From Goldsmiths to Bankers, from Money to Currency, 8
Legal tender itself, just as every feature of forms of payment, has not always been assumed; in this vast realm between “gold” money and fiat money, media of payment, negotiable instruments were used as having legal tender that in actual fact did not have uniform unit of measure nor were ratified as having any legal tender, while society might suffer for their scarcity, but certainly not much for their lack of these qualities – definitely not more than it will for all that is lurking behind ambiguous money.
And last – but not least, finally, notice how such banknote’s features subsist regardless of whom is its issuer, be it governing body or private bank – which means that a governing body may, who knows, enforce acceptance of fiat money backed by nothing issued by a private bank, leaving one and all wondering why this inexplicable favouritism. Indeed money, as it becomes more and more fiat, permits the issuer to be released from the burden of owning the intrinsic value to back it up – another way to say, permits to create purchasing power out of nothing – and this brings the desirability of its issuing power to a new order of magnitude. And consequently the efforts to put one’s hands on it, too.
At first, issuing IOUs, negotiable instruments, was regarded as mere part of any business’ operations, and citizens, businesses, banks, etc. issued, accepted, exchanged and redeemed in actual goods commercial papers. However obvious this may appear, it means a very precise freedom and independence: anyone is entitled and free to issue a medium of payment, and take the responsibility to back it up by one’s own promise to redeem it, and anyone is entitled and free to choose whether to accept that medium of payment, and thus give credit to, and enforce the responsibility to redeem it on anyone else or not. Compare this freedom with fiat debt money enforced as legal tender: a bit different, isn’t it? Later on and progressively banking developed and operated as a type of private business in itself.
