Freedom, Society, and State - Ludwig von Mises Institute

ter to indirect exchange when individuals begin to
realize that they can facilitate their ability to exchange
for goods they desIre by first obtaining goods
wit h high rna rketabi Ii ty. Consequen t Iy, cer ta i n commodities
emerge spontaneously as a general medium of exchange
as more and more individuals begin to demand
these goods not so much for their use as consumption
goods but for their use in facilitating exchange. Eventually,
this second use becomes dominant, and the commod
i t Y comes to be demanded almost solely for its use
as a general medium of exchange.(55)
What kind 0 f goods wi 1 1 emerge as mo ne y has va r i e d
from soc i e t y t 0 soc i e t y ? S ome a gricu 1t ur a Isoc i e ties
have used cows; fishing societies have used fishhooks
or seashells, etc. But generally metals, and in particuI
a r gold and s i I ver, ha ve pre va i led for a n urn be r 0 f
reasons. They are durable, fairly portable, and highly
divisible. All of these greatly facilitate exchange.
Whi Ie the state, whether for purposes of obtaining easy
revenue or to protect society from fraud, has gradually
assumed a monopoly on the issue of money -- the United
States government, in fact, did not finally prohibit
private coinage until 1863(56) -- the important point
i s t hat m0 neyemer g e d s pon tane 0 us I Y from the rna r k e t .
Libertar ians note that some economists even contend
that it was impossible for the state to create money by
declaring some good legal tender and ordering the public
to accept it. "It IS not the State, but the common
practice of all those who have dealings in the market,
that creates money," says LUdwig von Mises. "It follows
t hat S tatereg u 1a t Ion a t t ributi n g g e nera I powe r 0 f
deb t - 1 i qui d a t ion t 0 a c omm 0 d i t Y i suna bleofit s elf t 0
make that commodity into money."(57)
1fthestate wa s not r e qui rOe d to br i ng mo neyin to
e xis ten c e, ne i the r isit ne c e s sa r y topres e r ve it. Go vernment
control over the monetary system leads to at
least two very serious problems. First, since money is
the n e r veeen t e r 0 f the en t ire e con omy, the libe r tar ian
believes that if "the state is able to gain unquestioned
control over the unIt of all accounts, the state
wi II then be in a position to dominate the entire system,
and the whole society.n(5S) And second, if any
one person or institution such as the government can
obtain control over the supply of money, there IS nothing
to prevent It from using this control to add to its
wealth simply by printing new money. There is, they
contend, no real difference between the printing of
new money by the government. and the activities of a
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