Origin and Definition of Money

 

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Definition of Money.   

There is no evidence about the first emergence of money , particularly the time and place concerned. People had very few wants in the beginning of human civilization. There was no need of money as they consequently interpendence for goods and services increased. Hence, the barter system came into existence to fulfill the initial needs of exchange. But a number of difficulties were observed in this system by the passage of time, for instance lack of double coincidence of wants , lack of store of common measures of value , lack of divisibility of commodities, lack of store of value, difficulty in deferred payment system, lack of transfer of value etc. In a civilised society, a need was felt that there should be such a system that could save all from these difficulties. Money came into existence in these circumstances.

The term money is derived from the word "Moneta" . It is said that moneta  is the other name of goddess Juno. In ancient Italy this goddess was called the goddess of heaven. Metallic money was coined in the temple of the this goddess. As this money was produced in the temple of ,

"The goddess of heaven"  one who got it felt the joy of heaven. So it is it is considered that the term Money is derived from the word Moneta.

On the other hand some scholars considered the term "Pecunia"as the root word of money. The term pecunia has origined from the term pecus which literally means "livestock". This can be held logical as in ancient days livestock and good was used as money.

whatsoever have been this the ways of origin of money , it is an ultimate truth that money is one of the three greatest inventions of the world. It is worth mentioning here the fire ,wheel and money are considered to be the three greatest invention of the world. Money is also used in the sense of seal or sign in Hindi.

Definition of money 

There is much difference in opinion of scholar regarding the definition of money someone has based the definition of money on the universal acceptance where as someone else has taken it function as the central issue in the definition so for the convenience of study definition of money can be classified as follows on the basis of their nature.

Definitions based on the nature of money

Definitions on the basis of nature of money can be classified into following three groups:

 1.Descriptive of functional definition:

This category includes definition of those scholars who stated functions of money in their definition some important definition of this category are given below:

According to crowther "Moneyis anything that is commonly used and generally accepted as means of exchange and at the same time act as the measure and store of value".

According to Coulborn, money maybe defined as the means of valuation and payment.

According to Professor Thomas It is a means to an end not for its own sake but as means of obtaining others artical or commanding the service of others.

According to Nogaro "money is a commodity which serves as an intermediary in exchange as a common measure of value".

According to hartle withers "money is what money does"

According to whitslesy if a particular unit is commonly employed to state values exchange goods and services of a form other money functions then it is money whatever its legal or physical characteristics

Although the above definitions are practical they describe money in place of defining it. There is radical difference in description and definition these definitions don't claim any universal acceptance or recognitions of governments so even if these definitions are accepted in practice they can't be given recognition.

2. Definitions based on common acceptance.   

It is an essential characteristics of money that it is commonly accepted by common people in return for the goods and services so some scholars have defined money on the basis of acceptance some important definition of this categories are given here.

(1) According to Marshall "money includes all those things which are not given time or place generally current without doubt or special enquiry as a means of purchasing commodities or services and of defraying expenses".

(2)According to Robertson "Money is anything which is widely acceptable in discharge of obligation".

(3) According to seligman "Money is one thing that possesses general acceptability".

(4) according to Ely "anything that passes freely from hand to hand as a medium of exchange and is generally received in final discharge of debts".

(5) According to professor kenynes "Money itself is that the delivery of which stepped contracts and price of contracts are discharged and in the shape of which a store of general purchasing power is held".

(6)according to G.D.H. Cole "Money is simply purchasing power of something which buys things it is anything which is her beautifully and widely used as a means of payment and generally acceptable in the settlement of debts".

(7)according to R.P. Kent Money is anything which is commonly used and generally accepted as a medium of exchange are as a standard value".

It is evident from all above definitions that a common acceptance is a chief characteristics of money but describing qualities can't be complete definition on the basis of above definition credit instruments can't be considered as money since they are not accepted everywhere.

3. Legal definitions

Definitions based on state principle have been kept under this category according to  this principle only such thing can be money which has been declared legally by the government. This category includes the ideas of Professor Knapp from Germany and British economist Hartel.

According to Knapp "anything which is declared money by State becomes money".

Hartle has also initially accepted the definition given by an Knapp but he has amended this definition saying money should not be defined only in in the terms of recognition by the government but as a unit of settlement of transactions".

Definition given on the basis of expansion

Where are three views regarding the meaning of money on the basis of expansion.

1. Definitions with narrow points of view

The definition given by Robertson is kept in this category. Robertson and his associates held that a commodity which is used to denote anything which is widely accepted in payment of goods or in discharge of other business".

If this definition is analysed gold is the only think which is acceptable to all countries for replacement in this condition money formed from gold or silver alone can include in the definition of money so most of The economist help the definition given by Robertson to be narrow.

2. definitions with broadd point of view :

Definition given by hartle withers can be included in this category according to him ."Money is what money does".

This definition is descriptive as well as universal this definition can be termed as everything in something according to this definition not only metals are currencies but also checks bills of exchange,  hundies and other credit instruments are included in money but some economist considered that this definition is far more than universal then what is needed according to this definition credit instruments are also money but nobody can be compelled to accept it  for repayment.

3.Proper definition.

On making a careul study of various definitions we come to find that some economists have centred their attention on the acceptance of money while some others have paste their definitions and functions what it does if we have to know the form of money it can be defined as follows money is something which is accepted freely and widely as a medium of exchange measuring value final repayment of loans and accumulating values.

Definitions based on viewpoints of economists.

Harry G. Johnson has presented for viewpoints regarding the definition of money.  These includes :

(1) Traditional Approach :

According to this view point money is considered according to its function so all those things which act as money can be called money. on the basis of currencies and demand deposit are included in money in this category Hartle withers, kenynes, Kent, crowther etc.

(2)Chicago approach:  

economist of Chicago University has made the definition of money universal by accepting the  traditional approach and at the same time including fixed term deposits and savings accounts deposit of commercial banks according to this approach: 

Money= currency +demand deposits+ fixed deposits+ savings bank deposits.

(3)Hurley and Shaw Approach:

This approach includes saving deposits with non banking financial institution debenture and bonds to Chicago approach so according to this approach.:

Money= currency+ demand deposit+ fixed deposit +savings Bank deposit +saving deposit +with non financial institutions shares debentures and bonds.

(4) Central Bank Approach:

According to this approach all kind of credits are included in money that is why  the monetary policies of Central Bank the amount of gross credit is considered.

Redcliff has also so sad money means credit forwarded by various sources considering all these approaches it is is evident that proper definition which has already been defined is the best.