The History of Money
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7 The History of Money UNIT ONE The History of Money This Unit consists of four sections: • Section A deals with barter and commodity money • Section B deals with coins and paper currency • Section C will help you to review what you have learnt in Sections A and B When you have finished this unit, you will understand how the concept of money has been transformed in the past few centuries. Section A BARTER AND COMMODITY MONEY 1. Match the English and Hungarian words English (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) axe barter capture commodity compensation cumbersome iron bar necklace obvious ornament shell slave Hungarian A. B. C. D. E. F. G. H. I. J. K. L. áru árucsere balta dísz elfog kagyló kárpótlás nehézkes nyaklánc nyilvánvaló rabszolga vasrúd 2. Match the following words with the definitions Words: barter cumbersome commodity money piglet exchange goose intermediate obvious 8 The History of Money Definitions: (1) give something for something ..................................................... (2) when you buy goods and pay for them with goods ..................................... (3) goods used as money (eg. salt) ..................................................... (4) difficult, slow ..................................................... (5) coming between two events in time .................................................... (6) easy to see or understand ..................................................... (7) young pig ..................................................... (8) large farm bird ..................................................... 3. Now read this passage about Barter. Try to translate it into Hungarian without using a dictionary Barter Before the earliest forms of commodity money appeared, people exchanged their goods through barter. This means that goods were traded directly. If someone with a goose to sell wanted to buy a piglet, he had to find someone with a piglet to sell who wanted to buy a goose; or, he could make one or more intermediate transactions to finally get whatever the owner of the piglet might have wanted. Such a system was obviously cumbersome and, with time, it gave way to commodity money. 4. Match the words below with the definitions Words: small change donkey shell axe bar compensation prisoner-of-war slave Definitions: (1) hard outer covering of some animals ………………………………… (2) long-shaped piece of metal ………………………………………… (3) money in small units ………………………………………… (4) person who is somebody else’s property ………………………… (5) tool for cutting wood ………………………… (6) animal of burden ………………………………… (7) soldier captured during a war ………………………………………… (8) payment for something unpleasant that happened to you ………………… The History of Money 5. Now read this passage about Commodity Money Commodity Money In various times and places, many different things have served as money. In New Guinea, people used to wear shell necklacesthe shells could be used as small change. In Nigeria, iron bars were widely used for trade until the middle of this century; in bronze-age Germany, bronze axe-heads were used for the same purpose. Under Roman law, donkeys were used to pay compensation: it cost 25 donkeys to hit a free man, 150 donkeys to break the bones of a slave, and 300 donkeys to break the bones of a free man. In prisoner-of-war camps, cigarettes served as money. 6. Ask questions about the different types of commodity money in the passage above as shown below. Answer the questions using the hints in brackets Example: a) What were shell necklaces used for? (as ornaments) They were used as ornaments. b) What else could they be used for? (as small change) They could also be used as small change. (1) a) What were iron ..................................................? (payments in trade) .................................................................................................................. b) What else ...........................................................? (making axes) .................................................................................................................. (2) a) What were bronze ..............................................? (payments in trade) .................................................................................................................. b) What else ...........................................................? (making wood-cutting tools) .................................................................................................................. (3) a) ................................... donkeys .......................? (paying compensation) .................................................................................................................. b) What .................................................................? (carrying things) .................................................................................................................. (4) a) ................................................................camps? (paying for food) .................................................................................................................. b) What .........................................................? (smoking) .................................................................................................................. 9 10 The History of Money Section B COINS AN PAPER CURRENCY 1. Match the English and Hungarian words English (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) circulate coin copper denomination durable lead melt down mint range tin Hungarian A. B. C. D. E. F. G. H. I. J. beolvaszt címlet érme forgalomban van ólom ón pénzt ver réz tartós választék, sorozat 2. Match the words and their definitions Words (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) acceptable accumulate attractive base metal circulate coin denomination drive out durable handle melt down mint portable precious metal range uniform Definitions A. which lasts long B. increase in amount; collect C. go round moving freely D. looking nice E. make coins F. make metal liquid through heating G. metal money H. not precious metal I. push out; chase out J. row, line or series of things; selection K. silver, gold or platinum L. something you can agree to receive M. which you can carry about; not fixed N. take up in your hands O. the same; not varying in form or quantity P. a unit of money 11 The History of Money 3. Match the synonyms in Column A and Column B Column A (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) accumulate capture changing cumbersome goods hard-wearing popular precious range recover Column B A. B. C. D. E. F. G. H. I. J. commodities difficult to carry durable expensive get back pile up series take as a prisoner varying widely used 4. Now read this passage about Coins Coins One of the best known forms of money is coins. No wonder: they have been around for about 3,000 years. It is easy to understand why they have been so popular and widely acceptable: they are uniform, durable, portable, easy to handle and attractive. They can be (and are) minted in a wide range of values. For smaller coins, base metals - lead, copper, zinc or tin - can be used, while coins of larger denominations can be made of silver and gold. It is true, though, that coins made of precious metals are usually driven out of circulation by “base” money. The reason for that is quite simple: while coins containing base metals circulate, the ones with precious metals are accumulated or perhaps melted down to recover the metal. 5. Complete the following sentences with words from the passage above. Write one word in each space (1) Coins have been popular because they are ...................., durable, .................... and easy to .................... . (2) Coins are .................... in a wide ..................... of values. (3) .................... metals are used for coins of smaller .................... . (4) Coins of larger ..................... can be made of ..................... metals. (5) Base money ..................... dear money out of ...................... . (6) Coins made of ..................... or gold are ..................... or sometimes melted down. 12 The History of Money 6. Match the English and Hungarian words English (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) bank note borrow charge interest circulation currency deposit exceed failure in exchange for issue receipt reliable Hungarian A. B. C. D. E. F. G. H. I. J. K. L. bankjegy bukás, csőd cserébe elismervény, nyugta forgalom kamatot felszámít kibocsát kölcsönvesz letét(be helyez) megbízható meghalad, túllép pénznem, valuta 7. Read the following passage about Paper Currency Paper Currency Paper money developed from coins. Gold coins used to be deposited with reliable institutionsfirst with goldsmiths, later with banksin exchange for deposit receipts. These were promises to return the gold coins when the receipts were presented. It then proved to be a lot easier to exchange these receiptsor bank notesthan gold, so they became more and more popular in trade. Very soon, the total value of these notes far exceeded the value of all the deposited gold as banks were quick to realize that it could be a good idea to issue a few extra banknotes and lend them, charging interest, to people who wanted to borrow money. That resulted in the increase of money in circulationand a long history of bank failures. Today even paper money is less frequently used. It gives way to plastic cards which can be used for payment and also for getting banknotes and foreign currency. You can also use your plastic card if you pay through the internet. But paper currency will be around for a long time. 13 The History of Money 8. Now try to guess which words in the passage above the following definitions refer to. The first letters have been provided for you Definitions (1) somebody who makes articles of gold (2) money put in a bank for safe-keeping (3) written statement that something has been received (4) put into circulation (5) be/become bigger than (6) additional (7) ask as a price (8) money paid for the use of money (9) cause, lead to (10) bankruptcy; when a business stops functioning Words g....................................................... d....................................................... r....................................................... i....................................................... e....................................................... e....................................................... c....................................................... i....................................................... r....................................................... f....................................................... 9. Make questions to the sentences below so that the underlined phrases could be the answers Examples: a) Paper currency developed from coins. What did paper currency develop from? b) Paper currency developed from coins. What developed from coins? Now you try: (1) Deposit receipts were promises to return the gold when they were presented. ................................................................................................ ............................................................................................................ (2) Deposit receipts proved easier to exchange than gold. ................................................................................................. ............................................................................................................. (3) The total value of notes exceeded the value of deposited gold. .................................................................................................. ............................................................................................................. (4) The banks thought that it could be a good idea to issue a few extra notes. ................................................................................................... .............................................................................................................. 14 The History of Money (5) The banks charged interest on the notes they lent. .................................................................................................... ............................................................................................................... (6) This resulted in the increase of money in circulation. .................................................................................................... ............................................................................................................... (7) The history of bank failures is a long one. ..................................................................................................... ............................................................................................................... (8) Gold used to be deposited with goldsmiths. ..................................................................................................... ................................................................................................................ 10. You can find various forms of money and their properties below. Match them Properties: attractive made of expensive material internationally acceptable popular as a commodity heavy expensive to insure difficult to transport durable yellow generally recognizable as money available in small units of value light easy to transport ornamental Forms of money: (1) shells ........................................................................................ ........................................................................................ (2) iron bars ........................................................................................ ........................................................................................ (3) bronze axe-heads .............................................................................. ........................................................................................ (4) precious metal coins ......................................................................... ........................................................................................ (5) base metal coins ............................................................................... ........................................................................................ (6) paper currency .................................................................................. ........................................................................................ 15 The History of Money 11. Now compare the different forms of money by completing the sentences below. Use the expressions in exercise 10. Write one word in each space (1) Although shells are .................... , they are not very ...................... . Besides, they are not internationally ...................... . (2) ...................... ...................... are more ...................... than shells, but they are not as attractive. However, they can be used for making axes, which made them popular as a ....................... . (3) ...................... ...................... coins are still popular as money. They are also ...................... in small ...................... of value. (4) ...................... ...................... can be attractive and it is reasonably durable. It is light, easy to ...................... and, as it is also available in large ...................... of ...................... , it can be used for payments of large sums of money. (5) Bronze ...................... were durable and could be ...................... into useful tools. (6) It is no wonder that ...................... ...................... coins have a lot of attractive properties. They are ...................... , made of ...................... material and used to be internationally acceptable. They are also popular as a commodity, though as such, they are ...................... to insure. Another problem with them is, that larger quantities are difficult to ...................... . 12. Below you can find some information about the names of some national currencies. Find which currency in the box goes in which sentence Currencies: dime florin crown dollar franc yen euro pound Sentences: (1) The Swiss ...................... gets its name from the Germanic invaders of ancient France, the Franks. (2) The ...................... got its name from the German Thaler, coined from silver mined in Joachimsthal, in 1519. The most believable account of the origin of the $ sign is that it represents the first and last letters of the Spanish pesos, written one over the other. (3) The Japanese unit of currency is the ...................... , which means “circle”: money is something that should go round in a circle, or circulate. (4) One of the most recent currencies, the ...................... , takes its name from our continent. 16 The History of Money (5) The British ...................... is from the Latin libra (“pound”), and that explains why its symbol is £. A pound sterling was originally one pound of silver. (6) The ...................... is Jefferson’s creation. Its name comes from old French disme (which comes from Latin decime) and means one tenth. So a ...................... is worth $0.1. (7) The Hungarian forint goes back to the ...................... which is named after Florence, “the city of the flower”, whose emblem is a lily. (8) The ...................... , the name of several old currencies and still the name of the Norwegian currency, comes from the symbol of royalty on the coin. Section C SUMMARY Answer the questions (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) How could people obtain goods before the earliest forms of commodity money appeared? What is barter? Give an example. Why did it give way to commodity money? What is commodity money? Give a few examples. What are the advantages and disadvantages of commodity money? Under what circumstances can commodity money be used in modern times? How long have coins been in use? Why do you think they became so popular? What were small coins made of? And large denomination? Why were coins made of precious metals driven easily out of circulation? What did paper money develop from? Why do you think people deposited gold coins with goldsmiths? What did they receive in exchange? How did banks make use of the money deposited with them? How could banks fail? What is becoming even more popular than paper currency? What can plastic cards be used for? Where does the word dollar come from? Why is the sign £ the symbol of the British pound sterling? What is the origin of the name of our forint? 17 The History of Money WORD LIST account accumulate, -d additional appear, -ed article attractive axe-head banknote bankruptcy bar barter base metal borrow, -ed camp capture, -d century change charge, -d interest circulate, -d circulation coin coin, -ed commodity commodity money compensation cumbersome currency denomination deposit deposit, -ed donkey drive, drove, driven out of circulation durable exceed, -ed exchange exchange, -d extra fail, -ed failure foreign currency give way to sg goldsmith goose (tsz. geese) handle, -d hard-wearing beszámoló összegyűjt, felhalmoz további, „plusz” megjelenik cikk vonzó baltafej bankjegy csőd rúd árucsere nem nemesfém kölcsön vesz tábor elfog évszázad aprópénz kamatot számít fel forgalomban van forgalom érme pénzt ver áru árupénz kártérítés nehézkes pénznem, valuta címlet letét, betét letétbe helyez, betétként elhelyez szamár kiszorít a forgalomból tartós túlmegy, meghalad, nagyobb mint csere cserél pótlólagos, „plusz” elbukik, csődbe megy csőd, bukás, kudarc valuta vminek utat enged, átadja helyét aranyműves liba kezel kopásálló 18 The History of Money hit, ~, ~ institution insure, -d intermediate invader issue, -d melt, -ed down metal mine. -d mint, -ed necklace obvious obviously ornament ornamental paper currency piglet pile, -d up popular portable precious metal present, -ed prisoner-of-war promise property prove, -d to be purpose range recover, -ed reliable safe-keeping serve, -d as shell slave small change soldier statement statement to be around trade, -d transaction uniform üt intézmény biztosít közbeeső hódító kibocsát beolvaszt fém bányászik pénzt ver nyakék világos, magától értetődő nyilvánvalóan dísz díszítő papírpénz malac felhalmozódik népszerű hordozható nemesfém bemutat hadifogoly ígéret tulajdon, vagyon bizonyul vminek cél sorozat, sor, választék visszanyer megbízható megőrzés szolgál vmiként kagyló(héj) rabszolga aprópénz katona állítás, kijelentés állítás meglenni kereskedik vmivel, elcserél vmit művelet egységes
