Do you know the origin of money? It originated from barter. Simply put, as society develops, people exchange what they need for what they need. For example, farmers’ production advantage is food, but they are not good at meat, poultry and clothing. However, they can exchange food for other things they need. This is the early "barter". However, with development, there will be inequality, shortages, and information gaps. In this case, a social medium will appear, which is money.
Currency can be food, silk products, gold and silver, or even stone. On a small island in the Pacific Ocean, because there are no other resources such as gold and silver, and because stones are difficult to transport, stones are used as currency. Wealth is determined by how many stones you have. It is not determined by how many fish you catch. For people in different environments, what value will stones have. So what is the essence of currency? My understanding is that it is a kind of "credit", a credit endorsement of services used by a country to develop economic development.
The earliest paper money in China was probably the Jiaozi of the Northern Song Dynasty. It was also the first country in history to have paper money, hundreds of years ahead of the world. The United States first issued paper money, the US dollar, hundreds of years ago, in 1792. The Northern Song Dynasty was prosperous because of its developed economy and commerce. It developed shipbuilding technology, launched the Maritime Silk Road, and traded with many countries. Even though there were hundreds of years of war, the prosperity was the peak period of the empire. In addition, a complete commercial tax system was established, which also stabilized the government's source of income. At the same time, the "pro-rich theory" prevailed from top to bottom.
The Song Dynasty had developed commerce and created many wealthy provinces, such as Sichuan. Due to its geographical location, it avoided the wars of the Sui and Tang dynasties and had a relatively independent economy. However, Sichuan could not use copper coins, mainly due to the lack of local copper mines. It could only rely on iron. The disadvantages were obvious: it was too heavy, which made it inconvenient to carry. So innovation emerged and paper money was born during this period.
In the early days, private bill transactions among wealthy families replaced some metals and silks. These physical currencies were also based on mutual trust. Later, because Jiaozi was more convenient to use, it was promoted by local officials and attracted the attention of the court. It was promoted nationwide. It was officially issued in 1024 AD, once every three years, 1.5 million strings each time, and 360,000 strings of iron. The exchange of iron and Jiaozi was thus created among the people. After being endorsed by the government, it was used in various fields such as military expenditures, fiscal taxes, etc. It originated from an exchange demand under the development of primitive economy, which is essentially credit.
Do you know how the West established its monetary system? Ancient Greece was relatively early. Around 600 BC, silver coins were used. When Alexander conquered Persia, he paid half a ton of silver as military pay. Precious metals were generally more popular. In the Roman era, silver coins became more common, made of precious metals with Caesar's head. Whether a currency can continue to develop is also based on the country's military strength. Due to continuous military expansion, the Roman Empire fell, so its monetary system collapsed.
Charlemagne, the father of Europe, the Frankish Empire, once tried to reform the currency. The ratio of gold to silver was set at 1:12. Because of the loose political union, it was still impossible to formulate an effective unified currency system, including the tax system, and the entire economy of Western Europe continued to decline. In addition to political factors, the main source of European silver was insufficient production capacity in Central Europe. This did not change until Columbia discovered the New World.
In 1492, Christopher Columbus, funded by the Spanish royal family, set sail westward in search of a new route to East Asia, but unexpectedly discovered the American continent. This discovery opened the prelude to the European colonial era. However, the event that truly changed the tide of history occurred in 1545, when a huge silver mine was discovered in the Andes highlands of the Spanish colony, marking a landmark moment in the booming silver industry in South America.
According to estimates by financial historian Kindleberger, the annual output of silver in the Americas was as high as 300 tons, and from 1545 to 1800, the global average annual output of silver was about 537 tons. This clearly shows the huge wealth and influence that the discovery of silver in South America brought to the Spanish Empire.
This period of history not only marked the rise of South America as one of the world's major silver producers, but also profoundly changed the global economic landscape and trade routes. The discovery of South American silver greatly promoted the development of Spanish colonies and the accumulation of wealth in Europe, and also left a profound mark on global economic history.
The discovery of silver in South America made Spain a silver transit point, and its economic power gradually weakened, while other European countries established strong commodity economies and industrial production. As the South American silver mines dried up, Spain's hegemony in Europe ended. However, other countries established strong commodity economies and industrial production because of Spanish silver.
With the influx of silver from South America, silver in Europe began to depreciate. Since there was no stable ratio between the prices of gold and silver, the huge fluctuations in the depreciation of silver made all countries very worried. In other words, if 11.11 pieces of silver were exchanged in France, and 11.75 pieces in Britain, then people would definitely prefer to exchange in Britain. Some effects can certainly be inferred, which would also lead to the instability of the monetary system. The British silver coins were transported to France and exchanged for gold, causing a serious deflationary state and making it impossible to trade normally. How was this problem solved? Can you think of what scientist Newton proposed: "Abandon silver and establish a gold standard."
What does it mean? A fixed amount of pounds can be exchanged for a corresponding proportion of gold, but gold cannot be used as a medium of exchange. In addition, with the endorsement of the government, a stable exchange relationship is established, which makes the pound and gold directly linked. In terms of value - gold, in terms of convenience - paper money. However, because the growth rate of social commodities far exceeds the growth rate of gold supply, the collapse of the gold standard began with the First World War, which inevitably led to the collapse of the pound system based on gold credit.
As mentioned at the beginning, the Northern Song Dynasty developed a relationship with Jiaozi. Other dynasties in the later period also issued paper money, but due to over-issuance, it failed to depreciate. In the Ming Dynasty, a large number of Ming Baochai were issued, and it was stipulated that it could not be exchanged for any other metal currency, and it was forbidden for civilian use. Historical conclusions show that it was not very popular in the market. In 100 years, that is, from 1400 to 1500, it fell again and again, even to 3%. Officials did not like it either, because their salaries were paid with Ming Baochai, which meant losses and unpopularity. In the end, silver had a status under certain historical circumstances and was generally accepted. Spain occupied South America and discovered many silver mines. China's exports were also developed, such as silk, porcelain, tea, etc., which flowed into South America through the Philippines through trade. 40% of the silver mines. (Note: The data has yet to be verified) The abundance of currency has led to prosperous economic development, and China and the West have influenced each other.
The transaction method of each transaction is relatively primitive, that is, weighing and acceptance of the purchase and sale. There is no fixed standard model for the purity. In fact, a standard financial system has not been formed, and the supervision system for the use of silver in the private sector is not perfect. The lack of unified standards is actually a risk.
From the history we have learned, the West relied on Chinese silk and tea, and China relied on Western silver. But in fact, the West was not so dependent on China, and China was more dependent on foreign countries. What was the impact? Spain restricted the trade deficit of Latin American silver trade flowing into China for years; and the early "closed-door policy" at that time, the Japanese silver that had been supplied to China for a long time suddenly disappeared. If there is a shortage of silver, it will be very dangerous, causing a series of vicious cycles, bringing wealth crises, leading to storage, and causing austerity. Donations are also collected in silver. This indirect way of collecting from the people has led to a drop in the price of goods and an increase in the price of silver. It is conceivable that the cycle will repeat, resulting in civil unrest, and the people in the northwest will rise up in uprising. At the same time, due to external military invasions in the northeast, there was no money to fight and it led to its demise. Of course, there are more comprehensive factors, which I will not write about here.
Although China was the first country in the world to create paper money, it returned to the original silver system due to a series of economic problems caused by its later development. Many problems, on the surface, are currency struggles, but in fact they are the game between imperial power and private credit. Once it collapses, whether it is inflation or contraction, it will cause a series of problems. The development and evolution of currency is not only the result of technological progress and economic needs, but also the embodiment of credit relations and social trust.
I don't know what you think? It's a waste of time, just treat it as a story!! Hahahaha
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