THE STORY OF MONEY

[Music] [Applause] [Music] [Music] money has because such an everyday part of our life that we seldom stop to think of what it really is in appearance it is either printed pieces of paper or metal discs why for instance should five hundreds of paper buy such a complicated thing as a motor car why should a metal disc buy a much larger piece of metal such as a Tim pale to explain this we must go back to the days of primitive man the earliest groups of people wandered about the earth living on the cattle that they drove from one pasture to another later on they settled down and gradually learned how to grow and make things and form small communities as these communities developed their needs began to grow and so they traded certain goods for articles that other communities possessed for example a man who was a hunter might want to exchange the skin of his captured animals for arrowheads made by a craftsman this was in its most primitive form barter as time went on communications between the different groups developed but the transportation of bulk commodities such as grain cattle etc on the never increasing scale became more difficult to handle on the basis of barter for purposes of exchange it became necessary to find an article that was portable and was also indestructible so there could be easily handled and used again for a time ornaments were commonly used simply because they were greatly prized and provided the most obvious means of meeting the instances surviving today now the courage shell necklaces still used for barter emphasis in the South Seas eventually metals began to take the place of ornaments as commonly acceptable bartering material the mid word gold silver copper and iron gold was the most valuable because it was the purest metal when mind and being rarer concentrated greater value in small bulk in countries such as Britain where gold is very rare bars of iron where the chief means of exchange it was now only a small step for the precious metals to be converted into handy sized metal disks and the symbol of money was thus created usually the head of the community issued this money for purposes of identification it was all from stem to the or other symbol indicative of the real purpose of these discs where the symbols of auxin grain bill stamped on them this type of money was not money quite as we understand it today it served as the most convenient and generally acceptable commodity to exchange for others staple commodities this money system persisted from early times and covered a considerable period of English history these metal discs however were only worth the weight of precious metal which they contained if you had two shillings in Queen Elizabeth's time one being lighter than the other the value of the lighter one was less despite the fact that both the coins were called shillings they were only worth their weight in metal in important transactions coins were weighed and people often carried pocket weighing machine was to test the value of the coins by their weight they were careful also to see that the coins were genuine because when making a purchase they only got the value of the weight of true metal handed to the merchant at this period the only investment for money was in goods land or valuables but people who had accumulated large sums of money did not always wish to invest it in these things so they began particularly in troubled times to bring it for safety to the Goldsmith's shops [Music] the Goldsmith's were almost the only people who offered security in their strong rooms consequently more and more people came to leave their money with them it was eventually discovered that when people with do their money from the ghost myths they did not expect to receive back the same coins that they had previously deposited in fact public confidence in these old firms became such that people actually preferred to be owed the money by the Goldsmith's more especially in uncertain times this meant that the depositors did not have to trouble themselves about their actual cash and so it became customary for some of this money to be used in business on the understanding that it would be repaid when required in this way a primitive form of banking was started very soon a new development arose it was the custom when a man deposited money at the ghost mist shop for him to be given a receipt for it it was soon realized that the man who left the money that is the depositor who might live many days journey from the Goldsmith could conveniently settle a private debt by passing on this receipt [Music] in this way for example the person who sold goods to a depositor became entitled to claim payment from the NGO Smith as this practice became general the goldsmith or banker as he was coming to be called began issuing receipt notes of different values to the people who had deposited money with him instead of giving a single receipt for the whole amount this greatly helped the settling of debts these notes were in effect promises to pay they represented the money owed by the banker for convenience the notes could be used but if metal where needed it could be demanded from the banker as time went on people founded a great convenience to use these notes to pay for goods which they purchased from it thus for the first time paper itself Warner's Benson became valuable as a new form of money the bank note instead of always giving their customers notes the bankers in time began to give them printed forms these forms were not unlike the notes they replaced but they had blank spaces in which the customer could write the exact amount to pay for a purchase it was in this way that the cheque system developed the cheque was in fact a safer and more popular form of banknote as the use of checks became more general the banks in London would often receive from their customers checks drawn on other banks with the request to collect the money and place it to the customers account in early days the bank's clocks used to walk around the city collecting the checks drawn on other banks these clerks in time got to know each other in the course of their rounds and very often they would meet one another in coffee houses in conversation they would find that they had checks drawn on each other's banks which they were going to collect and so to save themselves trouble they exchanged the checks and paid over or received the difference in cash in course of time this routine grew into an officially recognized procedure and the Clearing House system for cheques was eventually started in a room at the five bells of Lombard Street in 1844 the control of banknote issues in England was taken in hand by the government through the agency of the Bank of England to ensure central supervision the government had all way of making metal coins in both cases the amount of money available for issue is controlled by Parliament Parliament authorizes the amount of money may be put in circulation thus today we have in effect three forms of currency the banknote and metal coin issued or controlled by the government and the checks drawn on the banks in early times we have seen how money was a portable and as such a useful means of exchanging commodities but today the amount of cash money collected by traders may become so bulky as to be difficult to handle on the other hand traders may need to draw large sums at short notice the machinery for accepting and handling large sums in safety is provided by the bank they also provide the organization whereby potatoes may draw out large sums when they require cash every day the bullion vans pass between the banks heads and their branches carrying cash suppliers were required to meet their customers needs or to collect cash deposited when this exceeds local requirements of branches the money process was greatly developed by the evolution of the cheque system so today a debtor in London can write out a cheque on his bank and send it to a creditor in say Birmingham this check is then usually paid in by the creditor to his account at his bank banks collect daily all the checks that are paid in posting them after listing to the central clearing house where all checks are sorted [Music] at the clearinghouse the representatives of the various banks exchange all these checks any barrels do from one bank to another being transferred through the Bank of England the check which the debtor in London has drawn on his bank is now sent back to his branch bank by the central clearinghouse and debited against his bank account in this way the whole transaction is completed without any cash changing hands [Music] this check is bringing the coal brought from the mines to the blast furnaces [Music] this check is bringing a tractor coming from the factory so that a farm may increase food production this check is providing the wages to pave workers in a large factory [Music] this check is bringing the bricks for timber the plaster and the paint coming from different parts of England for the construction of new houses we've seen how money was originally a commodity making easier the exchange of other commodities we have seen how it became a token and a means of keeping active the exchange of goods and services between communities money today made of paper and metal is still in token form although it is now recognised that the real wealth of a country lies in its natural resources and in the skill labor and production of its inhabitants money remains the most convenient means of exchanging goods and services by providing the machinery and organization for circulating money the bank's perform an essential service for if money did not circulate freely the modern community could not continue on its present standards of life money has ceased to be merely a commodity as it was in the early days it now lubricates the wheels of Industry and Commerce and so speeds the production and exchange of goods and services on which modern life depend 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