MONEY AND THE MECHANISM OF EXCHANGE 165

of valuation of the various actual rupees, of differing mintages,
which were in circulation, though this standard rupee was
not struck for use. Not being in circulation, and subject to
degradation through wear and tear, its value in silver
remained unchanged. In most modern communities, vast
quantities of goods are exchanged which are valued in terms
of gold or silver coins, but in the exchange of which such
coins are not used, various paper representatives of large
masses of coin serving as actual media of exchange.
The commodity which serves as medium of exchange and
common denominator of values is generally known as money.
Though a primary function of money was to serve as an
actual intermediary in exchanges, the development of commerce
 has progressively substituted representatives of money
for money itself in this function. The values exchanged are
estimated in terms of money, but the actual handling of the
money is a cumbrous and unnecessary formality, which can
be, and is, dispensed with on most occasions, though the right
to require it is reserved. This use of substitutes for money
in actual exchanges throws into greater prominence the use
of money as a means of expressing value, and the fact that
a great number of contracts, expressed in terms of money,
call for money payments at a time subsequent to the date
of the contract, leads to a further important quality being
required of a money, if it is to be a satisfactory money. Its
value must remain steady, that is, the values held in view in
making a contract in terms of money should, as far as
possible, be realised when the payment is made. If the
money-material be one which is subject to rapid and considerable
 fluctuations in value, this condition is not fulfilled.
By the selection of the precious metals as money material,
the fulfilment of this condition is, in some degree, ensured.
Let us consider the case of gold, and note the features of
Contrast between it and such commodities as iron, cotton,
wheat, etc, in this respect. The supply, available for current
use, of these latter commodities, is practically dependent on
Current production. This is more obviously the case with
iron than with agricultural products, since the supply of these
latter is great just after harvest and small immediately before