ds to exchange, the
methods of exchange, and the prevailing scale of prices. The amount
of goods to be exchanged may change even when the amount produced is
unaltered (e.g., a change from agricultural to industrial conditions).
The methods of exchange may alter so as to require either more money
(e.g., cash instead of credit business), or less money (e.g., use of
bank checks displacing use of money by individuals). Or, apart from
the other factors, the scale of prices may change as the conditions of
gold and silver production are altered. The interrelations of gold
and silver production, paper money issues, banking growth, and
money-inflow and outflow in foreign exchanges give rise to the most
interesting and important problems in the field of monetary theory.

Sec. 7. #The money-material in its commodity uses#. We are now prepared
to take up the question: What determines the ratio at which money
exchanges for other goods? And, as money comes to be the unit in which
prices are generally expressed, the question becomes: What determines
the general level of monetary prices? We have this problem in its
simplest form in the case of a commodity-money such as gold. It may be
looked upon merely as so much precious metal. The problem of its value
as bullion is the same as that of the value of pig iron or of zinc,
of meat or of potatoes. There is here no special monetary problem.
The value of gold as bullion and its value as money are kept in
equilibrium by choice and by substitution. The several uses of gold
are constantly competing for it: its uses for rings, pens, ornaments,
championship cups, photography, dentistry, delicate instruments, and
as a circulating medium. If the metal becomes worth more in any one
use, its amount is increased there and is correspondingly diminished
in other uses.[3]

When coinage is free and gratuitous[4] the standard money is a
commodity. Such coinage is essentially but the stamp and certificate
that the coin contains a certain weight and fineness of metal. Where
coinage is free and gratuitous each coin will be worth the same as the
bullion that is in it so far as the citizens exercise their choice.
They will not long keep uncoined metal in their possession when it is
worth more in the form of money, nor will they long keep money from
the melting-pot when it is worth more as bullion. Yet there may be
a slight disparity between the bullion value and the monetary value
before the metal is convert