The other kinds of money are not commodity-money and the materials of
which they are made, whatever they be, are not worth as much in any
other uses as they are in their present monetary form. Their value is
always referred to, and adjusted to, that of the commodity-money, so
long as any of it is in circulation. In contrast with commodity-money,
these other kinds may be called fiduciary money. By fiduciary money
we mean money that has not a commodity value equal to its money value,
but which is generally accepted because each receiver has faith that
others in turn will take it in the same way.[2]

§ 2. #Present monetary system of the United States.# Here is given a
summary of the main features marking the present monetary system of
the United States (in 1915).

Not all this variety is essential to an efficient monetary system and
several of the kinds survive as the result of historical accidents
(political and legislative). But all are now kept in accord with the
value of the gold coin which, it will be observed, is the only kind
the amount of which is not artificially limited. Silver dollars are
no longer coined, subsidiary silver and minor coins are issued only
in exchange for other money, as are gold and silver certificates in
exchange for gold or for silver, which they merely represent while in
circulation.

§ 3. #Saturation point of fractional money.# Fiduciary money is that
on which regularly the issuer makes a seigniorage charge.[3] Let us
consider now the effect of seigniorage on the value of money.

Fractional coins are those of smaller denominations than the standard
unit of money, as shillings and pence in England, and half dollars,