MONEY : ORIGIN AND GROWTH

    There are two important theories regarding the origin of money :

1. THEORY OF SPONTANEOUS GROWTH 

2. THEORY OF EVOLUTION

      The first theory states that man has not made only efforts to discover money. But money has come into being spontaneous according to exigencies of circumstances, time and place. The chief exponent of this theory is Spalding , according to him this theory can be proved by the historical facts.

       The second theory states that money was discovered to remove the defects of the barter system , and that the complicated money and credit exchange system of today is the product of a long process of evolution. But nothing can be said certainly. The origin of money , as Keynes observes are lost in the most antiquity.

       Money was not a sudden discovery or invention . Like most other social institutions, money has undergone a process of historical evolutions , spread over a long period of time. During this process of historical evolution , a variety of things had been used as money. Commodities like skins of animals, cattles , goats  and agricultural product such as wheat and rice had been used as money in different stages of economic development. In more recent time , metallic coins and paper notes have been used as money.

DEFINITION OF MONEY :  MARSHALL has defined money as , " All those things which are , at any time and place , generally current without doubt or special enquiry as a means of purchasing commodities and services and of ferrying expenses. " 

 QUALITIES OF GOOD MONEY :

1. GENERAL ACCEPTABILITY : Money should be commonly acceptable as payment for any goods or services  purchased . We accept money today not because it is made of gold which is a valuable commodity but we accept it because it buys goods for us and it is commonly acceptable in payment for goods and services .

2. ELASTICITY : By elasticity we mean the supply of money should be such that it may be manipulated in accordance with the conditions prevailing in the economy. It can be increased with the increasing volume of trade and output.

3. STABILITY OF VALUE : No doubt stability in the value of money is always desirable . In ancient times stability in the value of money material was required but today money material has no value at all nor it need to have. 

FUNCTIONS OF MONEY : 

1.  Money helps to equalise marginal utilities and marginal productivity.

2. Money helps in the distribution of national income.

3. Money is the basis of credit transaction.

4. Money increases the liquidity of capital .

5. Money increases the mobilization of capital.

 EVILS OF MONEY : 

         Money is not an un mixed blessing . It has its dark side as well. The various evils of money can be divided under two heads : 

1. ECONOMIC DEFECTS : The following are the main economic defects of money : 

    a) Money give birth to trade cycle.

    b) Money encourages over capitalisation and over production.

    c) lack of stability in the value of money.

    d) Money strenghten te capitalism.

    e) Instead of being a servant, money trends to become the master.

2. SOCIAL DEFECTS : The following are the social defects of money : 

    a) Money is directly responsible for the recibe of spiritualism in modern society.

    b) Money has encouraged greed and acquisitiveness.

    c) Money has encouraged fraud , theft, murder etc.

    d) Money creates in men the desire and urgent to exploit others.

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