Monetary History

Good afternoon, ladies and gentleman. I am going to talk today about Monetary History from Ancient Times to the Present Day (the history of money). What is money? By definition, it’s something of value. But over the last 10,000 years, the material form that money has taken has changed considerably—from cattle and cowrie shells to today’s electronic currency. Here, let’s get an overview of the history of money.

To start with I’ll tell you about ancientry, when people bartered. Well, we’ll talk about commodity money and first metal money and coins. Then, I’d like to say about paper currency and the gold standard. After that we'll move on to the present and future currency. Finally, I'll summarize my presentation. I'll try to answer all of your questions after the presentation.

I'll begin with barter. It’s the exchange of resources or services for mutual ['mjuːʧuəl] advantage, and the practice likely dates back tens of thousands of years. Some would even argue ['ɑːgjuː] that it's not purely a human activity; plants and animals have been bartering—in symbiotic relationships—for millions of years. In any case, barter among humans certainly pre-dates the use of money. Today individuals, organizations, and governments still use, and often prefer, barter as a form of exchange of goods and services. But let’s (return) refer to \ turn to the ancient times. Subsequently cattle, sheep, leather, fish, tobacco, tea, salt and others come to be used as money in many different societies at different periods. It’s called commodity money.

Cattle, which throughout history and across the globe have included not only cows but also sheep, camels, and other livestock, are the first and oldest form of money. With the advent of agriculture also came the use of grain and other vegetable or plant products as a standard form of barter in many cultures. Various items have been used by different societies at different times. Aztecs used cacao beans. Norwegians once used butter. The early U.S. colonists used tobacco leaves and animal hides. The people of Paraguay used snails. Roman soldiers were paid a "salarium" of salt. On the island of Nauru, the islanders used rats. Human slaves have also been used as currency around the world.

Gradually, however, people began exchanging items that had no intrinsic value, but which had only symbolic value. An example is the cowrie shell. The first use of cowries, the shells of a mollusc that was widely available in the shallow waters of the Pacific and Indian Oceans, was in China. Historically, many societies have used cowries as money, and even as recently as the middle of this century, cowries have been used in some parts of Africa. The cowrie is the most widely and longest used currency in history.

Commodity should be fairy durable, easily divisible and portable that to serve effectively as money. None of the above-mentioned commodities possessed all this qualities, and in time they were replaced by precious metals, first by silver, later by gold.

Let's turn now to first metal money and coins. Metals objects were introduced as money around 5000 B.C. Bronze and Copper cowries’ imitations were manufactured by China at the end of the Stone Age and could be considered some of the earliest forms of metal coins. Metal tool money, such as knife and spade monies, was also first used in China. These early metal monies developed into primitive versions of round coins. Chinese coins were made out of base metals, often containing holes so they could be put together like a chain.

Outside of China, the first coins developed out of lumps of silver. They soon took the familar round form of today, and were stamped with various gods and emperors to mark their authenticity. These early coins first appeared in Lydia, which is part of present-day Turkey, but the techniques were quickly copied and further refined by the Greek, Persian, Macedonian, and later the Roman empires. Unlike Chinese coins which depended on base metals, these new coins were made from precious metals such as silver, bronze, and gold, which had more inherent value.

Leather money was used in China in the form of one-foot-square pieces of white deerskin with colorful borders. This could be considered the first documented type of banknote.

Turning to paper banknotes, the first known paper currency appeared in China. Paper money was adopted in Europe much later than in Asia and the Arab world - primarily because Europe didn't have paper. The Bank of Sweden issued the first paper money in Europe in 1661, though this was also a temporary measure. In 1694 the Bank of England was founded and began to issue promisory notes, originally handwritten but later printed. To make travelling with gold less dangerous, goldsmiths, or people who made jewelry and other items out of gold, came up with an idea. The goldsmiths started writing out notes on pieces of paper that said the person who had the note could trade the note in for gold. These promissory notes were the beginning of paper money in Europe.

Gold was officially made the standard of value in England in 1816. At this time, guidelines were made to allow for a non-inflationary production of standard banknotes which represented a certain amount of gold. Banknotes had been used in England and Europe for several hundred years before this time, but their worth had never been tied directly to gold. In the United States, the gold standard act was officialy enacted in 1900, which helped lead to the establishment of a central bank.

1930: end of the gold standard

The massive depression of the 1930s, felt worldwide, marked the beginning of the end of the gold standard. In the United States, the gold standard was revised and the price of gold was devalued. This was the first step in ending the relationship altogether. The British and international gold standards soon ended as well, and the complexities of international monetary regulation began.

As to the present, in our digital age, economic transactions regularly take place electronically, without the exchange of any physical currency. Digital cash in the form of bits and bytes will most likely continue to be the currency of the future.

Let's summarise briefly what we've looked at. The use of money is as old as the human civilization. Money is basically a method of exchange, and coins and notes are just items of exchange. But money was not always the same form as the money today. They passed in the development through some important stages such as commodity money, metal money and coins, paper money, modern banknotes, electronic money and it should be noted that today currency continues to change and develop.