NoNonsense The Money Crisis. Peter StalkerЧитать онлайн книгу.
definition. One of the standard assertions is: ‘Money is anything that is widely used for making payments and accounting for debts and credits.’ Or, in more specific terms, money is anything that governments will accept for paying taxes.
Credit and barter
Money has often been thought of as just like any other commodity – part of a sophisticated form of barter. In fact money has its origins in credit as people tried to keep track of mutual obligations.1 One the earliest types of record was the ‘tally stick’. This would be a stick generally of hazel-wood on which details of the obligation were recorded, with notches and in writing. The stick was then split. The debtor kept one half; the creditor kept the other. Since each stick was unique the record would be quite specific. Its value depended, however, not on the price of hazel-wood but on the relationship between debtor and creditor.2
In principle the creditor could pass on the tally stick to someone else and indeed this often happened. This would make the tally stick a limited form of money. However, another option might be to use something else as an intermediate token or commodity – a more general ‘medium of exchange’. For this purpose you could use any readily transferable item but the best bet will be something in limited supply. Throughout the ages the most common tokens have been made of precious metals, and particularly silver and gold, which have the merit of being relatively scarce and portable while also being divisible into any size and weight.
Metals are durable, which is why even when many other elements of ancient cultures have disappeared, pieces of metallic money often remain as the most persistent vestiges of human activity. This might suggest that most transactions were carried out with cash, but many more took the form of credit, even if any records of transactions have long since vanished.
The earliest known usages of commodities as money tokens have been traced back to the 24th century BCE, in Mesopotamia, the land between the Tigris and Euphrates rivers, which is now shared between Iraq, Syria and Turkey. Here people often used both silver and grain when exchanging goods. They could also use these for paying fines. Around 1000 BCE the king of Eshnunna in northern Mesopotamia, for example, declared that the fine for biting a man’s nose was around half a kilo of silver.3
Of course metals that are scarce in some places can be quite common in others. So if you lived in, or better yet owned, a place that had a gratifying supply of precious metals, you would literally be sitting on a goldmine. Lydia, for example, a territory in what is now Turkey, was well endowed with a natural gold-silver alloy called electrum. The last king of Lydia, from 560 BCE, was Croesus, who became fabulously wealthy; indeed he was ‘as rich as Croesus’.
Slotting in coins
Lydia is also thought to have been the first place to introduce coins – casting different weights of gold or silver so as to offer a system of regular oval pieces stamped on either face with different symbols according to the value. Instead of carrying around a pair of scales to tell how much metal you were exchanging you could instead accept the coins at ‘face value’.
Coins were also being produced in city states in ancient Greece. In Athens, for example, the government would pay citizens with coins for public-service activities, from fighting (as soldiers) to taking turns in juries. At first the face value of the coins supposedly matched the value of the metal they contained. But this would prove awkward for the smallest transactions which might require tiny scraps of silver, so the Greek cities also started to issue bronze coins, simply asserting their value, which was generally greater than their metal content. This represented an early example of what might be called ‘fiat’ money.4 Indeed, even the gold and silver coins were often irregular so they too relied on the fiat element. In fact, the use of gold and silver in some respects confuses the issue, implying that money is a commodity like any other when it is more a token that represents a recognized debt.
Soon Athens was making similar declarations about gold or silver coins, imposing a value higher than the actual metal content. It could do this by ensuring that only the state could produce the coins and making it clear that it would prosecute any forgers. This was also an early example of ‘seigniorage’ – the power over money creation that allows the government to manufacture money and use it to pay its own bills. Athens also saw the first signs of what we now call bankers. These started out as money changers, providing foreigners arriving in the city with coins they would need for daily transactions. But some money-changers also started to store coins, and to lend them out – at an interest rate of around 12 per cent a year.
To make the value readily identifiable, the coins were originally stamped with symbols such as plants or animals. In Athens, for example, one of the coins carried a stamp of the city’s sacred bird and became known as an ‘owl’. Eventually, however, the temptation for rulers to portray themselves on the coinage proved irresistible. The first monarch of this era to decide that coins would look better if adorned with his face was Alexander the Great who, by around the third century BCE, had conquered most of the known world and felt entitled to lord it over its money as well.
When in Rome
A couple of centuries later the Romans too took up the idea of making coins. They also introduced some of our modern terminology. One of the first places they used to manufacture coins was near a temple located on the Capitol, the citadel of Rome. The goddess occupying that temple was Juno Moneta, from whom are derived the words ‘money’ and the place where coins are made, the ‘mint’. Juno’s function as a goddess, appropriately enough for this risky item, was the ‘one who warns’.
In Rome the basic unit of currency was the bronze coin, the ‘as’, which was literally the value of an ass. The principal silver coin was named the denarius, which in 212 BCE could buy 10 asses. The Romans also gave an early indication of the power of money, or at least the power of money backed by brute force. As they crushed other regimes across Europe they grabbed most of the local precious metals. In 167 BCE, when the Romans defeated the kingdom of Macedon, for example, they marched off with a cool 324,000 kilograms of silver, equivalent to 75 million denarii. In this way they cornered most of the available silver and ensured that the denarius would become the major currency in the western Mediterranean.
In Europe nowadays, if you dig up ancient coins, the chances are they will be Roman. This is because, in the second and third century BCE, the Romans minted many millions of them. However, since even they could not seize sufficient precious metal to make these coins, they steadily reduced the silver content. In the mid-260s CE in Britain, which the Romans had conquered, they replaced the denarius with the ‘radiate’, which by then was down to just 0.5 per cent silver. This did not prove very popular. Britons and others started to turn their noses up at coins whose value was set by imperial decree and reverted to weighing out precious metal. Indeed, following the collapse of the Roman Empire, most of the barbarian kingdoms wisely stuck to gold.
The seventh century saw the emergence of the first Muslim communities – spreading out from Mecca, one of the principal trading cities of Arabia, to establish a caliphate that would eventually extend from what is now Afghanistan right across to Spain. They too started to use coins. The prophet Muhammad himself was generally uneasy about money and is supposed to have said ‘money puts my community to the test’. But his victorious followers found it easier to go with the financial flow, and generally absorbed the monetary systems of the countries they conquered, though carefully replacing any Christian crosses with Islamic symbols that varied according to the religious orientation of the ruler, Sunni or Shi’a. Initially they used gold, largely from Africa, but later switched to silver. By the 11th century in Egypt, one dinar, derived from the Latin ‘denarius aureus’, could pay for a servant for a month, or buy around 100 kilograms of wheat.
China’s ‘little brothers’
Coins were also appearing on the other side of the world. In China at around the same time, when the kings were trading they sometimes used various commodities, including grain or cloth or knives or spades. But gradually they too started to adopt forms of token payment through coins. At first they felt more comfortable if these actually looked like miniature spades or knives. But eventually they found it easier