The History of Money
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- What is commodity money?
- A means of exchange as well as an item of consumption (e.g. cocoa beans used by the Aztec people)
- What is the root of the world salary?
- Salrius (Latin for 'of salt')
- Give examples of commodity money.
- Salt, cattle, tobacco
- When does commodity money sometimes resurface?
- In times of economic trouble (e.g. chewing gum, cigarettes during WWII)
- Disadvantages of commodity money.
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Not always easy to break up
Poor stores of value Sometimes bulky Not valued the same by different cultures
Potential difference in quality - Advantages of metal as a commodity money
- Durable Easily divisible Can be put to many uses Not bulky
- Why has gold been the preferred commodity money?
- Pure gold remains pure and unchanged Natural human attraction to gold Viewed by many cultures as sacred Its color is similar to that of the sun and fire
- Where were metals first used as money?
- 2500BC, Mesopotamia, silver
- What was the first money revolution?
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Use of standardized coins of silver and gold (Lydia, Greece, 560BC)
More intensive use of markets - What is the market revolution?
- The gradual replacement of autocratic tributary system by democratic market-based ones, the introduction of money, wholesail and retail distribution
- How did money change social ties?
- It made them more extensive, connecting more people together than either kinship or force, but, at the same time, made them more transitory.
- Advantage of money in measuring value
- Provided a standardized way of measuring value for any sort of goods (goat, poem) or services (work, time)
- Impact of money of intellectual skills
- Required people to be able to count, rationalize, and think in more abstract terms
- What is the effect of money on a civilization?
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Allows to structure life in incredibly complex ways
Allows to structure value and social relationships
New social networks created by markets gave rise to new political system - Give two words whose root is "Juno Moneta", patroness of the roman state, of women, etc.
- June, most propicious month for marriage Money (monnaie) from 'monere' = 'to warn'
- The Romans and money
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Money reached the Romans a few centuries after it appeared in Lydia.
The Roman Empire was the first to be built around the concepts of money and markets
The Romans spread the use of money throughout southern and western Europe - How did and did not the Romans finance their empire?
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Through conquests, pillage and looting of Syria Egypt, Gaul, Spain, etc.
Through taxes and appropriation.
Not through exports or wealth creation - How did the Romans reduce the strength of their currency? Why? Consequences?
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Starting with Nero the content of silver in coins steadily diminished from 100% to virtually nothing over the course of 2 centuries.
This was done in order to sustain government expenses.
Inflation. - Trade balance in Roman Empire
- Imports of luxury goods from Asia Exports of gold and silver
- Describe the economic decline of the Roman Empire
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High taxation which discouraged merchant activity
Enforcement of family trades (father, son, ...)
Forbidden land sales for farmers thus tying them to their plot (much like the later feudal system)
Building of Constantinople
Devaluation of currency, taxes paid in goods
State-ownership of commerce activity
Decline of markets, disappearance of money - What is the Edict of Milan?
- It was an official decision by Constantine in 313 to end Christian persecution and allow them to practice their religion
- Differences between classical and medieval economy
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Classical:
Focus on cities
Payment with money
Emphasis on commerce
Medieval:
Rural economy
Emphasis on self-sufficiency
Hereditary services, payment in kind (no use of money) - Who were the Templars?
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Crusaders who lived to serve the church and liberate the Holy Land from the Infidels (1118AD).
They became businessmen and created and ran the world's greatest banking institution using their castles to provide banking services to the nobility, kings and popes. - Philip IV of France and the Templars
- In need of silver and gold Philip decided to loot the riches of the Templars. He proceeded to demonize them through the use of propaganda. Ultimately this served to break the stronghold that the Church had over financial activities, and return that power to a state.
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