Money Matters

The first banknotes in Europe were issued by Sweden's Stockholms Banco on this day in 1661. The bank soon collapsed, but the idea of banknotes spread quickly, their portability a clear advantage over cartloads of precious metal. Although banknotes were not a new idea -- Marco Polo, returning from China late in the thirteenth century, marveled in his Travels at "[h]ow the Great Kaan [Khan] Causeth the Bark of Trees, Made into Something Like Paper, to Pass for Money Over All His Country" -- most modern historians of finance describe banknotes as an essential step in the evolution of any economic system or civilization:

The evolution of credit and debt was as important as any technological innovation in the rise of civilization, from ancient Babylon to present-day Hong Kong. Banks and the bond market provided the material basis for the splendors of the Italian Renaissance. Corporate finance was the indispensible foundation of both the Dutch and British empires, just as the triumph of the United States in the twentieth century was inseparable from advances in insurance, mortgage finance and consumer credit. Perhaps, too, it will be a financial crisis that signals the twilight of American global primacy.

The excerpt above is from Niall Ferguson's The Ascent of Money. As suggested by the Jacob Bronowski allusion in his title, Ferguson does not belong to the filthy-lucre school of thought: "Though the line of financial history has a saw-tooth quality, its trajectory is unquestionably upwards."

David Wolman's The End of Money foresees "the twilight of money in its most commonly understood form" -- namely, "little metal discs and strips of paper bedecked with dead white guys and cryptic messages." Given today's globalized, computerized world, Wolman argues, money's demise is both imminent and right:

Although predictions about the end of cash are as old as credit cards, a number of developments are ganging up on paper and metal money like never before: mistrust of national currencies, novel payment tools, anxiety about government debt, the triumph of mobile phones, the rise of virtual and alternative currencies, environmental concerns, and a wave of evidence showing that physical money is most harmful to the billions of people who have so little of it.

Daybook is contributed by Steve King, who teaches in the English Department of Memorial University in St. John's, Newfoundland. His literary daybook began as a radio series syndicated nationally in Canada. He can be found online at todayinliterature.com.

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