Alexander del Mar (from 9 August 1836 to 1 July 1926) was an American author, political economist, numismatist and a rigorous historian who made important contributions to the history of money. He also had honour to be the first Director of the Bureau of Statistics at the U.S. Treasury Department. He believed strongly in the legal function of money and dedicated much of his time to research on the history of monetary systems and finance. This article is written to pay tribute to him on his book ‘The Science of Money’.
THE UNIT OF MONEY IS ALL THE MONEY
The Unit of Money is all the money is the first chapter
this great book. In this chapter he gave history of the money and origin of the
word money. Its employment with reference to any period before B.C. 273 an
anachronism. He wrote that money, or nomisma, meant originally the whole
numbers of money. As per his views this was its classical meaning and during
the Empire and the Dark Ages money came to mean one or more coins. As per his
research, this is the meaning attached to it in the laws of modern nations,
because these laws originated in the Dark Ages. During the Renaissance it meant
the whole quantity, not numbers, of money. This is the meaning sometimes
attached to it by the Economists, because their systems date from the
Renaissance and he describe the incongruous nature of this meaning. He finally
concluded in this chapter with precision that money can only mean all the numbers
of money of a given country and Teleologically, the unit of money is all money.
CLASSIFICATION OF MONEY
In this chapter of the book he describes that moneys are of
great variety, needing classification, moneys are legal institutions, moneys of
unlimited and limited volumes, commodity, convertible, inconvertible and
composite moneys. He gave his research about various classes of commodity
moneys, living moneys, merchandise moneys, metallic moneys. He said that their
variety chiefly due to limitation of coinage, to seignorage, and to
legal-tender efficiency. Give general brief on age and life cycle of money from
the age of coins, bullion and finally to Unlimited paper moneys and their
varieties of composite moneys. He said that these are the kind employed by the
leading nations of the modern World-Limited moneys and define that these were
the kind employed in various countries of the ancient world.
STATISTICS
OF MONEY
In this chapter he describes the statistics of moneys
defective and its reasons that coins melted and exported surreptitiously. Sometimes
minted in one country to circulate in another. He said that coins used on
shipboard are melted in foreign mints. Describes the counterfeit coins, Coinable
bullion, Light coins, Coin reserves, misleading and deceptive practices. He
said that coins employed for special classes of payments. Give statistic of paper
money, Bank of England notes in foreign countries and on shipboard. Give his
research about local circulation of American “State-Bank" notes, Counterfeits,
Propriety of including bills, discounts, or cheques in the statistics of money
decided adversely. He said that International comparisons fallacious and every
country a law to itself concerning money.
THE
FUNCTION OF MONEY IS TO MEASURE VALUE
He said that the function of money correctly understood by
Aristotle during the era of that philosopher the volume of money in each country
was limited, and it formed a definite measure of value therein. He said that it
is now everywhere unlimited, and has lost its character of an exact measure Money
is not defined in the laws. For this reason, he concluded that it is unlike all
other measures money is intended, but not now fitted for, & measure. He
said that the size or weight of a dollar or pound sterling furnishes no guide
to the whole number of dollars or pounds; yet it is this which constitutes the
measure of value. In this chapter he described how the measuring function of
money is altered with every change in the whole number of so called units of
value, not so with the units of weight, length, volume or area.
VALUE
IS A NUMERICAL RELATION
In this chapter he shared his research about the legal use
of the words unit of value and their importance. As per his views they are not
defined in the law and describe that Unit is a synonym for measure money and
evolution of the word value, its classical meaning related to the power of
numbers. He said during the Dark Ages it became associated with labour and in
the Rennaissance it acquired the meaning of an attribute of matter Fallacy of
this last view. He said that the correct nature of value rediscovered by
Montesquieu and Bastiat. He said that the value shown to be a numerical ratio
between all exchangeable things and its further character difficult to define
because of its continual variance. He said though indefinable it is not
immeasurable, its value measurable by the whole numbers of money. He said that the
existing mint laws practically make the whole numbers of money or unit or
measure of value to consist of an indefinite sum whose only limits fluctuate
between illimitable demand and uncertain supply.
MONEYS
CONTRASTED WITH OTHER MEASURES
In this chapter he said that besides the difference,
already shown, which exists between unlimited moneys and limited measures,
there are differences between moneys and other measures even when both are
limited. He described it in five points: -
1.
Money is used to
determine the value of numberless things at the same time; a yard. stick to
determine the length of one thing at a time.
2.
Money determines a
dynamical and variable relation; other measures, & statical and fixed one.
3.
Money determines a
numerical and extrinsic relation; other measures determine an inherent and intrinsic
attribute.
4.
Money determines an
equitable relation; other measures determine attributes which have no
connection with equity.
5.
Moneys have a tendency
to instantly amalgamate, and two or more moneys will merge into one money of
the combined volume of both, which is not the case with other measures.
LIMITATION
IS THE ESSENCE OF MONEYS
In this chapter he gave resemblances, actual and desirable,
between money and other measures. He said that all measures of precision are
artificial, to become a precise measure money must also be of artificial
dimensions and all other measures are susceptible of exact numerical expression.
As per his views to become a true measure, money must be defined numerically.
He said that the efficiency of all measures, money included, depends upon the
exactness of their limits, not the substance of which they may be composed. He finally
concluded that the limits of other measures are not left to be determined by
supply or demand, nor should be those of money.
THE
PRECESSION OF PRICES
In this chapter he gave explanation of Price. He said that
it cannot be expressed in a given coin or sum of coins independent of other coins.
He views that it varies directly with the whole numbers of money, logically a
doubling of money will instantly effect a doubling of all prices. He said that
in point of fact, this doubling occurs in time, and the time varies with
different commodities, this variance subject to natural law and such law called
the Precession of Prices, or Movement of Prices in Time. Gave his results of
practical observations on the working of this law. Share his research regarding
danger of employing a money without fixed limits and other practical observations
concerning moneys.
REVULSIONS OF PRICES
He describes that why coins are not made of gold and silver
because of the intrinsic qualities of these metals. The practice arose from the
superior constancy of their quantity as compared with other substances, and
during eras when artificial moneys of fixed quantity were politically
impracticable Historical examples. He said that the precious metals were never
commonly and permanently used for coins until the conquest of Europe by Rome
When the first effects of this conquest subsided the precious metals fell into
disuse as materials for coins, until the Spanish conquest of America. The
effects of this conquest, and its concomitant great supplies of gold and silver
to Europe, upon prices, have been sustained by means of so-called convertible
paper notes. He concluded that this system incapable of further extension,
necessity for reform in money, fluctuations of prices which have resulted from
convertible note systems their disastrous and baneful effects.
CAUSES
AND ANALYSIS OF A RATE OF INTEREST
In this chapter he describes the causes of a rate of
interest, Temporary supply of money, Rate of profit in trade, Rate of profit in
production, Rate at which animals, plants, and minerals increase. He said that rate
at which the means of subsistence increase and subsistence ultimately governs
the rate of interest. Subsistence also governs the growth of population; so
that population and the rate of interest are related. He said that when to the
rate of interest, arising from increase of subsistence, there are added
allowances for risk, taxes, and the cost of superintending loans, the market
rate of interest follows Present tendency of the market rate. Describes the ignorance
of American ministers of finance and Usury laws.
RATE
AT WHICH EXCHANGES INCREASE
In this chapter he said that exchanges differ essentially
in frequency, their frequency indicated by the customary rates of profit
attached to each class. He said that they are all reducible to one denomination
of frequency and when thus reduced it will be found that competition has
compelled them all to bear the same rate of profit. That rate is the one at
which all the capital in a country augments. He said that the latter is
identical with the net rate of interest for money. He concluded in this chapter
that given the net rate of interest in a given country, the following rates can
be deduced: the average rate of the augmentation of all capital: the net rate
of profit on all exchanges reduced to one denomination of frequency and the net
profit on each class of exchanges whose order of frequency is given.
REGULATION OF MONEYS
In this chapter he describes the fluctuations of price
which do not belong to the domain of science, variations which do, practical
considerations for the regulation of money. Shared his research regarding effect
in the United States of an absolutely' fixed sum, influence of a fixed sum per
capita of population. Describes the actual movement of population and money
during the past century and rose an important question; Had money been
regulated instead of being left to commerce, chance, and political contention,
the great panics of 1815, 1821, 1837, 1861, and 1870 might have been averted.