Representative money: Difference between revisions
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[[File:Goldcertificate front.jpg|thumb|right|U.S. $50 |
[[File:Goldcertificate front.jpg|thumb|right|U.S. $50 gold certificate]] |
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'''Representative money''' |
'''Representative money''' or '''receipt money''' is any [[medium of exchange]], printed or digital, that represents something of [[Value (economics)|value]], but has little or no value of its own ([[intrinsic value (finance)|intrinsic value]]). Unlike some forms of [[fiat money]] (which may have no [[commodity]] backing), genuine representative money must have something of intrinsic value supporting the [[face value]].<ref name=mundell/> |
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Unlike [[fiat money]] (which may or may not have anything of value backing it), to be a genuine representative money, there must always be something valuable supporting the face value represented.<ref name=mundell/> |
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| ⚫ | * A claim on a commodity, for example [[gold certificate|gold]] and [[silver certificate]]s.<ref name="mundell">Robert A. Mundell, [http://academiccommons.columbia.edu/download/fedora_content/download/ac:114139/CONTENT/econ_0102_08.pdf The Birth of Coinage], Discussion Paper #:0102-08, Department of Economics, [[Columbia University]], February 2002.</ref><ref>Jon Hooks, ''Economics:fundamentals for financial services providers'', [https://books.google.com/books?id=wfbfki5YB0UC&dq=Money+representative&pg=PA201 p. 201] {{ISBN|0-89982-494-3}}, {{ISBN|978-0-89982-494-9}} Retrieved September 9, 2009</ref><ref name="p.30">William Howard Steiner, ''Money and banking'', [https://books.google.com/books?id=gq6CAAAAIAAJ&q=representative+money p. 30], H. Holt and company, 1941.</ref> In this sense it may be called "[[Monetary system#Commodity-backed money|commodity-backed money]]". |
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* Any type of [[money]] that has face value greater than its value as material substance. Used in this sense, most types of [[fiat money]] are a type of representative money.<ref>{{cite book |
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| ⚫ | *A claim on a commodity, for example [[gold certificate]] |
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|title=A Treatise on Money |
|title=A Treatise on Money |
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|author=John Maynard Keynes |
|author=John Maynard Keynes |
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|page=7 |
|page=7 |
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|chapter=1. The Classification of Money |
|chapter=1. The Classification of Money |
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|orig-year=1930 |
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|year=1965 |
|year=1965 |
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|quote=Fiat Money is Representative (or token) Money (i.e something the intrinsic value of the material substance of which is divorced from its monetary face value) |
|quote=Fiat Money is Representative (or token) Money (i.e something the intrinsic value of the material substance of which is divorced from its monetary face value) |
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|publisher=Macmillan & Co Ltd}}</ref> |
|publisher=Macmillan & Co Ltd}}</ref> |
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There is no concrete evidence that the clay tokens used as an accounting tool to keep track of warehouse stores in ancient Mesopotamia were also used as representative money. |
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Historically, the use of representative money predates the invention of [[coin]]age. In the ancient empires of Egypt, Babylon, India and China, the temples and palaces often had commodity warehouses which issued certificates of deposit as evidence of a claim upon a portion of the goods stored in the warehouses, a form of "representative money."<ref name=mundell/> |
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<ref name="Schmandt-Besserat">[https://sites.utexas.edu/dsb/ Denise Schmandt-Besserat], [https://sites.utexas.edu/dsb/tokens/tokens/ Tokens: their Significance for the Origin of Counting and Writing]</ref><ref>Keynes, J.M. (1930). ''A Treatise on Money''. Volume I, p. 13</ref> However, the idea has been suggested.<ref name=mundell/> |
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According to economist [[William Stanley Jevons]] (1875), representative money arose because metal coins often were "variously clipped or depreciated" during use, but using representations for the value stored in banks ensured its worth. He noted that paper and other materials have been used as representative money.<ref>[[William Stanley Jevons]], [http://www.econlib.org/library/YPDBooks/Jevons/jvnMME16.html ''Money and the Mechanism of Exchange''], Chapter XVI, "Representative Money," Retrieved June-29-2009</ref> |
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In 1895 economist [[Joseph Shield Nicholson]] wrote that credit expansion and contraction was in fact the expansion and |
In 1895 economist [[Joseph Shield Nicholson]] wrote that credit expansion and contraction was in fact the expansion and contraction of representative money.<ref>[[Joseph Shield Nicholson]], ''A treatise on money and essays on monetary problems''], Chapter VI, Effects of Credit or "Representative Money" on prices, [https://archive.org/details/treatiseonmoney00nichiala/page/72 <!-- quote="representative money". --> pp. 72–74], A. and C. Black, 1895.</ref> |
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In 1934 economist William Howard Steiner wrote that the term was used "at one time to signify that a certain amount of bullion was stored in the Treasury while the equivalent paper in circulation" represented the bullion.<ref name="p.30"/> |
In 1934 economist William Howard Steiner wrote that the term was used "at one time to signify that a certain amount of bullion was stored in the Treasury while the equivalent paper in circulation" represented the bullion.<ref name="p.30"/> |
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{{Means of Exchange}} |
{{Means of Exchange}} |
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{{DEFAULTSORT:Representative Money}} |
{{DEFAULTSORT:Representative Money or Receipt Money}} |
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[[Category:Currency]] |
[[Category:Currency]] |
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[[Category:Metallism]] |
[[Category:Metallism]] |
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Latest revision as of 05:10, 30 January 2024
Representative money or receipt money is any medium of exchange, printed or digital, that represents something of value, but has little or no value of its own (intrinsic value). Unlike some forms of fiat money (which may have no commodity backing), genuine representative money must have something of intrinsic value supporting the face value.[1]
More specifically, the term representative money has been used variously to mean:
- A claim on a commodity, for example gold and silver certificates.[1][2][3] In this sense it may be called "commodity-backed money".
- Any type of money that has face value greater than its value as material substance. Used in this sense, most types of fiat money are a type of representative money.[4]
There is no concrete evidence that the clay tokens used as an accounting tool to keep track of warehouse stores in ancient Mesopotamia were also used as representative money. [5][6] However, the idea has been suggested.[1]
In 1895 economist Joseph Shield Nicholson wrote that credit expansion and contraction was in fact the expansion and contraction of representative money.[7]
In 1934 economist William Howard Steiner wrote that the term was used "at one time to signify that a certain amount of bullion was stored in the Treasury while the equivalent paper in circulation" represented the bullion.[3]
See also[edit]
References[edit]
- ^ a b c Robert A. Mundell, The Birth of Coinage, Discussion Paper #:0102-08, Department of Economics, Columbia University, February 2002.
- ^ Jon Hooks, Economics:fundamentals for financial services providers, p. 201 ISBN 0-89982-494-3, ISBN 978-0-89982-494-9 Retrieved September 9, 2009
- ^ a b William Howard Steiner, Money and banking, p. 30, H. Holt and company, 1941.
- ^ John Maynard Keynes (1965) [1930]. "1. The Classification of Money". A Treatise on Money. Vol. 1. Macmillan & Co Ltd. p. 7.
Fiat Money is Representative (or token) Money (i.e something the intrinsic value of the material substance of which is divorced from its monetary face value)
- ^ Denise Schmandt-Besserat, Tokens: their Significance for the Origin of Counting and Writing
- ^ Keynes, J.M. (1930). A Treatise on Money. Volume I, p. 13
- ^ Joseph Shield Nicholson, A treatise on money and essays on monetary problems], Chapter VI, Effects of Credit or "Representative Money" on prices, pp. 72–74, A. and C. Black, 1895.
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