why do the receipts of the goldsmith work as money
Answers
Answer:
Goldsmiths were originally depositaries for gold or commodity money, who kept gold deposits safe from the public in return for receipts promising payments and redemption to the bearers of those receipts.
Answer:
receipts of Goldsmith as money
Explanation:
Goldsmith receipts as a means of payments
An epoch-making event took place just in the mid-seventeenth century, and this was that the deposit receipts of the goldsmith-bankers, which hitherto had been issued in the name of the depositor, were now being issued to bearer, i.e. the receipts had started being used as a means of payment. The receipt holders found it possible to use the receipts as a means of payment because they were backed by gold, and were convenient. Thus the recipient of the receipt had a claim on the goldsmith-banker for the amount of gold coins stated on the face of the receipt.
This practice became the norm for payments and depositors came later to demand of their goldsmith-bankers receipts in smaller denominations. For example, if Mr A deposited 100 one pound gold coins the goldsmith-banker would be asked for 100 receipts, each with a face value of one pound. These receipts became the principal means of payment, i.e. money. Thus at this stage the amount of money in circulation was the sum total of gold coins in circulation plus goldsmith-banker receipts in the possession of the public. [Note that the gold coins in the vaults of the goldsmith-bankers are not included - because they are represented by tokens - the receipts.]
This historical event is described by Jevons71: "The practice arose of transferring possession by delivery of these receipts, or 'goldsmith's notes' as they were called." Jevons adds that "Such notes are.. .referred to in.. .some statutes.. .hey had become general and not special promises - mere engagements to deliver a sum of money on demand."