All that glisters...

July 18, 1997

There are almost no limits on the history of money. Money finds its way into most aspects of our lives. It has political, social, economic, cultural, religious, and doubtless other ramifications. The story of money can therefore be picked up almost anywhere and lead almost anywhere else. We could start at one end of the spectrum with primitive money - such as the gathering of shells - and pass on to the discovery of metals and mining technology, and the production of coin (and later paper). It would not be long before we encountered merchants arranging credit, scriveners, and in due course reached the establishment of goldsmiths and the very beginnings of modern banking. This in turn could lead us quickly on to fractional reserve banking and the "creation" of money (as opposed to the finding or manufacture of it). There would then follow such obvious topics as the functions of banking and the emergence of central banking, and then public finance would enter the story, with monetary policy and its relationship to other policies not far behind. Yet we would still, after discussing these topics, only be at the beginning of the whole story. Mention of policy draws attention to the important part that politics plays in monetary matters. Politics appears in the very earliest stages of money's history. For example, when we think of the search for, and discovery of, gold and other precious metals, the subject of property rights arises, and with it the role of the state in both allocating and enforcing them. The state therefore makes its appearance. And we still have not said what money is. Does it evolve naturally or is it something that by its nature requires the imprimatur of the state?

All of this is simply to indicate that a book with the title, Money: A History, could be a very ambitious project. The coverage in this book has a very particular origin and purpose. At the British Museum, a gallery called the HSBC Money Gallery has been set up, named in grateful acknowledgement of the sponsorship of Hongkong and Shanghai Banking Corporation Holdings, both for the gallery's establishment and maintenance. The gallery brings together material on the history of money from the beginning of time until the present, and from all cultures. This last fact is of interest because it means that the gallery is the only gallery in the British Museum that by definition represents a range of cultures; every other gallery is dedicated chiefly to one culture.

The book is in main part an extended guide to the gallery. And it is no surprise to find a picture of a Hongkong and Shanghai Bank note on page one. The editor is Jonathan Williams, a curator in the department of coins and metals in the British Museum, with the assistance of Joe Cribb and Elizabeth Errington. There are nine chapters in all and a list of ten authors is given, all of them from the British Museum. But there is no indication as to which chapters are by which author(s). The scope is huge in both time and space, from the third millennium bc to the present, and from all parts of the globe - all in the space of 250 pages.

The text is not all that extensive, however. As might be expected, it is generously illustrated with more than 350 illustrations of one kind or another: photographs of coins, notes, people, places, paintings, maps, and so on. Additionally, there are "boxes" scattered throughout for special topics such as the Vikings, the origins of Islamic coinage, copper in Africa. Lots of quotations are used, for example from Voltaire - "It is easier to write about money than to acquire it; and those who gain it make great sport of those who only know how to write about it" - to the saying of the well-known, widely quoted Oscar Wilde character Miss Prism in The Importance of Being Earnest, who tells Cecily: " will read your Political Economy in my absence. The chapter on the fall of the rupee you may omit. It is somewhat sensational. Even these metallic problems have their melodramatic side." There is no overall conclusion; it is not that sort of book. There is a short bibliography.

While very useful for the detail it presents, and for its description of money and to some extent monetary conditions across so much time and space, the book lacks an organising framework, which can be a handicap. For instance, the opening chapter gives an interesting account of the very earliest precious metals and how they were used as money from as far back as 2400 bc. The metals were carried as bullion and when making a transaction they would be weighed out on scales. Even in ancient times, prices for a range of goods and services were advertised, wages were specified and publicised, and even fines for offences were listed. Such metals were used in long-distance trade throughout the Mediterranean. This is very interesting and it could contribute to the account of money generally given by economists: that it evolved from the use of precious metals. But then, just as easily, the story slides into an account of the Greek city state and of how the state's authority guaranteed the coinage. Now this is an alternative story to that of the economists, which conflicts with the view that money evolved on its own as people demanded certain things of it. Nothing in the text draws attention to this or enlightens the reader on these matters.

Similarly, there are accounts of how, from the earliest times, silver coinage was debased as limited supplies of the metal were stretched to cope with increased activity, particularly more and more expensive wars. And there is much discussion of how inflation meant that low-denomination copper coins became uneconomic to produce. Yet these kinds of comments throw up questions. Might not copper coins continue to be produced but be asked to do more work, and perhaps take on a token form? There is a lot on inflation, and of how it caused distress. But no inflation rates are given. I should have thought that for most of the period under discussion the rates were too low to cause serious distress. Nevertheless, sometimes the instincts of the authors are good even where there is no analysis: we are told that price controls were as useless in the year 301 as they were in the 1970s.

Although money of various kinds (and even metal coins) has been around for millennia, the monetary economy is a relatively recent thing. Though this is not stated explicitly in the book, we slide gently into it. After noting the widespread use of the silver penny - the sole currency coin in most of northern Europe in the period 750-1150 - and noting too the contribution of Byzantium, where the state taxed and spent on a huge scale and where for 500 years the gold solidus was the bedrock of the monetary system, we reach the later Middle Ages in Western Europe. It was there that something more closely resembling the beginnings of a monetary economy emerged. Twelve denarii (pennies) equalled one solidus (shilling), and 20 solidi equalled one librum (livre or pound). These relationships lasted for centuries and survived in different forms into the second half of the 20th century. Until quite recently, we were all (at least in Britain) accustomed to talking in Pounds .s.d.

It was in the later Middle Ages that money was used increasingly and helped to improve the functioning of the economy, first of all in the sale of property. Medieval rulers paid servants' salaries rather than give payment by other means; feudal tenants commuted labour services into cash rents. But once again the book says little or nothing of how this emerging usefulness of money related to the emergence of a market economy, the beginnings of capitalism, the better definition of property rights and so on. Facts do not speak for themselves; they need to be interpreted.

Perhaps I am carping. In this kind of book space is limited, and the book has been designed with a specific aim. But I cannot help feeling that some unobtrusive framework would have facilitated explanation. It might also have allowed the material to be pulled together. All of this might have given the book wider appeal and at the same time perhaps stimulated more work on earlier forms of money. Even so, a reading of the book will undoubtedly prompt a visit to the British Museum's Money Gallery.

Forrest Capie is professor of economic history, City University.

Money: A History

Editor - Jonathan Williams
ISBN - 0 7141 0886 3
Publisher - British Museum Press
Price - £25.00
Pages - 256

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