by zunguzungu

In a wonderful old piece by Cathy Gallagher on “Raymond Williams and Cultural Studies,” I found this little extract delightful enough to extract (hopefully) for your delight:

Bank money, from which the currency we now simply call “money” derived, was originally a form of credit designed to keep gold money out of circulation and thus avoid its debasement. For whenever a precious metal is used as a currency, the coins themselves wear away, their materiality gradually diminishes, and a gap thus develops between the actual amount of metal in the coin and the value it is authorized to represent. As Brian Rotman has explained,

“This reliance on its own materiality, whereby gold money operates through signifiers whose weight is supposed to guarantee the sign values in question, contains an inherent instability…. A gap arises between “good” money (the pure unsullied issue of the state) and “bad” money (the worn and fraudulently diminished coins in circulation). This gap in signified value between the ideal, nominal signifier corresponding to the face value and the materially debased signifier which reduces the sign to a function of its actual, that is contingent, weight became known as the agio.”

This agio, an assumed average debasement of coins that Adam Smith defines as “the supposed difference between the good standard money of the state, and the clipt, worn, and diminished currency,” led state banks to create “imaginary” money, coins with little metallic worth or paper vouchers, that would stand for the gold, which lay in pristine heaps, supposedly invulnerable to material disintegration. If the intrinsic worth of gold was what allowed it to circulate freely, across national boundaries, in and out of local economies, circulation was also the very process that opened the gap between what was believed to be its immanent, intrinsic worth and its signifying function. Hence, when the banking system developed sufficient reliability, coin symbols began replacing the gold coins in circulation. The essence of these symbols was that their material qualities would be conventionally specified, that they would have no intrinsic worth that could interfere with their signifying function. Of course, the materiality of the coins mattered because they had to bear the marks of having been coined by a legitimate agency in order to foil counterfeiters, but such symbolic features were carefully differentiated from intrinsic ones. The amount of nickel, tin, copper, etc. in a coin should ideally, according to the theory of bank money, be “immaterial,” insignificant as a determinant of the coin’s value.

The history of money has been the history of such de-materializations of the signifier: from coins, to paper, to blips on computer screens…