Niewmismatic Error Coins

From Metal Money  To Paper Money.

As societies developed, it became apparent that primitive money was inefficient and often impractical. For example,a man paid five hundred head of cattle for a boat could end up spending the greater part of his 'profit' feeding and housing his new herd. Moreover, cattle was not a good store of value and man's wealth could disappear the instant his cattle died.

As man groped for new standards, eyes turned towards metals and their intrinsic value. Metals were rare and, unlike cattle or storks of rice, could be kept for a long time as they were not perishable. Moreover, metals could be easily shaped into readily recognisable shapes and were easily divisible into smaller units.



At first, metals like copper, silver and gold existed side by side with foodstuff and livestock money, with the metal weights being equated to fixed amounts of the foodstuff and livestock. For example, the Babylonians used barley and metal, the Jews had cattle and silver while the Hittites used sheep and silver. Gradually, metals assumed greater prominence and pushed livestock into the outer edges of use.

Starting with metal pieces which had to be weighed and analysed at each transaction man's ingenuity led him to the idea of stamping the ingots with a mark or seal guaranteeing the weight and purity of the metal. But, it was not until around 2000 BC that the first state seal appeared on these bits of metal, together with laws to punish counterfeiting.

From heavy ingots that could only be used in large scale transactions, the next logical step was to divide the ingot into smaller pieces, or coins, each with a stamp guaranteeing weight and purity. The first metal coins in the Western world are believed to have been invented around 650 BC in Lydia (a Greek city-state). These bean-shaped coins were of electrum, a natural mixture of gold and silver. A century later, Croesus, a Lydian king said to be the richest person of the time, found a way to make pure gold and pure silver coins. His coins were stamped with the heads of a bull and a lion.

The right to stamp coins, that is minting, rapidly become a political privilege and was concentrated in the hands of the rulers, with coins even becoming a sort of propaganda newspaper. An examination of the coins of ancient Rome, for instance, will show how emperors used coins to celebrate their achievements, and improve their public image.

As trade expanded within Europe, the fear of robbery and the sheer inconvenience of lugging heavy sacks of coins around gave impetus to the development of banks. With flourishing trade centers springing up in the fourteenth and fifteenth centuries, it became clear the dependence on rare metals could only restrict growth. The search was on for a new means of exchange.

Towards the end of the Middle Ages, the Bill of Exchange appeared. With these documents, a debtor promised to pay off his debt at a given time and place. These were crucial to the development of banking as they not only increased the availability of money. but when deposited with banks, allowed bankers to create more money in the form in the form of loans.

First Issued Of Banknotes

In the seventeenth century, the Bank of Amsterdam invented the banknote. It collected deposits of coins, assayed them, then issued a note for the amount which could be later exchange for the bank. But it was the Bank of Stockholm that fist issued the banknotes as we know it today-paper money representing a sum, designed to circulate without a time limit-in 1661
However, as with the invention of metal coins, the Chinese had beaten Western civilisation to the use of paper money by some seven to ten centuries. From a form of currency note made from deerskin, China progressed to its first paper notes some time during the Northern Song dynasty (Ad 960-1127). By the time Marco Polo visited the court of Kublai Khan, paper notes made from the inner bark of the mulberry tree, suitably embellished with official red seals and warnings of the death penalty for forgeries, were enjoying universal acceptance in China. However, it took a full three centuries after Marco Polo regaled his contemporaries with tales of Emperor Kublai Khan's paper money for the first banknote to appear in Europe.

With private banks issuing their own banknotes counterfeiting became rampant, leading to bank collapses which rocked financial systems and shook public confidence in banks and paper money. Government after government was forced to step in and restore order, and the issue of paper money slowly concentrated in the hands of the newly created central banks.

Source:Stories Of Singapore's Money by Doreen Soh