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The history of gold starts with barter. To the ancients items that were useful and attractive to were traded or bartered. They represented items that retained their value and could be traded later for other goods and services. These items represented the original forms of money.
The Bronze Age followed as the next stage in the history of gold. The bronze age allowed men to produce metals. Soon the metals were used as money. The metals were not perishable like the livestock, wheat and corn which had been used as money. The metals also did not have limited life spans.
After many years of trial and error, gold and silver were selected as the best materials for money, along with copper and other metals. Gold history really got started when coins were minted with an amount of metal that was guaranteed by stamping the image of the ruler on the coin. Examples of these early gold history coins were Roman coins such as Aureus and Denarius.
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| Gold HistoryThese coins were widely used until the Romans started reducing the amount of gold and silver in the coins. This devalueing of the coinage helped bring an end to the Roman currency and the Roman Empire. Coins such as the gold Bezant, of Constantinople fared better, It lasted for over 800 years in international and national trade. The bezant was so successful it influenced european coin systems still being used today .
It was Goldsmiths, who drove the next advance in the history of gold money, They needed secure vaults to protect their valuable metals. Some of them started offering a storage service for wealthy owners of large quantities of coins.
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http://monetaoro.unicatt.it/referenze.htm | The Goldsmiths gave receipts or to the wealthy that said: “I promise to pay Bearer on demand at the above address xxx gold coins”. This was a great innovation because the wealthy no longer needed carry heavy quantities of gold with them for every business transaction. They just needed the receipts.
The receipts were “as good as gold” as far as merchants were concerned. The receipts were the start of the bank notes we use today. They were more convenient to transport and use than the heavy metallic coins.
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The inventive Goldsmiths soon saw another opportunity to by making loans of their gold coins. In the beginning the loans were secured by the goldsmiths capital. The Goldsmiths simply gave the borrower a receipt against their own gold holdings.
The Goldsmiths knew that only a small number of the gold coins held in storage were ever claimed by their owners. So they started increasing the loan business and issued receipts worth more than the gold they actually had. The holders of the receipts were not aware of the lack of available gold coins.
This was the invention of “fractional receipt” money, because the stock of gold coins in the vaults was only a fraction of the gold issued by the Goldsmith.If a Goldsmith issued too many receipts, and the receipt holders found out about it, they would all run to the Goldsmith and try to claim their gold.
The threat of bankruptcy forced a certain discipline on the Goldsmiths lending activities. That and the threat of being beaten to death by an angry mob.
Goldsmiths were the early bankers and the “fractional receipt” form of money eventually developed into the modern “fractional reserve banking system” which is in common use around the world.
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