By Reynold F. Nesiba
Professor of Economics
Augustana College – Sioux Falls, South Dakota
This past May, marked the one hundredth anniversary of A. Mitchell Innes’s (1913) publication of a paper titled, “What is Money?” in The Banking Law Journal. In it, this British diplomat, then living in the US, reviewed the history and usage of money and its forms in credit and coinage. On both historical and logical grounds, he asserts that the “modern science of political economy” rests on a series of assumptions regarding money and credit that are “false.” One of the most important of these assumptions is the belief that “under primitive conditions men lived and live by barter.” Who should we blame for this false assumption? According to Innes, it is Adam Smith (1776), the father of economics, who in turn rests his arguments on the words of Homer, Aristotle, and those writing about their travels to the New World.
