EVOLUTION OF MONEY
DR SHASHI AGGARWAL
MEANING OF MONEY
1. THE TERM MONEY IN ENGLISH IS DERIVED FROM LATIN WORD “ MONETA” WHICH IS THE
OTHER NAME OF ROMAN GODDESS JUNO
2. FIRST REGULAR MINT WAS SET UP IN THE ROME IN THE TEMPLE OF THE GODDESS JUNO
OR MONETA
3. THE EARLY ROMAN COINS BORE ON ONE SIDE THE HEAD OF THE GODDESS WITH HER
NAME MONETA
4. GRADUALLY THE NAME MONEY PASSED ON TO THE PRODUCT OF THE MINT AFTER THE
NAME OF THE GODDESS
5. MONEY CAN NOT BE DESCRIBED ON THE
BASIS OF THE MATTER IT IS MADE AFTER THE NAME OF THE GODDESS
6. MONEY CAN NOT BE DESCRIBED ON THE BASIS OF THE MATTER IT IS MADE OF
MEANING OF MONEY
MONEY IS DEFINED AS ANYTHING THAT IS COMMONLY USED AND
GENERALLY ACCEPTED AS MEDIUM OF EXCHANGE
OR STANDARD OF VALUE
MONEY IS DEFINED AS ANYTHING WHICH PERFORMS THE
FUNCTIONS OF MONEY THAT IS MEDIUM OF EXCHANGE,MEASURE OF VALUE AND STORE OF
VALUE
MONEY CAN BE DEFINED IN TERMS OF ITS FUNCTIONS
FUNCTIONS OF MONEY :
1.
MEDIUM OF EXCHANGE
2.
MEASURE OF VALUE
3.
STORE OF VALUE
4.
STANDARD OF DEFERRED
PAYMENT
MONEY CAN BE ANYTHING WHICH IS GENERALLY ACCEPTED AS MEDIUM OF
EXCHANGE,MEASURE OF VALUE,STORE OF VALUE AND STANDARD OF DEFFERED PAYMENTS
.
EVOLUTION OF MONEY
THEORY OF SPONTANEOUS GROWTH OF MONEY :-
1.
GIVEN BY PROF. SPALDING
2.
NOT DISCOVERED BY ANY
PARTICULAR INDIVIDUAL
3.
ITS GROWTH WAS JUST
SPONTANEOUS
4.
WITH THE GROWTH OF
CIVILIZATION,EXCHANGE INCREASED
5.
PROBLEMS ASSOCIATED WITH
BARTER SYSTEM, USING A PARTICULAR
COMMODITY AS MEDIUM OF EXCHANGE AND THIS COMMODITY CAME TO BE ACCEPTED AS MONEY
WITH THE PASSAGE OF TIME
6.
MONEY CAME INTO BEING ON
ITS OWN
7.
DID NOT REQUIRE ANY
SPECIAL EFFORT
THEORY OF EVOLUTION OF MONEY :
1.
PROPOUNDED BY PROF
CROWTHER
2.
MONEY HAS COME INTO BEING
AS A
RESULT OF SPECIFIC HUMAN EFFORTS
3.
ACCORDING TO CROWTHER,”
MONEY IS ONE OF THE MOST FUNDAMENTAL OF ALL MAN’S INVENTIONS. IT NEEDED THE
CONSCIOUS REASONING POWER OF MAN TO MAKE THE STEP FROM SIMPLE BARTER TO MONEY
ACCOUNTING.
4.
WITH A VIEW TO FINDING A
STANDARD MEASURE OF THE VALUE AND A MEDIUM OF EXCHANGE THAT MAN HAS INVENTED
MONEY THROUGH HIS CONSISTENT EFFORTS
COMMODITY MONEY :-
1.
WITH THE BEGINNING OF
HUMAN CIVILIZATION,VARIOUS COMMODITIES WERE USED AS MONEY
2.
HUNTING STAGE ,PEOPLE USED
ANIMAL SKINS,BOWS AND ARROWS ETC FOR MONEY
3.
IN THE PASTORAL STAGE,THE
GOATS,SHEEP,COW AND OXEN WERE USED AS MONEY
4.
IN THE AGRICULTURE STAGE,GRAINS
WERE USED AS MONEY
5.
IN DIFFERENT STAGES
DIFFERENT COMMODITIES SUCH AS SHELLS,CONCHES,CATTLES AND GRAINS
DISADVANTAGES :-
1.
ALL CATTLE OR OTHER GOODS
ARE NOT HOMOGENEOUS
2.
LACK OF STANDARDIZATION
CAUSED A LOT OF HARDSHIP OF VALUE
3.
SUPPLY OF COMMODITIES
COULD ABRUPTLY CHANGE
4.
NOT POSSIBLE TO HOARD
WEALTH IN THE FORM OF GOODS
5.
LACKED PORTABILITY
6.
THE TRANSFER OF VALUE EXTREMELY DIFFICULT
METALLIC MONEY :-
1.
MAN DISCOVERED VARIOUS
METALS SUCH AS IRON,GOLD,BRASS ,COPPER AND SILVER ETC
2.
THESE METALS WERE USED AS
MONEY
3.
INITIALLY PEOPLE WERE
INDIFFERENT TO THE WEIGHT OF THE PIECE OF THESE METALS
4.
METAL PIECES WERE STAMPED
A AND THEIR VALUE WAS INSCRIBED
5.
INTRODUCED DURING 8 TH
CENTURY BY KING MIDAS OF LIDIYA
6.
HELD THAT EVEN PRIOR TO
THAT METAL COINS WERE IN USE AND EGYPT
DEMERITS :
1.
SUPPLY OF THESE COINS
COULD NOT ALWAYS BE ADJUSTED TO THEIR
DEMAND
2.
METAL COINS FAILED TO COPE
WITH THE GROWING REQUIREMENTS OF TRADE
3.
USED TO BE HEAVY
4.
WERE EXPENSIVE FORM OF
MONEY
PAPER MONEY :
- IS THE INVENTION OF THE SONG DYNASTY IN CHINA IN THE 11 TH CENTURY
- METALLIC MONEY WAS INCONVENIENT AS WELL AS RISKY TO TRANSFER METALLIC
MONEY
- INVOLVED GREATER RISK OF BEING STOLEN
- DURING THE TANG DYNASTY ( 618-907 CE) HOWEVER MERCHANTS BEGAN TO LEAVE
THOSE HEAVY STRINGS OF COIN WITH TRUST WORTHY AGENT WHO WOULD RECORD HOW
MUCH MONEY THE MERCHANT HAD ON DEPOSIT ON
PIECE OF PAPER
- THE PAPER A SORT OF PROMISSORY NOTE COULD THEN BE TRADED FOR GOODS AND
SELLER COULD GO TO AGENT AND REDEEM THE NOTE FOR THE STRINGS OF COIN
- THESE PRIVATELY PRODUCED PROMISSORY NOTES WERE STILL NOT TRUE PAPER CURRENCY
- AT THE BEGINNING OF THE SONG DYNASTY ( 960-1279 CE) THE GOVERNMENT
LICENSED SPECIFIC DEPOSIT SHOPS WHERE PEOPLE COULD LEAVE THEIR COINS AND
RECEIVE NOTES
- IN THE 1100S ,SONG AUTHORITIES DECIDED TO TAKE DIRECT CONTROL OF THIS
SYSTEM,ISSUING THE WORL’D FIRST PROPER,GOVERNMENT PRODUCED PAPER MONEY
- THIS MONEY WAS CALLED JIAOZI
- THE SONG ESTABLISHED FACTORIES TO PRINT PAPER MONEY WITH WOODBLOCKS
USING SIX COLOURS OF INK
EVOLUTION OF PAPER CURRENCY IN INDIA
1.
PAPER CURRENCY CAME INTO
INDIA IN AROUND 18 TH CENTURY. ESTABLISHMENT OF EUROPEAN TRADING
2.
WITH THE PAPER CURRENCY
ACT OF 1861,THE BRITISH COLONIAL GOVERNMENT GOT SERIOUS WITH THE BUSINESS OF
BANK NOTES MAKING IN INDIA. BANKS LOST THEIR RIGHT TO ISSUE NOTES AND STATE IN
CHARGE
3.
BANK OF ENGLAND PRINTED
THE FIRST OFFICIAL PAPER BY THE GOVERNMENT IN INDIA
4.
CAME IN THE DENOMINATION
OF RS 10,RS 20,50 ,100 AND 1000 WITH CURRENCY DETAILS IN TWO LANGUAGES AND
PORTRAIT OF QUEEN
5.
FIRST INDIAN CURRENCY
PRINTING PRESS WAS SET UP IN 1928 IN NASHIK
6.
1935 ,RBI CAME INTO
EXISTENCE AND TOOK OVER THE RESPONSIBILITY OF MANAGING INDIA ‘S MONEY
7.
1N 1938,THE RBI ISSUED THE
FIRST NOTE AND IT HAS PORTRAIT OF KING GEORGE VI
8.
IN 1944,THE RBI BEGAN
PRINTING NOTES WITH A SECURITY THREAD AND NEW WATERMARK,FEARING AN INFLUX OF
FAKE NOTES FROM JAPAN DURING WORLD WAR II
9.
AFTER REMODELING THE FIRST
POST INDEPENDENCE NOTE CAME WITH THE
IMAGE OF LION CAPITAL OF ASHOKA
10. BANK NOTE WITH PICTURE OF MAHATAME GANDHI WAS FIRST PRINTED IN 1996
11. THE LATEST DESIGN CHANGE IN INDIAN BANK NOTES IS SAID TO BE THE
INTRODUCTION OF THE NEW CURRENCY WHICH WERE PRINTED FOR THE FIRST TIME IN 2011
12. EVOLUTION OF PAPER MONEY
13. INITIALLY PAPER MONEY WAS CONVERTIBLE THAT IS COULD BE CONVERTED INTO GOLD
OR GOLD COIN
14. BUT NOW IT IS IN CONVERTIBLE
MERITS OF THE PAPER MONEY:-
1.
NOT AN EXPENSIVE SYSTEM OF
CURRENCY
2.
ITS SUPPLY CAN BE ADJUSTED
ACCORDING TO THE NEED
3.
CONVENIENTLY TRANSFERRED
FROM ONE PLACE TO OTHER
DEMERITS :
1.
EXCESSIVE SUPPLY OF PAPER
MONEY
2.
WILL CAUSE INFLATION
CREDIT MONEY : CREDIT MONEY IS ANY
FUTURE MONETARY CLAIMS AGAINST ANY INDIVIDUAL THAT CAN BE USED TO BUY GOODS AND
SERVICES.
MANY FORM OF :
1.
CHEQUES
2.
PROMISSORY NOTES
3.
DRAFTS
VIRTUALLY ANY FORM OF FINANCIAL INSTRUMENT THAT CAN NOT
OR IS NOT MEANT TO BE REPAID IMMEDIATELY IS CREDIT MONEY
NEAR MONEY :-NEAR MONEY IS A
FINANCIAL TERM DESCRIBING NON CASH ASSETS THAT ARE HIGHLY LIQUID AND EASILY
CONVERTED TO CASH. NEAR MONEY CAN ALSO BE
REFERRED TO AS QUASI MONEY OR CASH EQUIVALENTS
NEAR MONEY ASSETS INCLUDE :-
1.
SAVING ACCOUNT
2.
CERTIFICATE OF DEPOSITS
3.
FOREIGN CURRENCY
4.
MARKETABLE SECURITIES
5.
TREASURY SECURITIES
6.
INSURANCE POLICIES
LIPSY AND STENIER ,” NEAR MONEY MAY BE DEFINED AS FINANCIAL ASSETS THAT ADEQUATELY FULL FILL THE STORE
OF VALUE FUNCTION AND ARE READILY CONVERTED INTO A MEDIUM OF EXCHANGE BUT ARE
NOT THEMSELVES A MEDIUM OF EXCHANGE
risk and return notes
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