MONEY AND THE MECHANISM OF EXCHANGE 173

and the finality with which obligations are discharged by
them, are important characteristics entitling those things
which satisfy these tests to separate classification, apart from
other media of exchange.
When the law confers legal tender power on a circulating
medium, unless citizens oppose the carrying out of the law
by practically refusing to circulate what the law endows
with the power of discharging debt, the medium thus
legalised satisfies the terms of the definition as a money.
Inconvertible paper-currency may thus be money, as well as
full-valued coin. Cheques and promissory notes and the like
are documents conferring a right, absolute or limited, to
demand money. They are not themselves money. They
only conditionally discharge debt, and have only a limited
Currency. If we read “community ” in the broad sense in
which national boundaries cease to limit the application of
the term, the definition limits the name “ money” to metallic
Money, practically to gold. Legal tender currencies have
ho international circulating power and debt paying potency,
30 that international money is, as is acknowledged freely,
Practically gold bullion.
In what precedes, the value of money in exchange for
Other commodities has been considered without other
‘eference to supply than to the fluctuations which occur.
As commodities in general have values corresponding in
SOme sense with cost of production, it is useful to enquire if
the same holds of money-material, As gold is the general
Material of standard money, ze. of the money in terms of
Which values are expressed in all the leading commercial
fations, we will refer to gold only. The relative stability of
ts supply has already been discussed. Thus cost of production
 may or may not correspond to the value which
‘®sults from the relation of existing supplies to current
®quirements. But, if cost of production be below the value
of the gold when produced, increase of supplies will be
Stimulated, tending to an ultimate fall in exchange-value,
og, Perhaps, to a rise in cost of production by resort to
Ower-grade mines. If, on the other hand, the value of the
20ld fall below the cost of production of anv considerable