A Ridiculously Brief and Incomplete Historical Perspective of Currency

The ancient Chinese used cowrie shells as currency. Babylonia used barley in their towns and villages while silver (shekel) was used mostly in their cities. As I understand, silver and cattle were used by the Jews for much of their trade while Greeks used silver and ox. The Persian Empire used both animals and gold. Copper and bronze, as materials of trade, were introduced by the Romans, presumably, in the 3rd and 4th Centuries B.C. As you can imagine, trade was difficult on a mass scale or in long distances as animals and barley were cumbersome to move from place to place. Cowrie shells were a lot easier to transport but many villages and tradespeople did  not honor them. They were not valued n their own locales.

Because metal transport was heavy, metal currency stayed local.  Bronzed axes in Gaul and iron swords in Britain were common local metal currencies. By the 3rd Century A.D., the metals in the coins were so minimal that the coins’ value were minimal.  Except for gold. Gold’s value increased to the point when, by the 4th Century A.D., gold was the standard bearer for currency exchange. It too was heavy. As it was also difficult to transport, it was not yet in great quantity. But its value was known, its sources were searched, fought over, and hoarded.

Wampum was a common unit of currency between the English and Dutch in the new Americas. Tobacco notes were issued when wampum beads were discontinued. Metals, such as gold and silver, were hard to come by in the developing territory.

Gold eventually became the standard of measurement for most currency, and more specifically, paper money. Because Its purity could be measured, it had stability. Its size could be measured against its purity. This gave currency a standard and ease in “foreign” exchange, exchange beyond one’s borders. Until recently (the last hundred years), there was a direct ratio between  the amount of gold a country stored and the amount of currency it had in circulation. A modern country “back then” backed its currency by its gold. That is significant to think about. A strong country did not have more money in circulation than it had gold.   Today, that has changed. The gold standard has been removed. Most currency is pegged to the US dollar which, itself, is backed by “the full faith and credit” of its government. More money can be printed as its measure is based on faith and credit. As long as that good “full faith and credit” is supported, its money is valued.

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