Sandra Choron - Money: Everything You Never Knew About Your Favorite Thing to Find, Save, Spend & Covet

B efore there was money, there was chocolateand corn kernels and knives and even pigs feet. It was from these early forms that money as we know it was born, and it was from these humble beginnings that money changed the worldby making commerce, wars, religion, and even civilization possible. The centerpiece of this chapter is a timeline that follows money from the lumps of metal that were once used as currency to the sophisticated works of art produced by so many countries today. The economists who created theories that are still useful today, the first bankers, and the scoundrels who spawned the counterfeiting industry are just some of the characters we will meet along the way. The body of art and literature, as well as proverbs and superstitions, that grew up around the subject of money, is represented here as well.

Whats notable is that despite the trouble that money has causedthe wars, the greed, the class struggles, and human sufferingwe nonetheless pursue it at all costs. Humans have found many ways to bring order to theflow of our existence, says Jack Weatherford in his classic work The History of Money, and money is one of the most important.

This chapter proves, beyond a shadow of doubt, that money does indeed change everything.

We can only imagine the origins of a barter system and the problems it presented. At its best, someone with more chickens than he knew what to do with could make a trade with someone down the road who had too many cows. Before money was created, the system was useful. But what if the whole county was overrun with chickens and you found that you couldnt even give the damn things away? Even if you did manage to locate a buyer, how did you go about making change if all he had was one measly blanket to trade? Our entire system of money was invented to solve these and other problems. This timeline shows how these were solvedand how many other difficulties were created by the development of money.

Even before money is invented, banking originates in Babylonia out of the activities of temples and palaces, which provide safe places for the storage of valuables. Initially, deposits of grain are accepted and later other goods, including cattle, agricultural implements, and precious metals, are stored in banks.

A code of law is issued by Hammurabi, who rules Babylon during this period. For the first time, specific values are ascribed to property, as the code addresses the subjects of loans, theft, land-leasing, and debt.

The earliest record of cowrie shells being used as money. The practice began in China, where the shells were found in the Pacific and Indian Oceans. Their use spreads as the Chinese begin to trade with other countries. Cowries were still in use in Nigeria until World War II.

China points the way to metal money by instituting the use of metal knives and spades as money. They also begin to make metal copies of the cowrie shells but soon discover that lumps of metal are easier to produce than the faux shells. Thus the first coins are produced. They are round, with holes in the middle so that they can be strung and easily carried to market.

As people begin to travel more widely and trade with other countries, the idea of money begins to spread. The earliest coins, found in Lydia, part of present-day Turkey, are round pieces of metal that are stamped with the faces of gods and emperors. By 550 B.C., they are made of gold and silver. Greeks and Romans, who also use bronze for minting, soon follow suit, and coins appear in different values.

The Gauls attack Rome, but the cackling of geese in the capitol, where the citys reserves of money are kept, alerts the Romans, who later build a shrine to Juno Moneta, the protector of funds. The words money and mint are derived from her name.

The Romans finally adopt coinage to replace the cumbersome bronze bars (called aes signatum) that have been commonly used as currency.

To fund the Second Punic War between Rome and Carthage, Roman rulers reduce the weight and purity of their coins, and one of the earliest periods of inflation ensues.

A bracelet of cowrie shells

China is the first to use paper money, in the form of a 30-centimeter square of white deerskin. Society soon learns that the value of money depends on how much of it is available, as those in financial need simply manufacture more by killing more deer. This lesson in inflation leads to the greater popularity of gold and silver coins.

Augustus Caesar reforms the Roman monetary system by introducing coins made of almost-pure gold, silver, copper, and brass.

Nero copies the practice of other emperors by debasing gold and silver coinage, and prolonged inflation results. By A.D. 250, the silver in Roman coins is down to 40 percent of its original silver content; by 270, it has fallen to 4 percent.