From Chickens to Plastic

At the end of the day, of course, it doesn’t really matter what shape or size the money takes, as long as everyone recognises it and accepts it in payment. But, over the course of history, money has predominantly been associated with metals, in particular gold, silver and copper.

Bartering

Before metal money become the usual means of exchange, people would swap goods and services in a process known as bartering – “I’ll swap you ten chickens for your goat”. This kind of exchange does not really encourage trade, as all sorts of problems arise; are all the chickens of the same size? If I’ve only got five chickens, can I buy half a cow? Obviously, precious metals are a practical alternative to payment in kind.

Four Essential Qualities

For money to be practical and efficient it should possess these qualities:

Durability– in prison, cigarettes may become a medium of exchange – but they’re easy to break and quickly dry up; in other words, they don’t last.

Portability– in some parts of Africa your wealth is measured in cattle. This is fine if you’re trading locally, but if money isn’t easy to carry, how can trade develop?

Divisibility – small units make life much easier – imagine trying to buy a hot dog in New York if the $100 bill was the lowest unit of currency!

Intrinsic value– money should have some worth in itself, otherwise it won’t inspire confidence.

Coins

We first read of coinsin the Kingdom of Lydia in the 7^th century BC. Their coins were of equal weight and therefore of equal value, simplifying trade. Stamping a design onto the coins is called “minting”; Alexander the Greatintroduced the practice of stamping a picture of the sovereign’s head on the coins, an idea that was soon copied. Coins however, were not always as valuable as they seemed – they were often clippedor shaved by unscrupulous individuals or debasedby the state. The Romans, with the economic pressure of the Punic wars, began a long process of debasement, mixing more and more copper in with the silver, so that the intrinsic value of the coin was far lower than the marked face value.

Paper Money

Bank notes were first introduced by the Chinese in the 10^th century. They were later used by governments in dire financial straits – caused by things like having to finance a war, for example. The English colonies in North America made important strides in the use of bank notes. For various political and economic reasons, the Colonists often found themselves short of coinage. To get round this problem, they used first wampum, the tobacco, rice and whisky or brandy – not exactly the most practical solution. The first paper money issue was by the Massachusetts Bay Colony in 1690. The practice was frowned upon and eventually banned by the mother country, but the inventive money-making instincts of the new United States of America meant that, during the 19th century, most of the money used was in the form of paper dollars. The first fully printed note in England was issued in 1855 – until that time the cashierhad to write the name of the payee and sign each note individually.

At first, bank notes were redeemable for gold – on Bank of England notes you will see written “I promise to pay the bearer on demand the sum of…” If you took a ten-pound note to the Bank they used to have to give you ten pounds in gold coin. Britain left the gold standard in 1931 and thus the notes are no longer backed by gold.

Plastic money

Nowadays many transactions are carried out with “plastic money” such as credit cards. The newest are called “smart cards” and carry small silicon chipsthat can record every transaction on the card. Research into the cards of the future continues, but the latest development is e-cash, cash to be used across the Internet– you’ll be able to spend money from the comfort of your armchair. If only earning the damn stuff was so easy!

So, money is so central to our lives that it has spawned a wealth of specific terminology, idioms and sayings. Great thinkers in all ages have had something to say about it; governments are elected on the strength of how they plan to manage it, empires rise and fall because of it.

Money is so important to us – people even say it makes the world goround.

<== попередня сторінка	\|	наступна сторінка ==>
Text 2. History of money.	\|	Task . Write an essay on the issue Money makes the world go round

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