Marketing Exchange Relationships, Transactions, and Their Media

By Franklin S. Houston | Go to book overview

15
The Changing Role of Legal Tender: An Historical Perspective

Money is a term of art that can be described by its functions. The primary function is that it is a generally accepted means of exchange in terms of a defined unit of account. Another function is that money is a store of value. A wide variety of "things" have been used as money, including credit cards, checks (demand deposits), gold, and silver. Congress and the courts grant some forms of money the special status of being legal tender that creditors must accept as payment for debts. 1 United States coins and currency are legal tender. The phrase "This note is legal tender for all debts public and private" appears on all Federal Reserve notes. Creditors are not required to accept other forms of payment.

The difference between legal tender and other forms of money played a crucial role in our economic history. Simply stated, without legal tender, there would not be a United States today. Over the years, the role of legal tender in our political and economic system has changed. At the present time, legal tender is growing in importance, but for different reasons than it was important before. This chapter examines the historic and current importance of legal tender. The article is divided into five parts. In chronological order, they deal with the Colonial period, the Civil War period, the Great Depression, Current Times, and a Conclusion.


COLONIAL PERIOD

One reason for the establishment and existence of the federal government in 1787 was to pay the debts of the colonies-states. Colonial governments found it difficult to borrow from their citizens because substantial wealth did not exist in liquid form. Wealth was mainly in the form of land and commodities, and there was no banking system. Despite these difficulties, the colonies had to pay for wars and other expenses, so they resorted to fiat money: currency that was not backed by a commodity such as gold. Massachusetts first used fiat money in 1690 and was soon followed by the other colonies. 2

Other forms of money circulated too. These included foreign coins (British,

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Marketing Exchange Relationships, Transactions, and Their Media
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Introduction ix
  • Note xiii
  • 1: The Marketing Taxonomy 1
  • Notes 10
  • 2: Comments on Extending the Domain of the Marketing Discipline 11
  • Conclusions 27
  • 3: Reciprocity within a Community 35
  • Concluding Comments 43
  • 4: Exchange as a Vital and Fundamental Consumer Behavior Phenomenon 45
  • Conclusion 54
  • Notes 54
  • Notes 57
  • 5: Refinements in the Model of Internal/External Market Exchange 59
  • Note 76
  • 6: Time, Potency, and Exchange: Making the Most of the Time Resource 77
  • Summary 98
  • 7: The Spatial Dimension 99
  • Summary 113
  • AFTERWORD 115
  • 8: The Evaluation Process and Its Impact on Decision Making in Exchange Relationships 117
  • Note 139
  • 9: How Exchange for Resale Differs from Exchange for Consumption 141
  • Conclusion 151
  • 10: Inequitable or Incomplete Social Marketing: The Case of Higher Education 153
  • Concluding Observations 162
  • Supplemental Reading 163
  • 11: Externalities of Exchange: Foundations for Future Study 167
  • Note 186
  • 12: Exchange: Ethical and Legal Foundations 189
  • Conclusion 210
  • Note 210
  • 13: An Examination of Exchange Media from an Historical Perspective 213
  • Note 224
  • 14: Some Ingestible and Other Types of Consumable Currencies 225
  • Conclusion 235
  • Notes 236
  • 15: The Changing Role of Legal Tender: An Historical Perspective 239
  • Conclusion 244
  • Notes 245
  • 16: Means of Payment in Marketing 247
  • Summary 264
  • Notes 265
  • Bibliography 267
  • Index 303
  • About the Contributors 315
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