Letter: Commodities and Quids
Regarding your reply to Mr. Archer, you say definitely that a sovereign is not a commodity, and you give as your reason that it can only act as currency inside the country of issue. Does that mean that a product of labour has to act as currency before it becomes a commodity, and if not, where does it fall short of being a commodity? In other words, could you clearly explain to me how to distinguish a commodity from other things?
Answer to W. W.
A commodity is an article, or service, that is produced for the purpose of exchange or sale. Under modern conditions that means produced for the purpose of realising profit through a sale.
A product of labour falls short of being a commodity when it is produced for the producer’s personal use and not for exchange or sale. Whether a product of labour reaches the position of currency or not has no bearing on this question. Of the thousands of commodities produced today, only one acts as currency.
With the changes and developments of society, the currencies in use change their forms, and, often, some of their characteristics. In the early stages a commodity in general use may act as currency, while still remaining an ordinary commodity. Later, when the exchanges have grown far more numerous and complicated, a particular commodity is set aside to act specially as currency and will receive some social stamp or mark, to guarantee its genuineness. When it has reached this position, and only then, it ceases to be a commodity, as it is no longer produced for profit, but as an official instrument set apart for currency purposes.