chapter 4

  1. The Problem of Barter in a Specialized Economy:

    • Once the division of labor is established, individuals produce little of what they consume and need to exchange the surplus of their labor for the goods produced by others. Society becomes a "commercial society."
    • Direct exchange (barter) is problematic due to the "double coincidence of wants." If a butcher has surplus meat and wants bread, but the baker doesn't want meat at that moment, no exchange can occur. This makes individuals "mutually less serviceable to one another."

  2. The Emergence of a Common Medium of Exchange (Commodity Money):

    • To avoid the inconvenience of barter, prudent individuals would keep a quantity of a widely accepted commodity that "few people would be likely to refuse."
    • Historically, various commodities served this purpose:
      • Cattle (e.g., Homer's valuation of armor in oxen).
      • Salt (Abyssinia).
      • Shells (parts of India).
      • Dried cod (Newfoundland).
      • Tobacco (Virginia).
      • Sugar (West India colonies).
      • Hides/dressed leather.
      • Nails (a village in Scotland).

  3. The Preference for Metals:

    • Metals eventually became the preferred commodity for money due to "irresistible reasons":
      • Durability: They are less perishable than most other commodities.
      • Divisibility and Re-unitability: They can be divided into any number of parts without loss and easily re-united (e.g., by fusion), unlike animals or many other goods. This allows for precise transactions.
    • Different metals were used: Iron (Spartans), Copper (Romans), Gold and Silver (rich commercial nations).

  4. The Evolution from Unstamped Bars to Coined Money:

    • Initially, metals were used in rude, unstamped bars (e.g., Romans before Servius Tullius, according to Pliny).
    • Inconveniences of unstamped bars:
      • Weighing: Required accurate scales and was troublesome, especially for small transactions or precious metals.
      • Assaying: Determining the fineness/purity of the metal was difficult, tedious, and prone to fraud (adulterated compositions).
      • Institution of Coinage: To prevent abuses, facilitate exchange, and encourage commerce, countries began affixing a public stamp on metals.
      • This led to the origin of coined money and mints.
      • The stamp was meant to ascertain the quantity and uniform goodness (fineness) of the metal.

  5. Development of Coin Stamps:

    • Early stamps often focused on certifying the fineness of the metal, similar to sterling marks on silver (e.g., Abraham weighing shekels, which were "current money" but still received by weight).
    • Later, stamps covered the entire coin (both sides, sometimes edges) to certify both fineness and weight. This allowed coins to be received by "tale" (count) rather than by weighing.

  6. Denominations and Debasement:

    • Coin denominations originally expressed the weight of metal contained (e.g., Roman "as" was a pound of copper; English pound sterling was a Tower pound of silver).
    • Over time, "the avarice and injustice of princes and sovereign states" led to the debasement of coinage: reducing the actual quantity of precious metal in coins while maintaining their nominal value.
      • Examples: Roman "as" reduced to 1/24th of its original value; English pound and penny to 1/3rd; Scots pound and penny to 1/36th; French pound and penny to 1/66th.
      • This allowed rulers to seemingly pay debts with less metal, but it defrauded creditors and favored debtors, sometimes causing significant economic disruption.

  7. Money as the Universal Instrument of Commerce:

    • Through this evolutionary process, money became the universal instrument for buying, selling, and exchanging goods in civilized nations.

  8. Introduction to the Concept of Value (Transition to a New Topic):

    • The chapter concludes by posing the next question: What rules do people observe when exchanging goods for money or other goods? This leads to the concept of "value."
    • Two meanings of "VALUE":
      • "Value in use": The utility of an object (e.g., water is very useful).
      • "Value in exchange": The power of purchasing other goods that the possession of an object conveys (e.g., a diamond has high exchange value).
    • These two types of value are often not correlated (water has high use value but low exchange value; diamonds have low use value but high exchange value).

  9. Outline for Subsequent Chapters:

    • The author will investigate:
      1. The real measure of exchangeable value (real price).
      2. The different parts composing this real price.
      3. Circumstances that cause market price to deviate from natural price.
    • The author requests the reader's patience and attention due to the detailed and potentially obscure nature of the upcoming topics.

In essence, this chapter traces the logical and historical development of money from the inefficiencies of barter to the establishment of coined metal currency, highlighting the practical reasons behind each step and foreshadowing the problem of debasement. It then sets the stage for a deeper analysis of value and price.

个人总结

物物交换的问题在于没有办法总是满足双方的需求。比如屠夫想用肉换面包，但是面包师不一定需要肉，这就没办法达成交易。 所以早期人们会把一些广泛需求的物质当成交换媒介，比如牛，盐，糖等。最终金属脱颖而出，原因在于它的耐久度和可分割性。金属的缺点是称量和验证。所以早期的政府会给这些金属加上官印，到后来的制定金属的标准价值。这就货币的产生过程。

在下半节，斯密还提到了价值的含义。一个是使用价值，另外一个是交换价值。