“Money makes the world go around. The world go around,” so sang Liza Minnelli in the 1972 movie, Cabaret. It’s something human beings have known since the beginning of civilization and was recently reinforced by a March 20 National Geographic article, The Journey of Mankind: How Money Made us Modern, by Patrick J. Kiger.
“Money, money, money,” is the gleeful chorus of the song.
While money is often today associated with some of the most base and predatory practices on the world stage, we still can’t along without it, whether buying a house or paying the babysitter. We may express hatred for the top one per cent who control most of the money, but we also envy them for having all that money, which brings to mind the Depression Era song, Buddy, Can You Spare a Dime?”
The premise of the Kiger’s article is that civilization may have existed before the advent of money, but won’t have gotten very far without it. The invention of money by ancient humans was a revolutionary milestone. Money helped drive the development of civilization by making it easier to buy and sell goods and connect the world by enabling traders to roam across continents and travel the Seven Seas. It became a great way for investors to amass wealth and it was easily transported.
Bartering was local, while money was international. How far could a shepherd drive sheep to market in exchange for other commodities? A hundred kilometres at best before the sheep lost poundage and hence value. Money simply didn’t lose its value over distance.
In the ancient world, money came in many different forms, but possessed the same benefits to a society — a flexible economic system that could easily be adapted to changing circumstances.
Money was a concept with its value pegged by its users. Think of the Sumerians of ancient Mesopotamia, who 9,500 years ago recorded economic transactions on pieces of clay and participated in a trading system that extended for thousands of kilometres. The clay tokens were a form of proto-money to represent different amounts of the three main trading good, which included grain, human labour and livestock. Tokens represented a measure of metal, a jar of oil, a quantity of honey or a garment.
“In Mesopotamia, silver became the standard of value sometime between 3100 BC and 2500 BC along with barley. Silver was used because it was a prized decorative material, it was portable and the supply of it was relatively constant and predictable from year to year” (Jeffrey Hays, Facts and Details, Mesopotamia Economics).
The Sumerians created the silver Shekel — She meant wheat, while a kel was equivalent to one bushel of wheat. When it became a standard currency, a Shekel was about a third of an ounce in weight and could be used to buy goods and services.
Kiger wrote that since ancient times, humans have utilized all sorts of things for money, such as cakes of salt, cowrie shells and stones. When European fur traders came to Canada’s West, they developed an exchange system that translated into so many beaver skins for a flint-lock rifle, etc.
“The Hudson’s Bay Company used the Made Beaver as a unit of currency that could be traded at their posts for various European trade goods. A prime beaver pelt was called a “made beaver” — a pelt which had already been worn for at least one season and from which most of the long outer hair had worn off. The greasy beaver wool was easily shaved from the skin by felters, and turned into the finest felt for making hats.
“The prices of all trade goods were set in values of Made Beaver (MB) with other animal pelts, such as squirrel, otter and moose quoted in their MB (made beaver) equivalents. For example, two otter pelts might equal one MB” (Hudson’s Bay Company website).
In the ancient world, gold eventually became the standard currency, since it was stable, easy to melt and could be hammered into various shapes. The first gold coins were produced in Lydia, in what is now Turkey, around 2,700 years ago.
“Lydian coins didn’t look much like today’s coinage. They were irregular in shape and size and didn’t have denominations inscribed on them, but instead used a stamped image to indicate their weight and value” (Kiger).
When someone possessed a Lydian gold coin, they knew its value and what they could buy with it.
“In the ancient Greek city-state of Corinth, banks were set up at which foreign traders could exchange their own coins for Corinthian ones. And the Greek historian Herodotus, writing in the fifth century BC, describes Carthaginian traders unloading their wares on beaches, and after setting smoky fires to signal shoppers, accepting the locals’ gold as payment.”
Coins were the currency of exchange for centuries, but there were limitations. As trade increased, it became too cumbersome to transport heavy coins around. The result was the introduction of paper money. The Chinese were the first to use paper money, but it was 17th-century Europeans who expanded its usage to the four corners of the globe.
The first paper money claimed that the bearer could exchange a note for an equivalent value in silver or gold. Bankers being bankers soon realized that with paper money in circulation, not everyone was rushing to the teller to exchange a note for a bit of silver, so they didn’t need to keep on hand an equivalent value of all the notes they released. In Canada, it was the banks, not the federal government that first issued paper dollars. The Bank of Montreal had its own notes as did the Bank of Hamilton, etc.
Before it joined Confederation, the common currency in Manitoba was the Hudson’s Bay Company pound note, although there was never too many in circulation. In fact, it was the lack of currency that held back the development of the Red River Settlement. Barter was the long-standing system and that couldn’t readily contribute to economic expansion. Just before and after Manitoba became a province, a multitude of coins and notes were in circulation, for example, English pounds and American and Canadian dollars. The first private bank established in Winnipeg was only in 1872 by Alexander McMicken. Once a true banking system got underway, the economic sky was the limit for Winnipeg and Manitoba, according to early promoters and investors.
Today, one does not ever have to step into a bank, or use wallet-filling currency for that matter, since money is now exchanged through cyberspace. A pay or pension cheque is deposited electronically into your account. You can pay your hydro or phone bill using the Internet. Gas and groceries, among a myriad of other goods and services, can be paid for at the till using a debit or credit card. A home mortgage can be arranged online. Even your income tax can be filed electronically and any refund you may receive will be deposited directly into your account.
We’ve come a long way from the days of the Sumerian clay token.