Currency & Credit - by Peter Gach

In my last few blogs I talked about how banking/interest started in about 3,000 B.C. by the Sumerians. Now here is interesting info about currency and credit. The Sumerians also started the first form of currency. Not coins nor paper but domestic animals, such as cows, camels and sheep. As the number of countries grew, so did the need for currency. Foreign trade was taking place. Obviously, one couldn't carry their animals around in their pockets (duh). One of the earliest records of foreign exchange was about 1156A.D. One could borrow cash in Geneo, travel to Constantinople, where they repaid their loan at a higher price in the currency of Constantinople (you, exchanging dollars for euros as an example). Soon after, foreign exchange transactions became a way for lenders to make money and a have a way of getting around the horrible usury laws that kept the foreign exchange transactions from charging interest. In the 1800's, most/many credit purchasers were made at merchant/general stores. The store owner then wrote the amount of the goods owed on a piece of paper that was kept under the arm sleeve of his shirt, hence "it's on the cuff". In the 1830's in Germany, "neutral protection societies" were formed to compare notes of their common clients and their respective credit. Then credit agencies came to be, not only for business owners but for the public as well. When it came to paying taxes, the Incas of Peru had their citizens pay taxes through labor. The Incas built the largest nation of their time without using money. When the Danes, living in Ireland between 800-900 A.D., didn't pay their taxes, local authorities would slit their noses, hence the expression "pay through the nose" that we still hear today. We still use the term "shell out" today but the term was first described by early European colonists who traded with Native Americans, who used shells as their currency. Bankrupt, no problem. Since the time of Moses, Jewish law provided for a period, every seven years, that all debt were excused and one could start with a clean slate (sounds familiar). Because many people viewed bankruptcy as an admissionof failure, the lawmakers knew that the heavy debt forever would slow down their economy (sounds familiar). Forgiving debt, the people were able to put money back into the economy. Amazing!