A Brief History of International Money Supply Systems in Major Civilizations with a Focus on Links to Major Economic Depressions

Article excerpt

My hypothesis is: A civilization is formed with a pairing of language and money under a political system. For example, the contemporary Japanese civilization is being formed with the Japanese language and Japanese yen under Japanese government.

In a previous paper (Comparative Civilizations Review No. 60, Spring 2009)1 I wrote that civilization is a process that integrates whole civilizations on the Earth, and that globalization today is being advanced with mainly American English and the U.S. dollar. I also described there the important role of major linguae francae, international languages.

So this time I would like to describe international money supply systems in major mainstream civilizations: Sumerian, Mesopotamian, Achaemenid Persian, Greek, Roman, French, British and American versions. A global civilization would require an international currency as well as an international language.

I will conclude by arguing that inadequate or unfit international money supply systems are a major cause of economic crises or depressions, and I will suggest a new supply system of international currency.

What is money?

Money, currency, is a sign of trust with a certain value in a human group, and its function is to exchange goods and services, to preserve and measure value, and to invest as capital. However, we must remember that the most important essence of money is trust. If trust in a society's monetary system is lost, the money will not be accepted or circulate.

Materials for money

Currencies with utility value can be cereals, salt, dry fish, livestock and other items with real value in practical life. Cereals were often used for money with utility value in the earliest civilizations. In the case of the Yellow River civilization, it was millet, and in the Mesoamerican civilizations, it was corn.

Examples of items used for money with symbolic value are gold, silver, copper, iron, shell, and stone. In a small society, people could use shell, stone and other symbolic materials as money. But in a larger society, metals were more commonly used. Gradually the ranks of those metals became clear according to their symbolic value. Gold became the first and silver was the second and the average exchange ratio between gold and silver was usually from one to thirteen to one to fifteen. But those precious metals were always in short supply in every civilization in each period. Thus, political authorities and people always felt a "money shortage" owing to a material shortage. Metals may have some practical value as well as symbolic value, especially in the modern world.

Currencies with symbolic value only are paper moneys, which are usually backed with the trust of their issuer's banks. Otherwise, paper is just paper, fragile and of little practical value. Banks have sometimes failed to meet the society's expectation. To correct this, political authorities have often designated a money-issuing bank as a national central bank. A paper money monetary system usually gains trust with the support of the political authorities.

There are many auxiliary paper currencies in modern civilizations, such as checks, promissory notes, bills of exchange, postal money orders, and so on. Also, today plastic money, credit cards, and electronic money on computers constitute moneys with symbolic value only. Those forms of currency were very fragile originally and were not trusted in preindustrial society.

But in economically developed societies, trust levels were raised among organizations and people in general and those monetary devices and systems became widely used and accepted.

Civilization, Money and Cities

Cities and civilization are critically dependent on both language and money. Why money? Because if money is supplied to the society, "Division of Labor" becomes possible. The division of labor allows the development of many kinds of specialists, such as political leaders, priests, officers, military, merchants, craftsmen, and scholars. …