German theory is Dr B. V. Head, who has given an admirable summary of the position of that school in his Introduction to his great work, Historia Numorum (p. xxviii.). To ensure a fair statement of the doctrine for the reader, it will be better for me to give here Mr Head’s exposition in preference to any summary of my own, as any statement by the critic of the doctrine to be criticized is always liable to the suspicion of being ex parte and consequently inadequate. Such a suspicion is avoided by letting as far as possible our opponents state their position in their own words.
“For many centuries before the invention of coined money there can be no doubt whatever that goods were bought and sold by barter pure and simple, and that values were estimated among pastoral people by the produce of the land, and more particularly in oxen and sheep.
“The next step in advance upon this primitive method of exchange was a rude attempt at simplifying commercial transactions by substituting for the ox and the sheep some more portable substitute, either possessed of real or invested with an arbitrary value.
“This transitional stage in the development of commerce cannot be more accurately described than in the words of Aristotle, ‘As the benefits of commerce were more widely extended by importing commodities of which there was a deficiency, and exporting those of which there was an excess, the use of a currency was an indispensable device. As the necessaries of Nature were not all easily portable, people agreed for purposes of barter mutually to give and receive some article which, while it was itself a commodity, was practically easy to handle in the business of life; some such article as iron or silver, which was at first defined simply by size and weight, although finally they went further and set a stamp upon every coin to relieve them from the trouble of weighing it, as the stamp impressed upon the coin was an indication of quantity.’ (Polit. I. 6. 14-16, Trans. Welldon.)