity to be produced, and then sell that quantity for whatever it will bring on the market, allowing the law of demand and supply to fix the price; second, the monopoly may decide upon the price at which it will sell the product, and then produce only as much as can be sold at that price. This is the method usually followed. In either case the supply is limited by the will of the monopoly and not by the cost of production. In a genuinely competitive industry the supply is limited by the cost of production. Producers will stop production rather than sell for any considerable time below the cost of production.

CHAPTER XXIV

MONEY

Money a labor-saving invention. One of the greatest of all labor-saving devices is money. If one will try to imagine the difficulties of carrying on exchange without the use of money, that is, by means of direct barter, one will easily understand how great a convenience money is. Of course, without the use of some kind of money we never could have developed our present highly specialized industrial system, under which each individual does that for which he is best fitted and exchanges his products or services for the products and services of other people who are likewise doing that for which they are best fitted. But even if we could imagine such an industrial system based on barter, the difficulties would seem almost insuperable. The tailor who had made a coat and desired bread in exchange might find difficulty in finding a baker who happened to want a coat; even if he found such a baker, it would be difficult for the tailor to carry home as much bread as the coat would be worth. By some kind of credit system, of course, the baker could credit him with a large number of loaves of bread, to be called for one at a time. The dairyman who had milk to sell would find it difficult to know how to collect payment for the very small quantities which he delivered to the butcher, the baker, the tailor, etc. These difficulties would be so great that in all probability there would be comparatively little exchange. The farmer would have to be his own butcher, tailor, and shoemaker. Each household, in fact, would have to be almost self-sufficing.

So important is the function of money in modern industrial society that some writers have seen fit to divide systems of

economy into two fundamental types, known as the barter economy and the money economy. Certain savage tribes, who live in a state of primitive communism, get along without much exchanging. Their limited commerce with the other tribes is carried on by means of barter; furs and other articles of their own production are exchanged for outside products which they desire. The introduction of money makes possible a great deal of exchanging within the tribe and is supposed to have marked one of the epochs in the economic development of civilized peoples.

Various substances which have served as money. Various commodities or articles have served the purpose of money. The early colonists in America found the Indians using a kind of currency known as wampum or bead currency. The Hudson Bay Company and other companies that traded with the Indians of the interior developed a skin or fur currency, in which the skins of various animals were recognized as standards of value and exchanged at the ratios agreed upon. In ancient times various European peoples accordingly used cattle as currency. In the Homeric poems values are frequently quoted in terms of cattle. A very amusing and at the same time instructive illustration is given in a paper entitled “Rudimentary Society among Boys," by John Johnson in the Johns Hopkins University Studies in History and Political Science, 2d Series, No. II. In this primitive boy society, butter was used as money.

BUTTER AND PIE IN BOYS' SOCIETY

Commonly the primary object of the hunters is to obtain a handsome collection of curiosities, and to enjoy the satisfaction of possession along with the esteem inspired by success; but occasionally a boy hunts with a purely commercial end in view. I have been told of one who made a practice of exchanging all the eggs he found for the allowance of butter given to his companions at meals. This latter is dealt out to the boys in approximately equal portions of an ounce weight, and is frequently used by them as a means of exchange and measure of value. A flying squirrel has been

known to bring fifteen "butters," and a sling, five "butters." The unit is subdivided once, the fractional piece being known as the "half-butter" and having a purchasing power about equal to that of one cent. Some boys who entered upon the manufacture of taffy obtained the needed butter by buying it from the rest at the price of two cents for one" butter," payment being made, at the option of the seller, either in money or in taffy.

Their transactions are often so complicated that the boys find it desirable to lessen the number of payments of this novel currency, and they employ for this purpose a system of verbally transferring their claims from one to another, somewhat as merchants use negotiable notes. Perhaps A buys a knife from B for ten "butters." B has an outstanding debt of the same amount for marbles, and he transfers to his creditor C his claim against A, who pays to C or to anyone else whom C may designate.

At first glance this use of butter as money seems laughably odd; but in fact it could be easily paralleled by long lists of articles equally far removed from the gold, silver, and paper of our own currency, which have yet served as money in different parts of the world. The wampum of the early Indians is familiar to all readers, and Jevons and Roscher enumerate, among many other substances that have been so used, corn, wolfskins, whales' teeth, and straw mats. The former of these distinguished authors remarks that "it is entirely a question of degree what commodities will in any given state of society form the most convenient currency" and our boy-state being in a condition where butter served the purpose, its citizens adopted that commodity as their money.

Professor H. B. Adams added a footnote to the above which reads as follows:

At Phillips Exeter Academy, New Hampshire, in my day, there was a pie currency in vogue among the boys who boarded in Abbot Hall. Pie was something of a luxury, for it was furnished by " Burnham," the steward, only twice a week. The idea of value in exchange was naturally connected with our Saturday and Sunday allowance of pie; in fact, there was a constant trading of different sorts of pie, a boy offering his mince or custard pie of one week for the apple or pumpkin pie that was to come the next week. Pie debts were, moreover, incurred in a variety of ways, chiefly for services rendered, - for example, by one's chum in making the fire on a cold morning, when it was not his turn, or by one student aiding another in his lessons, etc. Boys would wager their pie sustenance for a week, and sometimes for a month, on a match game of ball. These young barbarians, at their ball play, used to rival the ancient Germans, who, as Tacitus describes, sometimes staked not only their property, but their very freedom in games of chance. What

could be greater recklessness for a hungry boy than to risk his pie for a month on the issue of a game of baseball? In ordinary transactions the unit of pie value at Exeter was the " piece," which was served us on a special plate; but there were as many standards of value as there were sorts of pie, so that in the settlement of a small debt of one or two " pieces," boys sometimes sought to pay their creditors in pie of an inferior or less marketable quality. Poor pie was like trade dollars. Sometimes a creditor would find himself with an embarrassment of riches. If his debtors insisted on paying off their obligations on one day in one sort of pie, he would be obliged to eat up all his perishable substance at once, or to dispose of it at a considerable sacrifice.

So great is the need for money in a society where there is any exchange of desirable articles that almost anything which is commonly used and appreciated may serve the purpose of money. Among primitive herdsmen, cattle meet the conditions. They are universally esteemed and appreciated; they are familiar objects whose value is generally understood, and they are easily transferable. They lack, however, certain other qualities which make modern metallic money convenient.

Qualities which the money material should possess. Jevons, in his "Money and the Mechanism of Exchange," names seven qualities which are desirable in the material of which money is made. They are, first, utility and value; second, portability; third, indestructibility; fourth, homogeneity; fifth, divisibility; sixth, stability; and, seventh, cognizability. Cattle possess only the first, second, and seventh of these qualities, and perhaps to a slight degree the sixth. That they are useful to primitive herdsmen is rather obvious. They furnish their own portability in that they can carry themselves about. They possess cognizability because all are familiar with them. There may be a certain stability also in their value, though that is by no means certain. The skins of animals, used as money by hunting tribes, possess the same qualities as cattle, but still lack the others which Jevons deems desirable. The "butters," as used in the rudimentary society mentioned above, seem to possess everything except indestructibility.

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