The History of Money - I
Posted on Sunday, June 3, 2007 At
7:07 PM
1 EUR = 0.9463 USD, 1 USD = 105.39 JPY, 1 CHF = 0.06466 EUR, 1 GBP = 1.506 USD, 1 CAD = 0.7145 EUR, 1 JPY = 0.01 EUR, 1 CAD = 0.6758 USD
We’ve all seen this equation, posted at banks, airports, on the Internet. This currency equation is a deeply meaningful barometer of value. It defines costs, and tells you that if you spent a dollar on a cup of coffee in the United States, you’re going to have to spend one hundred and five yen for a cup of coffee in Japan. But price is a far thing from worth.And worth may be a far thing from value.
To understand what money means we have to understand worth and value: those things money is supposed to represent.
My Imagination sees a man crawling onto an oasis from the desert—sunburned, exhausted, his clothes tattered.Would he pay more for a glass of water than someone not suffering from thirst? Of course he would. Hence, the value. Hence, what it’s worth. But what would he pay with? If it’s money, then money means survival. It means the ability to live. Once the man’s thirst is quenched, the worth of water to him would decline. It would get poured into a nominal value system. That’s when things get complicated. The value of money has to be assessed. For in and of itself, money is nothing more than paper and coins.Without value, a jingle jangle, origami is about all money would be good for.
So, what exactly is money and where did it come from? Adam valued fruit, but he didn’t have to pay for it (with money that is). In the beginning, there wasn’t any money. And that should tell us something. Like all inventions, time included, money is defined by the people who made it up, concocted the idea. Money is a conception. From it, a whole value system has been created. And that’s not just economics.That value system often defines our social status, our professional lives, our leisure abilities, our relationships, and most of all our purchasing power. In other words, it defines us in a way.
So, what great ape set these definitions? Who defined money?
The word “money” stems from the Latin. It derives from the Roman goddess Moneta. Moneta is another name for Juno, the Roman goddess of heaven. She, the wife of Jupiter, is also the goddess of light, birth, women and marriage—some of those things that give meaning to life, that mint us to one another.
The Romans played an integral part in devising money and its value. However, the actual conceivers of money were the people of Lydia, an ancient city in Asia Minor, or modern day Turkey. Money was first minted there in seventh century B.C.
Lydia began to mint coins made of electrum, which is a mixture of gold and silver.The government issued these bean-shaped ingots and marked them with their weight and value in lieu of pieces of gold and silver, which had been the standard barter material because of their scarcity.
Lydia was part of the thriving society of Asia Minor at the time. There, where the first trade centers of the world evolved, discoverers and inventors created an attractive marketplace. Commerce soon exploded—and the government of Lydia minted money to control the way in which things were bought and sold.With government-minted money, they could control price and value: worth.
Governments, ever seeking control, could now exercise their influence on commerce. Needless to say, the “money” idea caught on.And before long, most of the governments of the world were issuing some semblance of coinage. But, ’round about the first century A.D., the Roman government overindulged and minted too many coins. It had needed the money to build and finance its military. Inflation occurred—and the value of money became an issue.To make up for the loss in value of one coin, people obviously had to carry more coins.
Hauling around buckets of coins wasn’t particularly convenient for the horseback, mule-riding, pedestrian society of the Middle Ages. So moneylenders and merchants began to issue promissory notes in lieu of coins. Ah, huh, another breakthrough in the creation of money. Someone was on to something, and credit currency began to be widely used as a system for buying and selling. Indeed, even today if you look at a dollar bill, you’ll see that it’s a promissory note “For All Debts Public And Private” issued by the government.
My Imagination is at it again, trying to conceive of things we haven’t experienced. He tries to envision life without money, life in situational barters. How would it change? How would it differ? We would still have to utilize skill—whatever skill we had—merely to subsist or obtain objects of value to pay for our subsistence. What would we do for trade? I don’t think there would have been a market for writers, mostly because there were no books. I would have had some very simple choices: craftsman, consul, farmer, butcher.
My place in society would then have been set. I could trade on that value. With that value, I could acquire the things or barter the things I would need to survive, like shelter. My Imagination sees: a horse, a cow, a pelt, a good spear. Those bartering objects that have utilitarian value. What a jump it is to representative value. All those barrels full of coins. The use of gold and silver as the basis for value because they were scarce in supply, creating a relatively stable value system, until that day in Rome when perhaps on a hot summer morning a man in toga and sandals pushing a wheelbarrow full of coins stops to wipe his brow in front of, say, the Colosseum and gets an idea for paper money. “A bit lighter on the back and feet,” he might have thought, looking up at Palatine Hill.
Paper money was used by private lenders and merchants for centuries until France, in the eighteenth century, formally standardized the use of government issued notes, or “paper money.”
This was quite a controversy at the time. Paper money meant governments no longer had to use gold or silver in the minting process.They could create value with a printing press, albeit they had to physically back the paper with reserves of gold.
The History of Money - II
We’ve all seen this equation, posted at banks, airports, on the Internet. This currency equation is a deeply meaningful barometer of value. It defines costs, and tells you that if you spent a dollar on a cup of coffee in the United States, you’re going to have to spend one hundred and five yen for a cup of coffee in Japan. But price is a far thing from worth.And worth may be a far thing from value.
To understand what money means we have to understand worth and value: those things money is supposed to represent.
My Imagination sees a man crawling onto an oasis from the desert—sunburned, exhausted, his clothes tattered.Would he pay more for a glass of water than someone not suffering from thirst? Of course he would. Hence, the value. Hence, what it’s worth. But what would he pay with? If it’s money, then money means survival. It means the ability to live. Once the man’s thirst is quenched, the worth of water to him would decline. It would get poured into a nominal value system. That’s when things get complicated. The value of money has to be assessed. For in and of itself, money is nothing more than paper and coins.Without value, a jingle jangle, origami is about all money would be good for.
So, what exactly is money and where did it come from? Adam valued fruit, but he didn’t have to pay for it (with money that is). In the beginning, there wasn’t any money. And that should tell us something. Like all inventions, time included, money is defined by the people who made it up, concocted the idea. Money is a conception. From it, a whole value system has been created. And that’s not just economics.That value system often defines our social status, our professional lives, our leisure abilities, our relationships, and most of all our purchasing power. In other words, it defines us in a way.
So, what great ape set these definitions? Who defined money?
The word “money” stems from the Latin. It derives from the Roman goddess Moneta. Moneta is another name for Juno, the Roman goddess of heaven. She, the wife of Jupiter, is also the goddess of light, birth, women and marriage—some of those things that give meaning to life, that mint us to one another.
The Romans played an integral part in devising money and its value. However, the actual conceivers of money were the people of Lydia, an ancient city in Asia Minor, or modern day Turkey. Money was first minted there in seventh century B.C.
Lydia began to mint coins made of electrum, which is a mixture of gold and silver.The government issued these bean-shaped ingots and marked them with their weight and value in lieu of pieces of gold and silver, which had been the standard barter material because of their scarcity.
Lydia was part of the thriving society of Asia Minor at the time. There, where the first trade centers of the world evolved, discoverers and inventors created an attractive marketplace. Commerce soon exploded—and the government of Lydia minted money to control the way in which things were bought and sold.With government-minted money, they could control price and value: worth.
Governments, ever seeking control, could now exercise their influence on commerce. Needless to say, the “money” idea caught on.And before long, most of the governments of the world were issuing some semblance of coinage. But, ’round about the first century A.D., the Roman government overindulged and minted too many coins. It had needed the money to build and finance its military. Inflation occurred—and the value of money became an issue.To make up for the loss in value of one coin, people obviously had to carry more coins.
Hauling around buckets of coins wasn’t particularly convenient for the horseback, mule-riding, pedestrian society of the Middle Ages. So moneylenders and merchants began to issue promissory notes in lieu of coins. Ah, huh, another breakthrough in the creation of money. Someone was on to something, and credit currency began to be widely used as a system for buying and selling. Indeed, even today if you look at a dollar bill, you’ll see that it’s a promissory note “For All Debts Public And Private” issued by the government.
My Imagination is at it again, trying to conceive of things we haven’t experienced. He tries to envision life without money, life in situational barters. How would it change? How would it differ? We would still have to utilize skill—whatever skill we had—merely to subsist or obtain objects of value to pay for our subsistence. What would we do for trade? I don’t think there would have been a market for writers, mostly because there were no books. I would have had some very simple choices: craftsman, consul, farmer, butcher.
My place in society would then have been set. I could trade on that value. With that value, I could acquire the things or barter the things I would need to survive, like shelter. My Imagination sees: a horse, a cow, a pelt, a good spear. Those bartering objects that have utilitarian value. What a jump it is to representative value. All those barrels full of coins. The use of gold and silver as the basis for value because they were scarce in supply, creating a relatively stable value system, until that day in Rome when perhaps on a hot summer morning a man in toga and sandals pushing a wheelbarrow full of coins stops to wipe his brow in front of, say, the Colosseum and gets an idea for paper money. “A bit lighter on the back and feet,” he might have thought, looking up at Palatine Hill.
Paper money was used by private lenders and merchants for centuries until France, in the eighteenth century, formally standardized the use of government issued notes, or “paper money.”
This was quite a controversy at the time. Paper money meant governments no longer had to use gold or silver in the minting process.They could create value with a printing press, albeit they had to physically back the paper with reserves of gold.
The History of Money - II