Today, Singapore ranks as one of the world’s largest financial centers. The city’s financial industry is underpinned by its role as a center for foreign exchange trading and foreign currency lending. It developed this role not so much organically or spontaneously but as a result of planning. Still, this doesn’t tell the whole story. A…
This post is a continuation of The Gold Standard Between the Wars (Part I). In that post, the international gold standard was rebuilt as countries fixed their exchange rates, whether at pre-war rates or newer sharply reduced valuations. As was recounted, the speed with which countries restored their currencies’ link to gold masked the difficulty…
Throughout the 19th century, steadily more countries joined the international gold standard led by Britain and the Bank of England. During the First World War, this system was suspended virtually everywhere and currencies were allowed to float freely for the first time. The 20th century would see several changes in the global monetary order, in…
The invention of coins brought about a commercial revolution as a new market economy began to develop in the midst of more primitive means of distributing production across consumers. However, money also had negative side effects. It provided a new way of storing wealth that served no productive end in itself; unlike an estate, a…
In the 17th and 18th centuries, Europe instituted mercantilist economic policies designed to promote the accumulation of money by running trade surpluses with other countries. Since several European states pursued this policy, they couldn’t all run trade surpluses with each other, so it tended to be with their colonies that European countries sought to accumulate…
In early modern Europe, currency was far less standardized than it is today. There were several different metals with monetary significance: gold, silver, and copper. Countries usually struck coins from all of these metals and often combinations of them together. In addition to local coins, circulating in any given place would be foreign coins made…
In the absence of metal coins or modern banknotes, commodities have been used as money. The commodities most suitable are those held in high demand by traders and merchants. In colonial America, examples of these included beads, beaver belts, and tobacco. The latter is particularly interesting not only because of its particularly broad acceptance as…
Any influx of new money, if poorly managed, can prove as ruinous as it seemed alluring. Misdirected riches can be frittered away and, by enabling years or decades of dissipation, growing indebtedness, or both, can leave its former holders in far worse position than where they began. Spain was able to capture large amounts of…
Far away from sources of foreign monies and lacking their own, early Australia was forced to improvise. Barter was especially impractical and attempts to create a local coinage were unsuccessful until the early 20th century. Banknotes provided the solution for some parts of the country but in remote areas far from any banks, makeshift systems…
It was in fairly modern times that money transformed from being purely a physical thing, tangible coins or paper changing hands, to an ethereal substance. Today, when money is used, it largely moves only in a digital sense and before the digital era, it may have changed hands without physically moving but instead by the…
When a currency is discredited, people usually turn to substitutes. These are often foreign currencies. Sometimes though the economy functions only by resorting to barter. This is hardly a solution since bartering is usually impractical. During the late 1940s in occupied Germany, people traded goods for products like cigarettes, coal, and potatoes which were in…
Today, coins and banknotes are the most common physical manifestations of money, but money does not need to take these common forms. Anything could be money, or at least exhibit some of the qualities of money, even seemingly common items anyone could produce. Consider that cowrie shells were used as money in Africa and Asia…
