Case Study: Origin of Money, its influence in and stabilisation of human civilisation

 

Money is what money does. Money is embedded in human history as the chameleon. From Ox, cowrie, silver, gold to minted coin, paper money, and now in the present avatar of digital money, bitcoin. It has changed too often its contour and usage. Keynes duly observed this behaviour : "Money is a far more ancient institution than we were taught to believe some few years ago. Its origins are lost in the mists when the ice was melting, and may well stretch back into the paradisaic intervals in human history of the inter-glacial periods, when the weather was delightful and the mind free to be fertile of new ideas in the Islands of the Hesperides or Atlantis or some Eden of Central Asia."1

The coinage evolved as a prelude to writing in the three regions of first human habitations, eg.,Lydia in far East, China and undivided India. Anthropologists and historians are divided in their opinion whether the origin and spread of coinage in each region is influenced by the others or were fully indigenous.

Discovery of precious metal like silver, gold, copper and capacity to reproduce a hybrid metal like bronze was the main catalyst to the thinking man of 600-1000 BC. As time moved, the thinking man and its collective wisdom got richer. The crisis of 1000 BC was an unique trade-off between the aspiration for high volume trade with far distant traders and availability of reliable medium of exchange in huge volume. Minting of metal coin began at this time and it began to be acceptable as a more secure reliable medium of exchange, especially since the rulers of the region were the sponsors and beneficiaries. 

 D. Schmandt-Besserat introduced the concept of Administration dealing with ancient money: “The main function of tokens was to keep track of household and workshop contributions of surplus goods to the communal wealth and their redistribution for the support of the underprivileged or the organization of religious festivals.”2 .

How the rulers gained from coin usage? Various Archeologists and historians of ancient age have done extensive research and observe that some of the-then rulers of the three regions used to dilute the purity of the metal and mix with other cheaper metal for public circulation at higher price than the coins were worth of.

 Foot Note : 1 J.M. Keynes: ”Treatise on Money”(1930), v.i., p. 13, Macmillan] 2 Author D. Schmandt-Besserat : “Tokens: their Significance for the Origin of Counting and Writing. 

The impact of money on our human lives, never has been so critical at the dawn of human life, when our forefathers lived in forests and their livelihood was hunting and gathering.  

The Survival of the fittest as they fought for food to survive, decided the law of homo sapiens. And since the weather were uncertain and availability of food at times erratic, scarcity of food were frequent and was a challenge for survival. An offer of a thinly crowded free earth on platter, the growing population spread its wings on every nook and corner of earth over 4 million years . It was increasingly a struggle to manage meals and for that, risking life in an extremely hostile forest and many sea and river-beds full of carnivorous mammals and poisonous reptiles. 

The truth is hidden in ancestors pre-history. The hunters branched out to expand and mark their footprint across many regions and the system of barter became the integral part of multi-community cave settlements. Genetic Analysis of sample DNA of present human population have recently established beyond an iota of doubt that Africa remains the cradle of civilization. 

Archeologists’ recent discovery of skeleton of ‘Little Foot’ belonging to the family of ‘Lucy’, and has pushed the date of earliest identified ancestor to 3.67 million years. Simple flaked stone tool technology considered the earliest stone tool industry in prehistory, were also unearthed. However, in the absence of written objects so far, historians have to rely on deductive logic to arrive at various premises, eg., use of any form of money, tools used to aid in addressing the want, the community identity et cetra. It is logical to induce that our Homo Sapien ancestors developed an informal mode of verbal communication and the code of expressions took root. The oral wisdom began to be carried from one to the next on various Dos and Don’ts. The holy rule book. Apart from that, the discovered pre-historic cave paintings give us a broader picture of the lifestyle then.3

What were the necessities of life in pre-historic age? And has the necessities changed over time to modern age. We explore this since money or coin or ox as a unit of account, what ever way we term money, the purpose of money to satiate the want. The ‘want’ as an economist would coin consist of food, home and clothes. I those time, these basic necessities of life determined the density of want , (contrary to a modern man of 2020 who consider a Fridge, AC, Mobile , a vehicle, a Trimmer, and a Condom – all necessary essentials of life). Food were always perishable. Make-shift home were made on the treetops and in some of the secured caves with an entry design that could assist to block the entry of wild animals. Especially for the winter and cold, animal skin and tree barks were in great demand. 

Foot Note: 3 Source: Purdue University Date:April 1, 2015,ScienceDaily 

As we walk through time, they spread into far off areas and developed through genetic cognitive design, a superior form of structure of communication expressing various emotions of fear, anger, happiness and love. Necessity always is the mother of invention. The ancient man began to acquire higher volumes of the necessities of life than they could consume and the surplus began to be dispensed with. The barter took first giant step in the growth of civilisation. The method of exchange between various groups of huntergatherer could be in the form of ‘ reciprocal gift’ or at times, it could take the form of negative reciprocity through limited local war. Millions of year ago, in the prehistoric period , ‘money’ as we now in the last 2500 years, was still a far cry.

The civilization branched out and spread out from Africa to the far East ( present Turkey and hinterland) and other regions. The nature of necessities evolved and items of barter expanded to include a few items of luxury and amusement and of pride , like skulls of hunted men and animals, chipped stones, containers, ornaments, newly found mineral, pearls, cowrie et cetra. Barter added more items in the list of agreed items for exchange. Dispute at times used to erupt. In course of time, various communities spread across a vast region, developed kinship with most of them while enmity maintained with a few others.    

Crisis is the mother of invention for man. Every crisis has shown mankind with a new vision. However, the system of debt and credit prevailed in an informal way and it precedes the barter of goods that our foregathers indulged in. The tokens that we call now as money, began its journey as a medium of counting. In course of time, ancestors realized the pitfalls of barter that exchange would face hardship if wants of buyer and seller are not reciprocal. And in due course, items of value (and yet not perishable) like ox, goat, bird, bow and arrow, spear(in china), cowrie( Indian Ocean based) began to be accepted as a widely acceptable token for exchange, money in disguise.

Around 9000 BC, first evidence of agriculture could be traced to the far East. The hunter gatherer now decide to settle down for cultivation. The Spade has already been used extensively and with the aid of domesticated Ox, cultivation was convenient and food was certain. Domesticated dogs began to be the guard of other domesticated animals and for devising early alarm system for the trespassers. China began to use spade as a token and extensively used as common medium for exchange. And later, China become the first region that introduced paper currency around 600-700 AD. 

However, Disadvantages of commodity currency like spades, hoes, and knives, these quasi-coins were all easy to counterfeit and, being made of base metals, of low intrinsic worth and thus not convenient for expensive purchases. 4

Let’s have a quick look at how Money, the chameleon, made its further journey. It played through the goldsmiths in England which consequently resulted in the development of system of cheque and banking…..“The invention of banking preceded that of coinage. Receipts came to be used for transfers not only to the original depositors but also to third parties. Eventually private houses in Mesopotamia also got involved in these banking operations and laws regulating them were included in the code of Hammurabi.”4 The Knights Templars and Hospitallers were de facto bankers by introducing a form of bill of exchange for transferring large money between traders. Money changing was not the only form of banking. One of the most important services was bottomry or lending to finance the carriage of freight by ships. The double entry book keeping arrived much later, before that single entry system of account was the modus of keeping record.

Paper Money , Gold Standard and US $ standard :A time came when the volume of trade within the community and across the regions became so voluminous, that the payment for such large trade if to be met out by Money(Cash), the transportation logistics would be highly unfavorable apart from the risk of safety in transit. So Paper currency was introduced in certain large industrialized economies, as it would co-exist with metal currency with a value of paper being in very high denomination. A stable govt that prints this paper currency also guarantees the paper token with the seal of the ruler( read national government , in modern times). 

Soon, all the countries followed suit. However, paper currency also carried the  same pitfalls as the commodity tokens as counterfeit of all currencies flood the market. However, despite the coin and paper currency, the popularity of credit transaction like Bills of Exchange, Promissory Notes, cheque, I.O.U chits continue to play the another role of money . 

Foot Note 4 : The Invention of Coinage in Lydia, in India, and in China ( XIV International Economic History Congress, Helsinki 2006, [Session 30])/Author David M. Schaps, Department of Classical Studies Bar Ilan University Ramat Gan, Israel 

Intangible Money : The crisis is the mother of new developments. The limitations of commodity currency, coin currency, barter, paper and other credit currencies led to the next revolution in money in the form of digital money. 1990s show the advent of digital money. That at the modern age has reached a volume of transaction to the tune of 20 – 30% of daily value of trade in the developing countries like India. The digital currency has taken the shape of online Credit Payments without carrying of credit or debit card to the banker. Non-bankers like Amazon, PayTM et cetra are competing with banker to offer paperless money through mobile banking. While the experiment continue with paper-less digital money and Bonds and Equities , Bitcoin , the game-changer enters and test the soil. The soil was dug by the vulnerabilities of Digital system of record keeping where frauds and hacking are increasing become too common.

As I conclude, raising the question of whether homo sapien sapien would imitate life as logical and natural as in the animal kingdom and with the boon of ‘super brain’ would make food and safety a pre-condition for all living elements of earth, with zero tolerance for deprivation.  

When we began discussing money in the pre-historic age, we observed that the three basic necessities of life as the hunter-gatherer sought after are no different from what majority of hungry human mouth of twenty-first century dream of. Two meals a day, a cover over head and a body-wear that even the same community imposed as a rule for social contacts.

The only diffidence is that the communistic living and sharing of common needs has gone a basic transformation. Earlier times, the survival of the fittest was the struggle of survival of our species against the rest of the species on earth. Now, once the remaining species are caged on earth, we have moved ahead with the use of cognitive brain unique to us, and a mind that has no end to pursuit for wealth to achieve comfort for self and the kin at the cost of rest of the community. That is called the ‘animal spirit’ of entrepreneurs that propagate a rich to get richer while half of the earth remain starved. 

During the last two centuries, international commerce resulted in an enormous redistribution of wealth to the industrialized nations located mostly in the northern hemisphere….. The colonies provided raw materials at low prices for European factories, and the colonists bought the products of those factories at elevated prices. The net effect of this institutionalized negative reciprocity has been that the majority of the former European colonies are still underdeveloped poor nations.5 

Money’s influence in the progress of civilization is significant , to say the least . But looking at the modern index of happiness of majority of the human race, it is equally true money while facilitating convenience and ease of survival, created a monster that divided the human race and started the race for greed, and a strife-torn earth as we live today. It seems the genie is out of the bottle and our race don’t know the secret of bottling it back.

 It’s a sad commentary that money and money only , that has been within us, was never invented by any, but travelled four million years in various guise, spoiling the modern heir of homo sapien sapien , threatening the creator itself.

Foot Note 5 : Debt: The First 5,000 Years (published in 2011)/ Author anthropologist David Graeber

Reference 

1. Keynes, J.M.(1930) Treatise on Money, v.i., p. 13, Macmillan 

2. Tokens: their Significance for the Origin of Counting and Writing /Author D. SchmandtBesserat ( Apart from the weblink, no journal citation) 

3. Source: Purdue University Date:April 1, 2015. ScienceDaily

 4. The Invention of Coinage in Lydia, in India, and in China ( XIV International Economic History Congress, Helsinki 2006, [Session 30])/Author David M. Schaps, Department of Classical Studies Bar Ilan University Ramat Gan, Israel 

5. Debt: The First 5,000 Years (published in 2011)/ Author anthropologist David Graeber

 6. A History of Money from Ancient Times to the Present Day (rev. ed. Cardiff: University of Wales Press, 1996. 716p. ISBN 0 7083 1351 5)/Author Glyn Davies 

7. Societies Transition From the Barter System to Modern Payment Methods(Barter to Bitcoin, Coin Desk, 2013, Web Edition) /Author Brett Clark 8. "Gifts and Commodities" (1982) /Author Chris Gregory

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