Evolution of the Monetary System

Evolution

In Mesopotamia (modern day Iraq) dating back before 3000 B.C.E. (before Common Era) mankind’s evolution was a sluggish process. Once barley was used as a form of currency the tides began to change. The barley they used was not typical barley because it did not become brittle and break like organic barley when it ripened. By selectively growing the cream of the crop, they produced a firmer, more durable product and began using it as a medium of exchange. This evolution of money continued until the Sumerian people, also known as the Sumer or “the black headed ones”, migrated from origins unknown, to Mesopotamia.

With the inclusion of the Sumer, the indigenous population evolved, and began using the Shekel, a bronze coin featuring a bushel of wheat on one side, and a chalice representing their goddess of fertility Ishtar on the other. The word Evolution Shekel means bushel of wheat where the word “she” means bushel, and kel means “wheat”.

The people would take their first harvests of wheat for the season and offer them to the priests of the temple, where they would receive their first shekel of the season. They would then take that shekel and go to the temple of Ishtar (Temple of life and death) where they would present it to the Ishtar prostitute during festivities. It was believed that the prostitute was the goddess of fertility and, if a person did not lay with her, his crops would wilt and die but, if he did, they grew in abundance.

Th evolution of the current monetary system is believed to derive directly from the Sumerian people, as they created the first visual receipts. These were clay tablets that individuals would stamp their signature on. The priests would then keep track of what they purchased and the cost of those purchases. Soon, interest was introduced as written “credits,” which were placed on the tablets denoting how much money a person had in the bank to pay for desired items. This system quickly evolved and took over the use of barley, as the crop would eventually spoil and could be consumed by rodents and other vermin. Many archaeologists agree that the Sumerian people created the first monetary system on the basis of this historical evidence.

Around 500 B.C.E., the shekel was displaced as the common currency when the countries of the Middle East began minting coins in silver and gold, which had a greater intrinsic value than the shekel did. These coins were stamped with the likenesses of the gods or kings different cultures worshipped, such as Rome’s Denarius, which featured the image of Marcus Aurelius. The value of these coins was estimated at 1.5 to 2.85 times the value of the metal the coins were made from. On that basis, the value of the Denarius was estimated at U.S. value of $15 at the beginning of the Roman Empire, to U.S. value of $29 by the time the Empire collapsed. Legionnaires were paid one Denarius about every three days to compensate for their efforts. The most recent coin used by the Roman Empire was the Dupondius, which was the currency from 23 B.C.E. to 250 C.E.

The first people known to create a paper currency were the Chinese, who adopted paper money for more than 500 years, from the ninth to the fifteenth century. Unfortunately the Chinese printed massive amounts of the currency, driving down the value tremendously forcing them to discard paper currency around 1455.

With the start of the American Revolutionary War in 1775, the Continental Congress introduced Continental currency to Americans. The denominations of these notes were from 1/6 of $U.S. value to a U.S. amount of $80 with many denominations in between. However by 1780 the bills were valued at 1/40 of their initial worth.

Financial historian Robert E Wright stated, “Some think the bills depreciated because people lost confidence in them or because they were not backed by tangible assets. There were just too many bills and and not enough people.”

The British used economic warfare by issuing counterfeit notes created by different artists hired throughout the war. This depreciated the value of the Continental currency significantly and by May of 1781 the currency simply could not sustain itself and was discarded.

Today many different currencies are used worldwide. Perhaps the system will become fully electronic with the rising advent of the Bitcoin. Needless to say the evolution of the world’s monetary system has changed drastically throughout history.

By James Kurtzweil

Sources:
Prezi
PBS
Wikipedia

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