The Money Mountain (IV)

There was in fact no reason other than historical happenstance that money was for so long equated in the Western mind with metal. In ancient Mesopotamia, beginning around five thousand years ago, people used clay tokens to record transactions involving agricultural produce like barley or wool, or metals such as silver. Rings, blocks or sheets made of silver certainly served as ready money (as did grain), but the clay tablets were just as important, and probably more so. A great many have survived, reminders that when human beings first began to produce written records of their activities they did so not to write history, poetry or philosophy, but to do business. It is impossible to pick up such ancient financial instruments without a feeling of awe.


Though made of base earth, they have endured much longer than the silver dollars in the Potosi mint. One especially well-preserved token, from the town of Sippar (modern-day Tell Abu Habbah in Iraq), dates from the reign of King Ammi-ditana (1683-1647 BC) and states that its bearer should receive a specific amount of barley at harvest time. Another token, inscribed during the reign of his successor, King Ammi-saduqa, orders that the bearer should be given a quantity of silver at the end of a journey. If the basic concept seems familiar to us, it is partly because a modern banknote does similar things. Just take a look at the magic words on any Bank of England note: 'I promise to pay the bearer on demand the sum of. . .'. Banknotes (which originated in seventh-century China) are pieces of paper which have next to no intrinsic worth. They are simply promises to pay (hence their original Western designation as 'promissory notes'), just like the clay tablets of ancient Babylon four millennia ago. 'In God We Trust' it says on the back of the ten-dollar bill, but the person you are really trusting when you accept one of these in payment is the successor to the man on the front (Alexander Hamilton, the first Secretary of the US Treasury), who at the time of writing happens to be Lloyd Blankfein's predecessor as chief executive of Goldman Sachs, Henry M. Paulson, Jr. When an American exchanges his goods or his labour for a fistful of dollars, he is essentially trusting 'Hank' Paulson (and by implication the Chairman of the Federal Reserve System, Ben Bernanke) not to repeat Spain's error and manufacture so many of these things that they end up being worth no more than the paper they are
printed on.

A clay tablet from second millennium BC Mesopotamia, front (above) and rear (opposite). The inscription states that Amil-mirra will pay 330 measures of barley to the bearer of the tablet at harvest time.

Today, despite the fact that the purchasing power of the dollar has declined appreciably over the past fifty years, we remain more or less content with paper money - not to mention coins that are literally made from junk. Stores of value these are not.

Even more amazingly, we are happy with money we cannot even see. Today's electronic money can be moved from our employer, to our bank account, to our favourite retail outlets without ever physically materializing. It is this 'virtual' money that now dominates what economists call the money supply. Cash in the
hands of ordinary Americans accounts for just I I per cent of the monetary measure known as M2. The intangible character of most money today is perhaps the best evidence of its true nature. What the conquistadors failed to understand is that money is a matter of belief, even faith: belief in the person paying us; beliefin the person issuing the money he uses or the institution that honours his cheques or transfers. Money is not metal. It is trust inscribed. And it does not seem to matter much where it is inscribed: on silver, on clay, on paper, on a liquid crystal display. Anything can serve as money, from the cowrie shells of the
Maldives to the huge stone discs used on the Pacific islands of Yap. And now, it seems, in this electronic age nothing can serve as money too.

to be continued...