y
we mean money that has not a commodity value equal to its money value,
but which is generally accepted because each receiver has faith that
others in turn will take it in the same way.[2]

Sec. 2. #Present monetary system of the United States.# Here is given a
summary of the main features marking the present monetary system of
the United States (in 1915).

Not all this variety is essential to an efficient monetary system and
several of the kinds survive as the result of historical accidents
(political and legislative). But all are now kept in accord with the
value of the gold coin which, it will be observed, is the only kind
the amount of which is not artificially limited. Silver dollars are
no longer coined, subsidiary silver and minor coins are issued only
in exchange for other money, as are gold and silver certificates in
exchange for gold or for silver, which they merely represent while in
circulation.

Sec. 3. #Saturation point of fractional money.# Fiduciary money is that
on which regularly the issuer makes a seigniorage charge.[3] Let us
consider now the effect of seigniorage on the value of money.

Fractional coins are those of smaller denominations than the standard
unit of money, as shillings and pence in England, and half dollars,
quarter dollars, dimes, nickels, and cents in America. Money to serve
well a variety of uses must be of different denominations, and "small
change" is necessary to make small purchases and for exact settlement
in larger payments that are not multiples of the standard unit. The
amount required (or most convenient to use) in each denomination
of fractional coins is thus a more or less certain portion of each
person's monetary demand, shaped by experience and fixed by habit. For
example, within certain elastic limits of convenience quarters may be
used for halves, and dimes for nickels (and _vice versa_); but each
person has a point of preference. The total demand for each kind of
change is the sum of the individual demands. This point where the
amount of coins of any denomination (in relation to the whole monetary
system) is most convenient may be called the saturation point of that
kind of small change, up to which point the people prefer a share
of their money in that form, and beyond which they will, if free
to choose, exchange that kind for other denominations (smaller or
larger). Each kind of money, as the cent, nickel, dime, has its own
peculiar demand and its saturation