War-time financial problems

THE ORIGIN OF CURRENCY • 135

be as well to consider what is wrong with our present
methods, and what sort of improvements are sug-
gested by the reformers. At present, as every one
knows, international payments are in normal times
ultimately settled by shipments from one country
to another of gold. Gold has achieved this position
for reasons which have been described in all the
currency text-books. Mankind proceeded from a
state of barter to a condition in which one particular
commodity was used as the chief means of payment
simply because this process was found to be much
more convenient. Under a system of barter an
exchange could only be effected between two people
who happened to be possessed each of them of the
thing which the other one wanted, and also at the
same time to want the thing which the other one
possessed, and the extent of their mutual wants had
to fit so exactly that they were able to carry out
the desired exchange. It must obviously have been
rare that things happened so fortunately that
mutually advantageous exchanges w^re possible, and
the text-books invariably call attention to the diffi-
culties of the baker who wanted a hat, but was unable
to supply his need because the hatter did not want
bread but fish or some other commodity.

It thus happened that we find in primitive com-
munities one particular commodity of general use
being selected for the purpose of what is now called
currency. It is very likely that this process arose
quite unconsciously ; the hatter who did not want
bread may very likely have observed that the baker
had something, such as a bit of leather, which was