What is Money?

Different economists have given different definitions of money. Some of the definitions are too narrow while others are too extensive. A few of these important definitions are given below:

A C Pigou - "In order for anything to be classed as money, it must be accepted fairly widely as an instrument of exchange."

G.D.H. Cole - "Money is anything that is habitually and widely used ae means of payment and is generally acceptable in the settlement of debts. "

Walker - "Money is what money does."

J.M. Keynes - By money is to be understood "that by-&livery of which debt- contracts and price-contracts are discharged, and in the shape of which a store of General Purchasing Power is held."

Alfred Marshal - "Money constitutes 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 defraying expenses."

D.H. Robertson - "Money is anything which is widely accepted in payment for goods or in discharge of other kinds of business obligations."

Crowther - "Money can be anything that is generally acceptable as a means of exchange and that at the same time acts as a measure and a store of value."

Analysis of the above-mentioned definitions will reveal that it is not easy to include all the essentials of money in one sentence. None of the above definitions is, therefore, comprehensive and satisfactory. However, these definitions help us to identify the basic features of money which may be summed up as under:

1) Money may be anything (even a piece of paper) which is chosen by common consent a s a medium of exchange or means of transferring purchasing power.

2) I t is widely accepted in payment for goods and services and in settlement of all transactions, including future payments.

3) It should be acceptable without reference to the standing of the person who offers it in payment. This is because money contains liquidity, i.e., generalised purchasing power, which can be passed on to others in exchange of goods and services.

4) Money is received customarily by all without any special tests of quality or quantity.

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