The Chronology of Money

128,000 BC

In Africa, modern humans exchange resources across long distances for the first time.

80,000 BC

First trade routes established

c 9000 - 6000 BC Domestication of cattle and cultivation of crops

Subsequently both livestock, particularly cattle, and plant products such as grain, come to be used as money in many different societies at different periods. Cattle are probably the oldest of all forms of money, as domestication of animals tended to precede the cultivation of crops, and were still used for that purpose in parts of Africa in the middle of the 20th century.

? - c. 3100 BC Writing invented in Mesopotamia

The main use, and probable motivation for its development, is for keeping accounts.

c. 3000 - c. 2000 BC Development of Banking in Mesopotamia

Banking originates in Babylonia out of the activities of temples and palaces which provided safe places for the storage of valuables. Initially deposits of grain are accepted and later other goods including cattle, agricultural implements, and precious metals.

c. 2575 BC Construction of the Great Pyramid at Giza

Given the limited range of uses of money in certain ancient civilizations, the completion of large-scale and long-term projects was usually based on detailed state planning, often involving slavery. Similarly, the much later but rigidly hierarchical civilization of the Incas in Peru managed without money at all.

c. 2250- c. 2150 BC Cappadocian rulers guarantee quality of silver ingots

The state guarantee, probably of both the weight and the purity of her silver ingots, helps their wider acceptance as money.

c. 1792 - c. 1750 BC

Reign of Hammurabi in Babylon The Code of Hammurabi includes laws governing banking operations.

 c. 1200 BC Cowries used as money in China

The Chinese character for "money" originally represented a cowrie shell. Cowries have been used as money in many different places at different periods. In parts of Africa they were used for this purpose as recently as the middle of the 20th century.

 

c. 1000-500 BC Tool currencies adopted in China

These were metal models of valuable implements that had previously been accepted in commercial exchanges, e.g. spades, hoes and knives.

 

c. 950 BC Queen of Sheba visits Solomon and they exchange gifts

The Biblical account of their encounter is probably the best known example of competitive gift exchange.

 

687 BC Crude "coins" invented in Lydia (according to Herodotus)

Herodotus criticises the gross commercialism of the Lydians who are not only the first people to coin money but also the first to open permanent retail shops.

 

c. 640 - c. 630 BC The first true coins produced in Lydia

The earliest coins made in Lydia, Asia Minor, consisted of electrum, a naturally occurring amalgam of gold and silver.

 

c. 600 BC Pythius operates as a merchant banker in Asia Minor

Pythius, who operates throughout western Asia Minor at the beginning of the 5th century BC, is the first banker in the area of Greece and Asia Minor of whom we have records. Many of the early bankers in Greek city states were Greek city states were "metics" or foreign residents.

 

c. 600-300 BC Round, base metal coins invented in China

The date is uncertain but these were probably at least roughly contemporary with the development of coinage in the West, and possibly much earlier. Being made of base metal the Chinese coins were of relatively low value and therefore inconvenient for expensive purchases.

 

c. 600 - c. 570 BC Use of coins spreads rapidly from Lydia to Greece

Aegina (c. 595 BC), Athens (c. 575 BC), and Corinth (c. 570 BC) start to mint their own coins. Prior to the introduction of coinage the Athenians had used iron spits or elongated nails as money.

 

c. 550 BC Lydians produce separate gold and silver coins

During the reign of Croesus the Lydians began to produce coins of pure metal instead of electrum. This is the world's first bimetallic coinage.

 

546 BC Croesus King of Lydia is captured by the Persians

As a result, use of coins spreads to Persia. Unlike the Greeks the Persians use mainly gold coins in preference to silver.

 

546 BC Athenian Owls produced

These coins are first produced by the tyrant Peisistratus, using silver from the Laurion mines 25 miles south of Athens.

 

c. 490 BC Discovery of a Rich Seam of Silver in the Laurion Mines

Themistocles subsequently persuades the Athenians to use some of the proceeds to build a fleet of warships.

 

480 BC Battle of Salamis

Greek civilization is saved by the victory of the Athenian fleet over the Persians.

 

407 BC Sparta captures the Laurion Mines

Sparta releases 20,000 slaves from the mines and cuts off supplies of silver to Athens.

 

406 - 405 BC Athens issues bronze coins with a silver coating

The Athenian public hoards silver coins which, as a result, quickly disappear from circulation, leaving only the inferior bronze ones.

 

405 BC Aristophanes' comedy The Frogs is produced

In the play Aristophanes refers to how the new, inferior coins have displaced the old superior ones from circulation - probably the world's first statement of Gresham's law, that bad money drives out good.

 

394 - 371 BC Career of Pasion

The Athenian banker Pasion, a slave, becomes the wealthiest and most famous Greek banker and gains his freedom and Athenian citizenship in the process. Greek banking transactions are carried out primarily in cash.

 

390 BC The Gauls attack Rome

The cackling of geese in the capitol, where the city's reserves of money are kept, alerts the defenders. The grateful Romans build a shrine to Moneta, the goddess of warning, and from Moneta the words money and mint are derived.

 

360 - 336 BC Reign of Philip II of Macedonia Philip unites Greece and Macedonia.

During his reign he deliberately mints far more coins than required for the immediate needs of his kingdom, probably to support the campaign against Persia that he was planning before his assassination. Among these coins is the golden stater celebrating his triumph in the chariot race in the Olympics in 356 BC - an early example of the use of coins as propaganda. These staters are widely circulated among the Celts of central and northern Europe whose earliest coins are copies of Philip's.

 

c. 350 BC Normal rate of interest in Greece is 10% except for risky business

According to Demosthenes 10% is the normal rate of interest for run-of-the-mill business. For risky business such as lending for shipping rates of between 20% and 30% are normal.

 

336 - 323 BC Reign of Alexander the Great

During the conquest of Asia Minor the cost of maintaining Alexander's army reaches about 20 talents or half a ton of silver a day but later enormous quantities of Persian bullion are captured. The coining of the previously stagnant Persian gold stocks and payments to Alexander's soldiers, many of whom settle in new towns founded by him, give an enormous stimulus to trade throughout his empire. Alexander also simplifies the exchange rate between silver and gold by fixing it at 10 units of silver equals one of gold.

 

323 - 30 BC Empire of the Ptolemies in Egypt

For long before Egypt came under Greek control grain had been used as a form of money in addition to precious metals, and state granaries functioned as banks. The Ptolemies transform the local warehouse deposit system into a fully integrated giro system with a central bank in Alexandria. Payments are made by transfer from one account to another without money passing.

 

275 BC The aes signatum or bronze bars are still commonly used as currency in Rome

These cumbersome bronze bars are later superseded by coins which are much more convenient.

 

269 BC Regular issues of silver coins are minted by the Romans and widely circulated

Despite the example of the Greek colonies on the southern Italian mainland and Sicily, and of Carthage, the Romans are relatively late in adopting coinage.

 

218 - 201 BC 2nd Punic War between Rome and Carthage

Because of the enormous demand for coins to pay troops the Roman rulers debase their coinage in purity and weight, causing inflation.

 

c. 200 BC Delos becomes a prominent banking centre

Delos, a barren Greek island, capitalises on its magnificent harbour and famous temple of Apollo to become a financial centre. Its rise is aided by the defeat of Carthage, one of its main rivals, by the Romans. Transactions are carried out by giro or credit transfer.

 

118 BC Leather money issued in China

This consists of pieces of white deerskin, about one foot square, with a value of 40,000 cash. (The cash was the name of a base metal coin).

 

55 & 54 BC Julius Caesar raids Britain

In his account of his two raids Caesar notes scornfully that the Britons still used sword blades as currency. However a number of the Celtic tribes had begun to mint their own coins of gold, silver, bronze and potin (alloys of copper and tin).

 

30 BC - 14 AD Reign of Augustus Caesar

Augustus reforms the Roman monetary and taxation systems issuing new, almost pure gold and silver coins, and new brass and copper ones, and also introduces three new taxes: a general sales tax, a land tax, and a flat-rate poll tax.

 

c. 30 ADChrist drives the money changers out of the Temple in Jerusalem

Jesus overturns the money changers' tables (Matthew 21.12). To gentiles the practice of money changers conducting their business in and around temples and other public buildings would have seemed commonplace. The Greek bankers or trapezitai derived their name from their tables just as the English word bank comes from the Italian banca for bench or counter.

 

54- 68 AD Reign of Nero Nero

slightly debases the gold and silver coinages, a practice copied by some later emperors, starting mild but prolonged inflation.

 

250 AD Silver content of Roman coins is down to 40%

After this level is reached inflation accelerates.

 

270 AD Silver content of Roman coins has fallen to only 4%

 

260 - 268 AD Reign of Gallienus

During his reign there is a temporary breakdown of the Roman banking system after the banks reject the flakes of copper produced by his mints.

 

270 - 275 AD Reign of Aurelian

Aurelian issues new, nearly pure coins, using gold from his eastern conquests, but raises their nominal value by 2½ times hoping in this way to stay ahead of inflation. However this "reform" sends inflation soaring. A rebellion by mint workers led by Felicissimus costs Aurelian's army some 7,000 casualties.

 

284 - 305 Reign of Diocletian

Diocletian makes vigorous attempts to get to grips with the problem of inflation using a variety of methods but these prove only partially effective at best.

 

295 Diocletian reforms the coinage

This fails to halt inflation, probably because the older coins remain in use and, in accordance with Gresham's law, drive the good coins out of circulation.

 

301 Diocletian issues the Edict of Prices

The Edict introduces direct controls of prices and also wage rates. This, too, is defeated by market forces.

 

305 Diocletian abdicates voluntarily

Although his currency reform and prices and incomes policy failed, his other reforms of the Roman administration, including the world's first system of annual budgets, are more successful.

 

306 - 337 Constantine secures control over the West then the whole Empire

Constantine issues a new gold coin, the Solidus, which continues to be produced in the Eastern Roman Empire unchanged in weight or purity for the next 700 years.

 

313 Christianity becomes the official faith of the Roman Empire

Constantine adopts Christianity and following his conversion, he confiscates the enormous treasures amassed over the centuries in the pagan temples throughout the empire. Consequently, unlike Diocletian, he has easily enough bullion to replace the earlier debased gold coinage. However he continues to produce debased silver and copper coins. Thus the poor, unlike the rich, are left with an inflation-ridden currency.

 

307 One pound of gold is worth 100,000 Denarii

The value of the denarius is only half that stipulated in Diocletian's edict of prices 6 years earlier.

 

324 One pound of gold is worth 300,000 Denarii

Later, in Egypt by the middle of the 4th century the denarius'value collapses completely so that a pound of gold is worth 2,120,000,000 denarii: another early example of runaway inflation.

 

410 Rome falls to the Visigoths

Banking is abandoned in western Europe and does not develop again until the time of the Crusades.

 

c. 435 Coins cease to be used in Britain as a medium of exchange

As a result of the Anglo-Saxon invasions Britain, uniquely among the former Roman provinces, ceases to use coins as money for nearly 200 years. When they are re-introduced from the Continent they are used initially for ornament.

 

c. 561 Coins are minted again in England by Bishop Liudard

The minting of coins in Britain had been abandoned after about 435 as a result of the Anglo-Saxon invasions. Bishop Liudard came over from France with the Merovingian Princess Bertha who married Prince Aethelbart who later, in 590, becomes King of Kent.

 

c. 604-616 Bishop Mellitus issues gold coins from a mint in London

These are used more for ornament than as currency.

 

620-625 Sutton Hoo ceremonial Saxon burial ship

Among the various treasures on board, are 37 Merovingian gold coins, but no English coins.

 

c. 630 Saxons first start to produce gold coins in significant numbers

As a result of the gradual rebuilding of commercial and cultural contacts with France and Italy Anglo-Merovingian types of coinage begin to circulate in south-east England.

 

c. 630-c. 650 Crondall hoard of coins

A hoard of 101 gold coins, most of which were minted in England, is buried at Crondall in Hampshire. The precise date is not certain.

 

c. 675 Silver starts to displace gold in Saxon coinage

Initially silver is used with gold as an alloy but early in the 8th century silver and base metals are the only ones used.

 

752 Pepin the Short of France starts minting the Denier

This new silver coin serves as a model for the English penny.

 

757-796 Reign of Offa, King of Mercia the most powerful Saxon Kingdom

During Offa's reign the minting of coins in England reaches new heights, both in terms of quality and quantity.

 

c. 765 King Heaberth of Kent produces the first English pennies

After the conquest of Kent by Offa, King of Mercia, production of the silver penny increases enormously and it replaces the older, more crudely designed sceat as the main English coin, except in Northumbria.

 

789 Vikings raid Portland

For the next 2-3 centuries England is subjected to repeated Viking attacks.

 

806-821 Reign of Emperor Hien Tsung and the development of paper money

In China a severe shortage of copper for making coins causes the emperor to issue paper money notes.

 

871-899 Reign of Alfred the Great

Alfred prevents the Danes from conquering the whole of England. The output of the mints is vastly increased to pay for the defence of Wessex.

 

910 Another state issue of paper money in China

 

925-940 Reign of Athelstan

Athelstan reconquers the Danelaw and unites the whole of England. This leads to the establishment of a single national currency.

 

928 Statute of Greatley

Among the provisions of this statute is that England should have a single national currency.

 

c. 960- Issues of Chinese paper money start to become regular

 

959-975 Reign of Edgar the Pacific

Edgar reforms the English coinage by controlling the issue of dies and strictly regulating the moneyers to ensure that the coinage is of uniform type and standard.

 

973 Beginning of a regular six-year cycle of recoinage

Because of their convenience as a royally authenticated means of payment the value of coins is higher than the value of their silver content. By recalling, melting down and reminting coins Edgar and his successors not only maintain the quality of the currency but also make handsome profits from the operation.

 

978-1016 Reign of Aethelred II, the Unready

Aethelred adopts a policy of trying to buy off the Vikings. His 75 mints produce nearly 40 million pennies to pay Danegeld.

 

1016-1035 Cnut of Denmark reigns over England

Cnut pays nearly 20 million pennies to his invasion force and disbands it. During his reign England prospers and English coins continue to arrive in Scandinavia in large quantities, this time mainly as a result of trade.

 

c. 1020 Quantity of Chinese paper money reaches an excessive level

The total amount is nominally worth 2,830,000 ounces of silver. Vast amounts of cash are used to buy off potential invaders from the north and to pay for imports causing a cash famine. As a result the authorities increase the note issues thus fuelling inflation.

 

1032 Private note-Issuing banks add to inflation in China

By this time there are 16 of these note-issuing houses.

 

1042-1066 Reign of Edward the Confessor

The length of the English recoinage cycle is reduced to less than three years in order to make greater profits from minting.

 

1066 Battle of Hastings

William the Conqueror's invasion is financed partly by debasement of the currency in Normandy but in England he introduces an efficient system of taxation, thus avoiding debasement. Subsequently, throughout the Middle Ages England's coinage tends to maintain its value to a greater degree than most continental currencies.

 

1086 The Domesday Book is compiled

This detailed survey of the wealth of England provides the information for determining appropriate levels and yields of taxation and forms the basis of the new English fiscal system.

 

1095-1270 The Crusades

The need to transfer large sums of money to finance the Crusades provides a stimulus to the re-emergence of banking in western Europe.

 

1100-1135Reign of Henry I

The quality of England's silver currency falls drastically.

 

1124 Punishment of the mint masters

At the Assize of Winchester on Christmas day all the mint masters are punished by having their right hands cut off. Not surprisingly this produces a temporary improvement in the quality of the coinage.

 

1138-1153 Civil War between Stephen and Matilda

Some powerful English barons issue their own currencies.

 

1149 Hung Tsun's Chhuan Chih or A Treatise on Coinage

This Chinese work is the first known on numismatics in any language.

 

1156 Earliest known foreign exchange contract

Two brothers borrow 115 Genoese pounds and agree to reimburse the bank's agents in Constantinople the sum of 460 bezants one month after their arrival in that city. In the following century the use of such contracts grows rapidly particularly when profits from time differences are seen as not infringing canon laws against usury.

 

1158 Henry II reforms the English coinage

This restores the prestige of English money which is maintained at a high level for the next four centuries.

 

1159 Scutage tax introduced by Henry II in lieu of military service

The annual 40 days service owed to him by his tenants-in-chief and their retainers is commuted into cash payments and with the proceeds he is able to establish a permanent army of mercenaries or professional soldiers as they commonly became known after this time from the solidus or king's shilling that they earn.

 

1160 Emperor Kao Tsung reforms the Chinese paper currency

Earlier issues have been excessive and so have become almost worthless. Therefore Kao Tsung replaces them with a new issue.

 

c. 1160-c. 1200 English wooden tallies evolve into instruments of credit

Tallies were wooden sticks originally used as receipts. Notches whose sizes represented a particular sum of money would be cut into the stick which would then be split down the middle. One part would be kept by the creditor, the other by the debtor. Sometimes the loans were fictitiously swollen to get round the prohibition of usury. During the 12th century the English Exchequer starts issuing tallies as a form of credit. Tallies were not finally abolished until 1826.

 

1166 Henry II levies a tax to support the Crusades

This is the first of a series of taxes levied by Henry over the years with the same objective. The Templars and Hospitallers act as his bankers in the Holy Land.

 

1166 Hyperinflation in China

The nominal value of the official paper note issues reaches 43,600,000 ounces of silver. In addition there are various local note issues.

 

1185 Henry II levies a new Crusading Tax

A levy of sixpence in the pound on all movable property is imposed along with a 1 per cent tax on all incomes whether from land or any other source.

 

1187 Battle of Hattin

Henry II's eastern account contains approximately 20,000 pounds of silver but he does not allow anyone to spend it until after Saladin's crushing victory over the Crusaders.

 

1188 The Saladin Tithe

Henry extends the provisions of the crusading tax of 1185 and attempts to speed up the assessment process by introducing self-assessment.

 

1189-1199 Reign of Richard I

On ascending the throne Richard immediately begins to "privatise" the monarchy's assets to raise money for the 3rd Crusade which starts in 1190. On his return through Europe he is taken prisoner, sold to Emperor Henry VI and then held for ransom.

 

1194 Richard released after being ransomed for £100,000

The speed with which the money is raised is a sign of England's prosperity.

 

1215 The Magna Carta signed

Among its provisions were restrictions on the right of the king to raise taxes without the consent of the Barons.

 

1232-1253 Gold coins are issued by several Italian states

Under the influence of Byzantine and Arab coinage Messina and Brindisi (1232), Florence (1252) and Genoa (1253) issue gold coins. The type minted in Florence, the florin, becomes widely copied in other parts of Europe.

 

1236 First Mongol issues of paper money

The Mongol empire, which now includes China, issues paper money on a moderate scale.

 

1260 Kublai Khan's first issue of paper money

By this time the note circulation has reached a substantial level.

 

1275 Edward I forbids the Jews to exact usury

The resulting shortage of money leads to an increase in clipping and a decline in the quality of the coinage. The Jews get blamed and suffer wholesale arrests in 1278 and expulsion from England in 1290.

 

1275-1292 Marco Polo lives in China

From his subsequent account of his Travels, Europe learns of paper money.

 

1279-1281 Edward I issues 3 new coins

The halfpenny, farthing, and groat (4 pence). The first two meet the demand for low-denomination coinage at a time when a penny would be a typical whole day's pay.

 

1282 The first recorded Trial of the Pyx

A public test of the purity of gold and silver coins, which continues in Britain to this day.

 

1283 Statute of Burnell

This introduces a central registrar of large credit transactions in England.

 

1294 Paper money issued in Persia

This disastrous experiment lasts barely two months and is confined to the city of Tabriz. Subsequently Rashid al Din, prime minister of Persia round about this time, describes both printing and paper money in his History of the World.

 

1299 Statute of Stepney on Bad Money

The importation of debased coins into England is forbidden and restrictions on the export of silver bullion and coins are introduced. These provisions are strengthened in 1351.

 

1319-1331 Parts of India and Japan issue paper money

These are short-lived imitations of Chinese currency.

 

1337 - 1453 Hundred Years War between England and France

In the early stages of the war the net balance of ransom, loot, bounty and plunder favours the English. Later, when the tide began to turn new, unpopular taxes are introduced to finance the English war effort.

 

1344 The Weight of the Penny is Reduced

To reduce the temptations offered to illegal exporters of coin, the weight of the penny, which has remained almost unchanged for 200 years, is slightly reduced.

 

1348-1350 The Black Death ravages Europe

This is followed by several other outbreaks of plague over the next hundred years, causing a reduction in the size of the population and a collapse in economic growth.

 

1351 Statute of Labourers

This stipulates the maximum rates of pay in England at pre-plague levels for the main occupations and restricts mobility of labour.

 

1351 Another Reduction in the Weight of the Penny

Edward III makes a more substantial reduction than the one he made in 1344.

 

1351 Restrictions on the Export of English Bullion and Coins

Anxieties over the unofficial drain of gold and silver bullion and coinage to the Continent cause the government to tighten the provisions of the Statute of Stepney 1299, but without much effect.

 

1352 The Statute of Purveyors

The English parliament is unhappy about the reductions in the weight of the penny and expresses the hope that the king will no more tamper with the coinage than with the standards of weights and measures.

 

1355 Nicole Oresme's De Origine Natura Jura et Mutationibus Monetarum is published

Oresme, the greatest economic thinker of the Middle Ages, argues that the quantity of precious metal in circulation determines the value of the currency. Later, in 1370, he becomes chaplain and adviser to King Charles V of France.

 

1356 Battle of Poitiers

King John II of France is captured by the English who demand a ransom of 3 million crowns (£500,000) but in the end they accept a little less than half the amount. Part of the ransom is used in building Windsor Castle.

 

1377-1399 Reign of Richard II

In 1377 Richard II imposes an unpopular flat rate poll tax followed by similar taxes in 1379 and 1381.  

 

1381 The Peasants' Revolt

The uprising, belatedly caused in large part by anger at the poll tax, is suppressed.

 

1381 Richard Aylesbury opposes ban on the export of bullion

He argues that a legal ban is unnecessary provided total commodity exports at least balance imports.

 

1401 Bank of Barcelona founded

 

1403 Charging interest on loans is ruled legal in Florence

Despite the traditional Christian prohibition of usury, Italian banks such as the Lombards, who have agents in the main economic centres of Europe, have been making charges for loans. The lawyer and theologian Lorenzo di Antonio Ridolfi wins a case which legalises interest payments by the Florentine government.

 

1407 Bank of St George, Genoa, founded

 

1440 Gutenberg invents the modern printing press

Although Europe already knew of the use of paper money in China, the printing press design is subsequently modified, by Leonardo da Vinci among others, for use in minting coins nearly two centuries before printed banknotes are produced in the West.

 

1448 Hyperinflation in China

The Ming note nominally worth 1,000 cash has a market value of only three.

 

c. 1450 Portuguese start voyages along the coast of Africa

In the 14th and 15th centuries Europe suffers from a "Great Bullion Famine." This is partially alleviated as the Portuguese open up a new route for sub-Saharan gold via Ghana and Mali.

 

1452-1519 Life of Leonardo da Vinci

Among Leonardo's drawings are designs for a press to produce more uniform coins quickly using a water driven mill. This innovation is widely adopted and the new money is termed milled money.

 

1453 Fall of Constantinople

The capture of Constantinople by the Ottoman Turks and the disruption caused to existing trade routes is a motivating factor in the subsequent European voyages of exploration.

 

c. 1455 China abandons paper money

There are no known references to paper money being in circulation after this date. Thus after well over 500 years of experience with paper currencies, during which there have been repeated episodes of inflation and currency reform, China ceases to use paper money.

 

1455-1485 The Wars of the Roses

By the end of these wars the English currency has suffered badly from wear and tear, clipping and counterfeiting of coins.

 

1487 Fuggers Bank founded in Augsburg

The increased availability of gold from Africa and later, after the discoveries of Columbus, the Caribbean, raises the relative value of silver and consequently the Fuggers profit greatly by financing European silver mines.

 

1489 Henry VII slashes Mint charges and issues the first gold sovereigns

By reducing the mint charges Henry encourages people to bring gold and silver to the mints, causing a huge increase in their output of coins in the following years. Up to 1489 the English pound has simply been a unit of account. Now, with the issue of the sovereign, it is also a coin.

 

1492 Columbus discovers America

In less than a decade after Columbus's first voyage the size of the world known to Europeans is more than doubled. Within a generation it is more than trebled. However, the discovery of highly profitable new trade routes to the already well-known trading centres of India and China is a more important motivation than the discovery of new lands.

 

1494 First book on double entry bookkeeping is published in Italy

Double entry bookkeeping has been in use for probably well over a century in Italy before the publication of the Summa de Arithmetica, Geometrica, Proportioni et Proportionalita by Friar Luca Pacioli.

 

1498 Proclamation against "Roman" coins

During the Wars of the Roses good domestic currency was extremely rare in England and use was made of illegally imported European and Irish coinage, almost all of which was also grossly underweight. By this proclamation Henry VII tries to prohibit the use of groats and half-groats issued by the Holy Roman Emperor.

 

1498 Vasco da Gama reaches India

The development of new, long-distance trade routes involving new modes of transport as a result of the voyages of Vasco da Gama and Columbus stimulates the development of capital and foreign exchange markets, and the use of bills of exchange. The pooling of resources to reduce the risks of trade with far-away destinations leads to the development of new experimental forms of equity capital from which the joint-stock company eventually evolves.

 

1500-1540 Huge supplies of New World gold reach Spain

On average between 1,000 and 1,500 kg. of gold reach Spain each year during this period. Initially these supplies are obtained by plunder, especially from the Aztecs and Incas, and later by applying new mining methods to the New World gold deposits.

 

1504-1507 Large-scale exports of manillas from Portugal to West Africa

During this short period alone a single trading station on the Guinea coast imports 287,813 manillas. (A manilla is a metal anklet, bracelet or front section of a necklace, usually made of copper or brass, used for money which can be conveniently and ornamentally carried on the person).

 

1504 Henry VII issues shilling coins

Up to this time the English shilling has simply been a unit of account.

 

1511 The Protestant Reformation begins

Although Luther, Calvin and Zwingli condemned traditional forms of usury they weakened the church's power and influence over economic affairs. Later on in England, Henry VIII, after breaking with Rome, legalises the charging of interest and seizes monastic property.

 

1519-1521 Cortés conquers Mexico

Before the arrival of the Spaniards the Aztecs and Mayas used gold dust (kept in transparent quills) and cocoa beans (kept for large payments in sacks of 24,000) as money.

 

1519 Minting of Thalers begins in Joachimsthal in Bohemia

This coin made from locally-mined silver is known as the Joachimsthaler, or thaler for short, from its place of origin, and is widely imitated. The Anglicised form of the name, dollar, is later used for the Spanish peso and the Portuguese eight-real piece which circulate widely in North America both before and after the United States gains its independence.

 

1526 Nicholas Copernicus writes his Treatise on Debasement

With many provinces of his native Poland, and other parts of Europe, suffering from debasement the great astronomer argues that it is the total number of coins in circulation, rather than the weight of metal they contain, that determines the level of prices and the buying power of the currency.

 

1532 Pizarro lands in Peru and begins the conquest of the Incas

The Incas were unique in reaching a high degree of civilization without the use of money even though they possessed huge amounts of gold and silver. The more rigid a state's planning system the less the need for money.

 

1534-1540 Dissolution of the Monasteries

Henry VIII seizes control of the property of the monasteries, partly to promote the Reformation in England but mainly because of his need to find money for the defence of the realm.

 

1540-1640 The Price Revolution in Europe

Europe, including Britain, experiences a prolonged period of inflation, partly because of the huge influx of gold and silver from the Spanish colonies in America and partly because the increase in population is not matched by an increase in the output of the economy. Compared with many earlier and later inflations this hardly deserves being described as a revolution.

 

1542-1551 The Great Debasement

Henry VIII debases the coinage of England as a means of raising revenue. In Ireland the debasement started earlier, in 1536, and does not finish until 1560.

 

1545 Henry VIII legalises interest charges on loans

An upper limit of 10% per annum is set.

 

1545 Discovery of an enormous source of silver in Potosi

This is a mountain of silver, 6 miles in circumference, in what later becomes Bolivia.

 

1551-1574 Thomas Gresham works in Holland

During these years Gresham lives, on and off, in Antwerp learning the arts of large-scale lending and borrowing as well as foreign exchange. The skills he acquires equip him to become one of the leading advisers of Elizabeth I.

 

1553 The first English joint stock company is founded

This is the Russia Company which is the product of the search for the North-East passage to Asia.

 

1560 Elizabeth I begins the reform of England's debased coinage

This is a first step towards the complete replacement of the debased coinage she inherited from her predecessors. Thomas Gresham, after whom Gresham's law ("bad money drives out good") is named, is an influential adviser. The debased coins are recalled and melted down and the base and precious metals separated. The recoinage programme is completed in 1561.

 

1563 Discovery of mercury deposits at Huancavelica

These deposits enable silver to be extracted from Potosi by the mercury amalgam process already used in silver mines in Mexico. Thereafter huge supplies of silver are sent to Europe and China.

 

1566 The Royal Exchange is built

This shows the new importance of banking, and particularly foreign exchange dealing, in England.

 

1568 First inland joint-stock companies in England founded

These are the Mines Royal and the Mineral and Battery. German metalworkers are prominent in the development of both.

 

1577-1580 Francis Drake's circumnavigation of the globe

The booty seized from the Spaniards (estimated at between £300,000 and £1,500,000) has been described by Keynes as the fountain and origin of British Foreign Investment.

 

1585 Bank of Genoa founded

 

1587 Francis Walsingham attempts to delay the Spanish

Armada by economic warfare Walsingham's agents reputedly corner large numbers of bills drawn on Genoan banks in order to delay the build up of resources to equip the Spanish Armada which sets sail against England the next year.

 

1587 Banco di Rialto, Venice, founded

 

1597 Spanish exports of silver to China reach a peak

In this year 345,000 kg. of Peruvian/Bolivian and Mexican silver are shipped from Acapulco to China via Manilla.

 

1599 The Dutch attempt to corner the pepper market

Pepper has a high value-to-weight ratio especially at times of real or artificial scarcity. On some rare occasions it is worth even more than its weight in gold. The Dutch action prompts the formation of the London East India Company the following year.

 

1600 The London East India Company is founded

Imports from India subsequently cause a drain of precious metals from England to India.

 

1601 Poor Law introduced in England

The aim is to establish a national pattern for parishes to copy in dealing with the problems of the destitute, which have become more obvious since the dissolution of the monasteries,

 

1602 Dutch East India Company founded

This company provides the financial backing for Dutch competition with England in the Far East for control of the pepper market.

 

1609 Bank of Amsterdam is founded

This public bank is established to provide a superior and more controlled service than that available from private bankers. Later its example inspires the establishment of the Bank of England.

 

1609 (Public) Bank of Barcelona founded

Holland and Britain are not the only countries to adopt the new banking practices which originated in Italy.

 

1613 Lord Harington issues copper farthings under licence

As a result of the lack of low denomination coinage in England token coins, mainly of lead, are produced by as many as 3,000 unofficial minters who pay the king nothing. The licence James I issues to Lord Harington stipulates that half the profits are to go to the king.

 

1615 First balance of trade and balance of payments calculations

The calculations for England by Sir Lionell Cranfield and Mr. Wolstenholme are referred to by Sir Francis Bacon in an essay written in 1616 (though not published until 1661).

 

1616 Bank of Middelburg founded

Banking continues to spread in the Netherlands.

 

1619 Hamburg Girobank founded

Publicly owned banks increasingly complement older, private banks.

 

1619 Tobacco begins to be used as currency in Virginia

Barely a dozen years after its introduction to Virginia tobacco starts being used as currency and this use continues for nearly 200 years.

 

1621 Edward Misselden's Circle of Commerce or Balance of Trade is published

Misselden, who is the first to use the term balance of trade in print, argues (like Aylesbury 240 years earlier - in 1381) that bullion outflows do not matter if trade is balanced.

 

1621 The Act Against Usury

The maximum legal rate of interest in England is reduced to 8% per annum.

 

1621 Bank of Delft founded

Banking continues to spread in the Netherlands.

 

1621 Dutch West India Company founded

This company provides the financial backing for Dutch competition with England for a foothold in the New World.

 

1621 Bank of Nuremburg founded

The trend continues towards publicly owned banks which complement the older private banks.

 

1633-1672 The Rise of the goldsmith-bankers

Some British goldsmiths, by dealing in foreign and domestic coins and by letting their safes be used for deposits of valuables, gradually evolve into bankers.

 

1633 The earliest extant English goldsmith's note is issued

Goldsmith's notes come to be used not only as receipts for reclaiming deposits but also as evidence of ability to pay.

 

1634-1637 Tulip mania in Holland

The high prices commanded by tulips with unusual patterns and colours encourages the general public to take part in speculative deals. A nationwide mania develops and sends the prices of bulbs soaring but when the bubble bursts they drop to one-twentieth, or less, of levels prevailing a few days earlier.

 

1634 Ship money taxes increased by Charles I

These taxes, introduced to raise money for the build-up of the English navy, prove extremely unpopular.

 

1635 Bank of Rotterdam founded

The spread of banking in the Netherlands continues.

 

1637 Wampum becomes legal tender in Massachusetts

This is only for sums up to one shilling. Wampum is a type of shell used by the native Americans as currency and adopted by the settlers.

 

1640 Charles I forcibly purchases the East India Company's pepper stock

Owing to his disputes with parliament over taxation, which lead ultimately to the English Civil War, Charles I is short of money. He compels the East India Company to sell him its entire stock of pepper on two years' credit and immediately sells it at a loss for ready cash, solving his short-term by adding much more to his medium-term debts.

 

1640 Seizure of the mint by Charles I

In another move to solve his financial problems Charles I seizes the mint and keeps one third of the bullion for six months.

 

c. 1640 Reduction in silver imports causes slump in Chinese economy

China has become dangerously dependent on New World supplies of silver for its currency. Supplies from this source start to dry up with disastrous consequences for the late Ming economy.

 

1642-1651 English Civil War

The war is fought because parliament disputes the king's right to levy taxes without its consent. The use of goldsmith's safes as secure places for people's jewels, bullion and coins had increased after the seizure of the mint by Charles I in 1640 and increases again with the outbreak of the Civil War. This accelerates the tendency of some goldsmiths to become bankers and development of that aspect of their business continues after the war is over.

 

1643 Massachusetts raises limit on wampum as legal tender.

The limit is raised to £2.

 

1645 Paris mint is fully mechanised and starts production of milled coins

With the replacement of the ancient technique of hammering coins, minting has become fully mechanised. Improved productivity is not the only advantage. The milled edges prevent clipping and cutting and make counterfeiting more difficult.

 

1652-1684 John Hull's unofficial mint operates in Massachusetts

The mint coins threepences, sixpences and pine-tree shillings all of which contain about three-quarters of the silver in their newly minted English equivalents but about as much as most of the old, worn coins in circulation.

 

1656 Bank of Sweden founded

Its charter authorizes it to accept deposits, grant loans and mortgages, and issue bills of credit.

 

1659 The ealiest extant British cheque is issued

This is an order to the London goldsmiths Morris and Clayton to pay a Mr Delboe £ 400.

 

c. 1660 Goldsmiths' receipts become banknotes

Because goldsmiths' notes are accepted as evidence of ability to pay they are a convenient alternative to handling coins or bullion. The realisation by goldsmiths that borrowers would find them just as convenient as depositors marks the start of the use of banknotes in England.

 

1661 Bank of Sweden issues notes

It becomes the first chartered bank in Europe to do so.

 

1661 Wampum ceases to be legal tender in New England

However it continues to be used as currency in other parts of America for another 200 years.

 

1663 First British Guineas produced

This is a new milled coin, initially worth £1, using gold from west Africa, hence the name guinea.

 

1664 Construction of the New York citadel paid for in wampum

Stuyvesant arranges a loan worth over 5,000 Dutch gilders in wampum to pay the wages of workers constructing the citadel.

 

1666 Act for the Encouragement of Coinage

English mint charges are abolished and replaced by import duties on wine, beer, cider, spirits and vinegar.

 

1668 Pepys refers to banknotes in his diary

In his entry for 29 February he mentions sending his father a note for £600 issued by a goldsmith.

 

1672 First state issues of copper coinage in England

There had been occasional licensed issues by private minters since 1613. The attractive new, milled coinage with the image of Britannia, tends to disappear from circulation, in accordance with Gresham's law, though not as quickly as the new silver coins do, while the existing badly worn, unattractive hammered coins and tokens continue to be used.

 

1672 Charles II introduces the Stop of the Exchequer

The goldsmiths refuse to lend more money to the king who has already borrowed huge sums and therefore he prohibits most payments from the exchequer, initially for a year and later indefinitely. In the late 1670s and the 1680s several of his largest creditors go bankrupt.

 

1681 First public note-issuing bank founded in Massachusetts

In this context the term bank means simply a batch of bills of credit issued for a temporary period. This example is followed subsequently in other British colonies in North America.

 

1682 Sir William Petty's Quantulumcunque concerning Money published Petty, a founder of Britain's Royal Society, argues that banking will provide a major stimulus to the English economy and world trade.

 

1688 The Glorious Revolution in England

William of Orange and his wife Mary are made jointly sovereign by parliament after James II flees to France. Political and economic power is in the process of shifting from the monarch to the moneyed classes and thus the financial and constitutional revolutions are closely and causally intertwined.

 

1689-1697 War of the League of Augsburg against Louis XIV of France

The English government has difficulty in raising enough money for the prosecution of the war by taxation and borrowing from the goldsmiths.

 

1690 The Massachusetts Bay Colony issues official paper money

These notes are used to pay soldiers returning from an expedition to Quebec. They can be used to pay taxes and are accepted as legal tender. Other colonies subsequently copy the example of Massachusetts.

 

1693 The English Parliament passes the Tontine Act

This act, based on the ideas of the Italian adviser to the French court, Lorenzo Tonti, marks the beginning of the English national debt. The tontine is a scheme for raising money on a long-term basis by weighting rewards in favour of the longest lasting contributors.

 

1694 Bank of England is founded

The main purpose of the Act founding the Bank is to raise money for the War of the League of Augsburg by taxation and by the novel device of a permanent loan on which interest would be paid but the principal would not be repaid.

 

1695 Bank of Scotland is founded

The first joint-stock bank in Europe solely dependent on private capital and wholly unconnected with the state.

 

1696 The Million or Lottery Act

The English government attempts to raise £1 million by issuing 100,000 shares of £10 at 10% with the possibility of sharing a total of £40,000 to be put up each year as lottery prizes. The target is not reached and the money is used as subscriptions to the capital of the Million Bank which becomes an investment fund for government securities.

 

1696 The Great Recoinage

England's silver coins, many of which are worn or clipped, are replaced by new, full-weight silver coins.

 

1696 The Ingrafting of the Tallies

Following the failure of the attempt to create a National Land Bank, which damages confidence in financial institutions, and a shortage of cash caused by the Great Recoinage, there is a collapse in the value of government tallies. The Bank of England helps the government out by taking up most of the tallies which are ingrafted into the Bank's capital stock. In return the Treasury agrees to pay 8% interest on the tallies.

 

1698 Coins form less than half the English money supply

Davenant, a contemporary writer, estimates that the total value of coins in circulation is less than that of tallies, bills, banknotes etc. Increasingly the power of money creation is passing from the King, in charge of the mint, to the London money market and provincial banks. Political and constitutional power is also affected by this transfer of financial power.

 

1699-1727 Sir Isaac Newton is Master of the Mint

During Newton's period in charge the emphasis of the mint's work changes from coining silver to coining gold.

 

1700 Collapse of the Darien Company ruins Scotland's trade hopes

The Scottish company was intended to set up a colonial entrepot at Darien in Panama. The impact of its failure on Scotland's attempts to develop its overseas trade proves a powerful motivating factor in the Act of Union with England in 1707.

 

1704 Promissory Notes Act

This confirms the legality in England of goldsmith's notes as negotiable, i.e. payable to the bearer rather than to a named person.

 

1705 John Law publishes Money and Trade Considered

After travelling widely on the Continent, Law returns to his native Scotland and publishes Money and Trade Considered: With a Proposal for Supplying the Nation with Money. He argues that metallic money is unreliable in quality and quantity. Bank notes issued and managed by a public bank would remove the brakes on the economy. He is probably the world's first Keynesian; but compare Sir William Petty, 1682.

 

1707 Act of Union of England and Scotland

Among the provisions of the act is a stipulation that the United Kingdom should have a uniform coinage - a single currency symbolising and cementing a united kingdom. During the 3 years of recoinage in Scotland the shortfall in currency is made up by the issue of notes by the Bank of Scotland.

 

1708 Britain sets American colonies' exchange rate for Spanish dollar

The British parliament specifies that 6 shillings should be the maximum rate any of the colonies should use for the Spanish peso or dollar which is widely used as currency by the colonists. However the Act has little effect.

 

1713 John Law returns to France

His ideas were rejected in Britain but in France he gets the chance to put them into effect.

 

1715 Duke of Orleans becomes Regent of France

French public finance is in a parlous state after the wars and extravagance of Louis XIV. State promissory notes fall to a quarter of their nominal value within a year. In desperation the Duke turns to John Law.

 

1715 North Carolina makes 17 different forms of money legal tender

All the British colonies in North America tend to suffer from a dearth of the official British coinage. Consequently they use a variety of substitutes including wampum, copied from the native inhabitants, tobacco and other natural commodities, and Spanish and Portuguese coins. The importance of these substitutes varies according to location.

 

1716 John Law creates France's first public bank

To economize on the use of precious metals Law establishes a note-issuing bank, Law & Co. or the Banque Generale. In contrast to the state's short-term paper Law's banknotes appreciate in value.

 

1718 French Regent reorganizes Law's bank

Law's bank becomes the Banque Royale and is given a new charter placing the lucrative note-issuing business more directly under the control of the Regent.

 

1719-1720 The Mississippi Bubble

The Mississippi Company had been set up to exploit the wealth of French colonies, especially in Louisiana. In 1719 it is also given a monopoly of trade with the East Indies and China and a speculative boom in the value of its shares ensues. The boom, combined with the over-issue of notes by the Banque Royale, leads to a drain of precious metals from France to London. Law's enemies persuade the Regent to dismiss him from his post as Minister of Finance, the bank stops payment and the boom collapses. The debacle sets back the development of banking in France by about 100 years.

 

1719-1720 The South Sea Bubble

Contemporary with the Mississippi Bubble a speculative boom takes place in the shares of the South Sea Company, originally set up to break the Spanish monopoly of trade with Central and South America, after it proposes to take over the National Debt. Numerous other companies are set up to take advantage of the speculative mania. The sudden collapse of the boom leads to changes in company law which affect the future development of banking in both Britain and America.

 

1722 Unsuccessful attempt to alleviate Ireland's chronic shortage of low-value coins

The lack of small money in Ireland has grown to such an extent that manufacturers are obliged to pay their employees in cards signed upon the back, to be exchanged afterwards for money. In August 1722 minting of copper halfpence and farthings for Ireland begins by William Wood in Bristol but ceases after protesters in Ireland demand that the country should have its own mint. Consequently the Irish poor are left to suffer for many years from their own promissory cards.

 

1722 Royal Prussian Seehandlung founded

The first German state bank is created for the purpose of stimulating foreign trade.

 

1723 First issue of notes by the Pennsylvania Land Bank

These are secured by mortgages on the property of the bank owners.

 

1727 The Royal Bank of Scotland is founded

The Royal Bank introduces a "cash-credit" system allowing certain applicants for loans to withdraw cash as required, interest being paid only on the amount withdrawn. This is copied by other banks in Scotland and then in England and is the origin of the overdraft.

 

1727 Tobacco notes become legal tender in Virginia

Certificates attesting to the quality and quantity of tobacco deposited in public warehouses circulate more conveniently than the actual leaf, already used as money for over a century, and these notes are made legal tender.

 

1729 Benjamin Franklin's Modest Enquiry into the Nature and Necessity of a Paper Currency

Following the publication of this work Franklin is awarded the contract for printing the Pennsylvania Land Bank's third issue of notes.

 

1741 British Parliament decides that the Boston Land Bank is illegal

The Land Bank or Manufactory Scheme is ruled to contravene the Bubble Act of 1720 which is retrospectively extended to cover the colonies.

 

1749-1751 Pelham reduces the burden of the British national debt

Henry Pelham, the British prime minister, takes advantage of low market rates of interest to reduce interest payments on the national debt from 4% to 3½% in 1749 and 3% in 1750, and replaces a whole series of annuities by a single 3% consolidated stock or consols in 1751.

 

c. 1750- The Industrial Revolution in Britain

In the mid-eighteenth century, at the start of the Industrial Revolution there are barely a dozen banking houses in England and Wales outside the London area.

 

1752 Britain forbids New England colonies from issuing new bills of credit

In addition, Parliament insists that all outstanding issues be promptly redeemed at maturity.

 

1759 General Wolfe captures Quebec

During his campaign he complains about being hampered by lack of funds. Similarly inflation is blamed for the lack of funds which led to the defeat of General Braddock in 1755. Consequently the British government decides to increase taxation in America, thus spurring the Revolution.

 

1760 Wampum factory opened in New Jersey

Demand for wampum as currency, and later ornament, remains strong. In the factory steel drills are used to make the holes that are used for stringing the shells together. This increases output of wampum enormously causing inflation. The factory remains in production for 100 years.

 

1762 Barings Bank founded

When Barings goes bankrupt in 1995 it is Britain's oldest merchant bank.

 

1764 Britain forbids all its American colonies to issue paper money as legal tender

This punishes the colonies that had been careful not to over-issue paper money as well as those that had been irresponsible. The only exception is for strictly military purposes. "No law ... could be more equitable", wrote Adam Smith, "than the act of parliament so unjustly complained of in the colonies." (p 348 of the Wealth of Nations). Adam Smith was in favour of paper money but against it having the status of legal tender.

 

1765 Royal Giro and Loan Bank founded by Frederick the Great

This is Germany's first note issuing bank. It later becomes the Bank of Prussia and later still, the Reichsbank.

 

1766 Benjamin Franklin fails to persuade

British parliament to allow use of paper money in America While in London Franklin tries unsuccessfully to persuade Parliament of the case for a general issue of colonial paper money.

 

1768 Russia's first two public banks established

They are created by Catherine the Great to finance Russia's war with the Ottoman Empire (Turkey).

 

1770 London Clearing House created

The clearing house is set up by private bankers. Joint stock banks, country banks, and the Bank of England are not admitted until many years later.

 

1770 Rhode Island's paper money rendered worthless by hyperinflation

Many of the British colonies in North America have over-issued notes causing inflation but Rhode Island is the worst.

 

1771 The first of the German Landschaften created in Silesia

The Landschaften are state cooperatives which grant mortgages, and other credit based on land, for the improvement of agriculture. Other Landschaften are established in the 1770s and 1780s.

 

1772 Scotland has a nationwide banking network

By this time 31 banks are operating in Scotland with branches and agencies covering most of the country. Thus Scotland is the first country in the world to establish an almost nationwide system of branch banking.

 

1772 Scottish banking crisis

The Ayr Bank, which rashly issued large quantities of notes backed with the wealth, based on land, of its owners, collapses along with 13 private bankers. This confirms the more conservative practices of the older Scottish banks.

 

1775 First British building society formed

Richard Ketley, an inn proprietor in Birmingham, and a group of his customers and friends form a society for saving money for building and purchasing houses for their own occupation.

 

1775-1783 The American Revolution or War of Independence

The American Congress, and individual states. finance their war effort overwhelmingly by printing money. This eventually leads to hyperinflation rendering the continentals worthless - but the Revolution is successful.

 

1776 Adam Smith defends paper money

In his Wealth of Nations he draws attention to the benefits of paper money in stimulating business both in Scotland and in the American colonies.

 

1776-1793 Caisse d'Escompte, France's second public note-issuing bank, founded

This is the first to be established in Paris since the failure of John Law's venture. After 10 successful years it starts to grant too many loans to the government, accompanied by excessive note issues and is forced into liquidation.

 

1778 Savings bank established in Hamburg

This is one of the earliest in Europe and gives rise to a handful of similar banks in north Germany by the end of the eighteenth century.

 

c. 1780-1810 Rapid spread of country banking in England and Wales

By 1810 the total number of licensed and unlicensed banks is probably over 800. In most cases their founders have strong ties with particular industries or trades and the banks meet the need of small workshops, mines etc. for working capital. Without these banks the Industrial Revolution would have been strangled in its infancy.

 

1780 Bank of Pennsylvania founded

This is the first American bank to be established since the declaration of independence from Britain. It is basically a temporary means of raising funds for the American army which is in a desperate financial situation.

 

1782 Bank of North America begins operations

It was granted a charter by Congress the previous year. It fulfils a wide range of banking functions and is a great commercial success.

 

1783 Unpaid soldiers prevented from looting the Bank of North America

This stimulates opposition to the bank, as much of the public sympathises with the soldiers, and the legality of the bank is later challenged by Pennsylvania's representatives.

 

1783 Act for the abolition of the British Treasury Tallies

The act lays down that the wooden tallies are to be abolished on the death of the last of the Exchequer Chamberlains operating the system.

 

1784 Bank of New York and Bank of Massachusetts both open

The Bank of New York is the oldest existing US bank (at the time of writing in 1996)

 

1785 Bank of America's Congressional charter is revoked

However the bank subsequently acquires a new charter from the state government of Delaware.

 

1786-1787 Shay's Rebellion in Massachusetts

Captain Shay leads a rebel force of debtors, disaffected farmers and ex-soldiers to try and secure debt relief, issues of paper money, and other reforms. The rebellion is put down.

 

1786 US Confederation Congress passes the Mint Act

The intention is to meet a currency shortage - but only a few tons of copper coins are minted.

 

1787-1817 Privately-issued tokens become common in Britain

By the end of the 18th century there is a severe shortage of copper and silver coins in Britain so that many firms have difficulty in obtaining enough currency to pay wages. This leads to a growth in payments in kind, use of foreign coins, and unofficial tokens. The token manufactures greatly expand the amount of currency available.

 

1789 The French Revolution

The revolutionary government seizes church lands and using them as security issues assignats, bonds carry 5% interest. However the interest is soon abandoned and the assignats become simply inconvertible, state-issued paper money notes.

 

1789 US Constitution gives Congress power over money creation

The States are not allowed to coin money, issue bills of credit or make anything except gold and silver legal tender.

 

1790 Schaaffenhausen founded in Cologne

Later this private bank becomes Germany's first joint-stock bank in 1848.

 

1791 Bank of the United States receives a 21 year charter

Because of opposition to the bank and fears that it would contravene the Constitution, Washington is going to use his veto but is persuaded not to by Alexander Hamilton.

 

1792-1815 French Revolutionary and Napoleonic Wars

The pressures of war cause many changes in the financial systems of both France and Britain.

 

1792 US Coinage Act

The Dollar is adopted as the unit of account, based on a bimetallic standard, subdivided into 100 cents. Foreign coins are supposed to lose their status as legal tender within 3 years of the US coins coming into circulation.

 

1793-1801 Britain sends more than £15 million to its allies

This is to support them in the war against France.

 

1793 The Bank Indemnity Act

This act gives the directors of the Bank of England legal immunity for loans to the government. This enables the British government to borrow much larger sums for the war against France.

 

1793 Friendly Societies Act

Societies for encouraging saving by the poor are made exempt from the provisions of the Bubble Act. The importance of the protection given by the Friendly Societies Act increases after the passage of the Anti-Combination Acts of 1799 and 1800 which are intended to prevent the development of subversive movements in Britain inspired by the French Revolution.

 

1794 US Mint Starts Operations

The Mint in Philadelphia is the first purpose-built structure authorized by the United States.

 

1795 Hyperinflation in France

The total nominal value of the assignats in circulation reaches 20 billion livres. Riots in Paris pave the way for the rise of Napoleon.

 

1796 Caisse des Comptes Courants founded

This short-lived bank is absorbed by the Bank of France in 1800.

 

1796 France replaces the assignats by a gold-based currency

This has the effect of drawing bullion back from Britain.

 

1797 Matthew Boulton given contract for minting copper coins

Because tokens had become common the British government decides that the free market could probably supply copper currency better than the Royal Mint. The initial contract is for 50 tons of two-penny and one-penny pieces. Boulton's partnership with James Watt results in the use of steam-powered machinery for producing 4,200 tons of copper coins eventually.

 

1797 Bank of England notes are made inconvertible

The provisions of the Bank Restriction Act are initially expected to be of very short duration but it is 24 years before convertibility is restored.

 

1797 Spanish dollars are overstamped for circulation in Britain

As a result of a desperate shortage of silver coins the Bank of England issues altered foreign coins from its reserves. Half a million pounds worth of Spanish dollars issued by King Charles IV are overstamped with a small engraving of George III. However the issue fails because overstamping is also applied unofficially to the plentiful supplies of light or base Spanish dollars.

 

1797 US extends legal tender status to Spanish dollars indefinitely

Because of a slight over-valuation of silver little gold is brought to the Mint. Also users hold on to the new silver coins preferring to pass on the older, duller Spanish ones. Consequently there is a shortage of both US gold and silver coins.

 

1797 Caisse d'Escompte founded

This bank is absorbed by the Bank of France in 1803.

 

1798 The Rothschilds expand into Britain

The Rothschilds banking house originated in medieval Frankfurt on Main. In 1798 Nathan Rothschild is sent to Manchester to deal in the cotton industry. His banking operations grow rapidly during the Napoleonic Wars, making full use of his family's international network of couriers.

 

1799 William Pitt introduces income tax

This new tax raises considerable sums. During the war the British prime minister also increases revenue by broadening the range of indirect taxes as much as possible.

 

c. 1799 Use of tokens, foreign coins etc. in Britain probably exceeds that of official coins

By the turn of the century the total supply and velocity of circulation of tokens, foreign coins, and other substitutes probably exceeds that of official coins of the realm. Some of the chief engravers at the Royal Mint make a good profit from selling new designs (not the official ones) to the token manufacturers.

 

c. 1780-1810 Rapid spread of country banking in England and Wales

By 1810 the total number of licensed and unlicensed banks is probably over 800. In most cases their founders have strong ties with particular industries or trades and the banks meet the need of small workshops, mines etc. for working capital. Without these banks the Industrial Revolution would have been strangled in its infancy.

 

1787-1817 Privately-issued tokens become common in Britain

By the end of the 18th century there is a severe shortage of copper and silver coins in Britain so that many firms have difficulty in obtaining enough currency to pay wages. This leads to a growth in payments in kind, use of foreign coins, and unofficial tokens. The token manufactures greatly expand the amount of currency available.

 

1792-1815 French Revolutionary and Napoleonic Wars

The pressures of war cause many changes in the financial systems of both France and Britain.

 

1793-1801 Britain sends more than £15 million to its allies

This is to support them in the war against France.

 

c. 1800-1860 Five hundred fold depreciation of the cowrie in Uganda

When cowrie shells are first introduced to Uganda at the end of the eighteenth century two are sufficient to purchase a woman. Thereafter the wholesale importation of cowries causes inflation with the result that by 1860 one thousand cowries are needed for such a purchase.

 

1800 The Bank of France is founded

France gains a national bank over a century after England, Holland and Sweden.

 

1800 Number of banks in the US reaches 29

Their number has increased from just 4 in 1790, despite fears that the Bank of the United States would enjoy monopoly powers preventing the rise of new banks.

 

1802 Barings buys 2,220 shares in the Bank of the United States

The number of British shareholders grows in the years leading up to the date when the bank's charter is due for renewal.

 

1803 The Louisiana Purchase doubles the size of the United States

Napoleon, being short of cash, offers to sell Louisiana to the United States for 15 million dollars. Two British banks, Barings and Hopes, agree to lend the money to the US government and, despite the wars, transfer it to Napoleon.

 

1804 Full-weight Spanish coins are re-issued by the Bank of England

Matthew Boulton is employed to erase completely the existing design on full-weight Spanish coins and stamp them as Bank of England Five Shilling Dollars.

 

1804 Bank of England issues token silver coins

These are light-weight, as opposed to full-bodied coins, for 3s. and for 1s. 6d.

 

1806 President Jefferson suspends the minting of silver coins

This is because of the tendency of these new coins to disappear from circulation, as an unintended consequence of the US 1792 Coinage Act.

 

1806 Bank of Bengal founded

For hundreds of years before the creation of the first formal, western-style banks, financial services have been provided in India by castes such as the Multanis, Marwari and Pathans who provide credit, collect deposits and arrange trading deals through bills of exchange or hundi. The Bank of Bengal is the first of the so-called presidential banks to be established during British rule to supplement the internal money supply of India.

 

1809-1831 Ohio State government issues paper warrants as currency

Warrants for 5, 10 and 20 dollars are used as currency in Ohio because of the shortage of coins.

 

1810 Royal Mint equipped with steam-powered machinery

Matthew Boulton who was responsible for constructing the Mint's new manufactory died a year before its completion. Boulton had previously supplied steam-powered machinery to mints in Russia, Spain, Denmark, Mexico and India.

 

1810 Start of the savings bank movement in Britain

Although there had been earlier examples of savings banks in Britain and on the continent, the Rothwell Savings Bank established by Henry Duncan as a bank for the poor becomes widely imitated not only in Britain but also France and Holland.

 

1810 Bullion Report by the House of Commons Select Committee

The Report from the Select Committee of the House of Commons on the High Price of Bullion blames the inflation taking place during the Napoleonic Wars on the creation of an excessive amount of credit, principally by the Bank of England and recommends that the Bank's notes be made fully convertible after two years, whether or not the war is over.

 

1811 Parliament rejects the proposal to restore convertibility of notes

The government argues successfully that to restore convertibility would imperil the British war effort.

 

1811 Bank of the United States' charter is not renewed

Public opposition to British shareholders, suspicion that the bank is exceeding its constitutional powers, and opposition from those who believe that banking should be controlled by the states not the Federal government, are responsible for the demise of the bank.

 

1812-1814 War between the United States and Britain

Inflation takes off in the United States. This is only partly because of the war. Without the restraining hand of the Bank of the United States there is a huge increase in the number of banks issuing notes with very little specie backing. This experience swings opinion in favour of creating a new national bank.

 

1816-1818 Prussia abolishes all internal customs

Other German states, with varying speeds, follow its example prior to the formation of a full customs union (Zollverein) between nearly all of them in 1834.

 

1816 Second Bank of the United States founded

The bank begins the task of restoring the convertibility of paper notes. It also restrains other banks from making excessive issues of notes.

 

1816 Privy Council recommends establishment of the gold standard

This proposal is accepted and, in accordance with a related proposal, a new British one pound coin made of gold, the sovereign, is produced.

 

1817 Act to suppress tokens passed by the British Parliament

An earlier bill in 1812 was unsuccessful. The 1817 Act does make certain exemptions, e.g. tokens issued by Poor Law unions are allowed until 1821 by which time the supply of official coinage has increased sufficiently to make tokens redundant.

 

1817-1852 Bank of France discount rate remains almost unchanged

During this time it is fixed at 4% except during the revolutionary troubles of 1848.

 

1818-1819 Various US states levy taxes on the branches of the Second Bank

The Second Bank of the United States refuses to pay these taxes and wins its case in the Supreme Court.

 

1820 Last British silver pennies are minted

This is nearly 1,100 years after the first English silver pennies, though silver continues to be used for higher value coins for another 100 years.

 

1821 Restoration of convertibility of Bank of England notes

This is two years earlier than the target date set by the 1819 Act for the Resumption of Cash Payments and completes the establishment of the gold standard in practice as well as in law.

 

1822 The Société Général founded in Belgium

The bank plays a vigorous role in Belgium's industrial revolution, the first of any country on the European mainland.

 

1824 Parliament rejects decimalization of British currency

Further proposals made in 1853, 1857 and 1918 are also rejected before the Halsbury Report of 1963 is accepted and put into effect in 1971.

 

1824 Illinois declares all branches of the Second Bank illegal

This decision is overturned by the US Supreme Court.

 

1824 Clearing system developed by Boston banks

The Suffolk Bank of Boston, in co-operation with 6 other local banks, begins the development of a system of clearing inter-bank accounts.

 

1825-1826 Banking crisis in England

During the year 60 banks fail. To alleviate the liquidity shortage caused by the financial panic the Bank of England issues one pound notes and the Royal Mint steps up the production of sovereigns.

 

1826 Banking reforms introduced in England and Wales

The bank crisis is blamed on small, weak country banks issuing too many small denomination notes. Parliament bans the issue of notes of less than £5 in England and Wales but not, after protests, in Scotland. Parliament also allows the creation of new joint-stock banks outside a 65 mile radius of central London and also permits the Bank of England to set up regional branches.

 

1826 Sir Walter Scott defends small Scottish banknotes

Under the pseudonym of Malchai Malagrowther, the novelist Sir Walter Scott writes a series of letters for the Edinburgh Weekly Journal demonstrating the superiority of the Scottish banking system and the disastrous consequences that would follow the abolition of small denomination notes. Because of the protests by Scott and others parliament decides that the ban on such notes should apply in Scotland.

 

1826 Death of the last British Exchequer Chamberlain

Upon his death the Treasury Tallies are abolished in accordance with the Act of 1783. Later the redundant tallies are returned to the House of Commons, an action that has disastrous consequences in 1834.

 

1828 Andrew Jackson elected President of the USA

Jackson has been suspicious of banks ever since he read the history of the South Sea Bubble.

 

1829 New York State passes Safety Fund Act

This tightens up conditions for chartering banks and contains provisions foreshadowing later developments in deposit insurance.

 

1832 Capital punishment for forging banknotes abolished in Britain

The maximum penalty for forgery is reduced from death to transportation for life (e.g. exile to Australia).

 

1832 President Jackson vetoes early renewal of the Second Bank's charter

In the presidential election the same year Jackson defeats Henry Clay, a supporter of the Second Bank. The result makes the Bank's demise certain.

 

1833-1834 Robert Owen's trade unions issue Labour Notes in Britain

The National Labour Exchange created by Robert Owen and his followers issues paper money in the form of labour notes to the value of one, two or five hours redeemable at designated stores but the experiment comes to an end with the failure of the Grand National Trades Union.

 

1833 Bank of England notes are made legal tender in England and Wales

The Bank Charter Act does this in order to discourage other banks from requesting that Bank of England notes be exchanged for gold at the hint of trouble. Bills of exchange up to 3 months are removed from the ambit of the usury laws by the same act.

 

1833 Jackson removes US government deposits from the Second Bank

Instead the deposits are placed in selected State Banks which come to be known as pet banks.

 

1834 Houses of Parliament destroyed by burning tallies

After the death of the last Exchequer Chamberlain in 1826 the redundant tallies are stored in the House of Commons. In 1834 to save space and economize on fuel the tallies are thrown into the heating stoves but they burn so fiercely that the fire spreads and destroys the Houses of Parliament.

 

1834 The Zollverein of the German States

A customs union is formed as a first step in unifying the currencies, weights and measures of the previously independent 39 German states.

 

1834 US Coinage Act

This makes a slight reduction in the value of silver relative to gold in order to encourage more gold to be brought to the mint. However, it hastens the disappearance of much of the remaining silver in circulation.

 

1835 East India Company authorized to issue rupees

Up to this time India has had 25 varieties of indigenous rupees but after the East India Company is authorized to issue its own rupee it comes to be accepted as the standard in India and abroad. At the same time the silver rupee is given legal tender status but gold coins lose that privilege.

 

1836 President Jackson issues his Specie Circular

The circular lays down that future purchases of government land must be paid in gold or silver, or their strict equivalent, rather than in local notes or promises to pay. This has the effect of swelling the US government's coffers with specie.

 

1836 Number of German savings banks reaches 280

The rate of growth in their numbers increased after the end of the Napoleonic Wars in 1815.

 

1837 US States acquire legal power to issue paper money

This reverses attempts to uphold the constitutional denial of the power of the states to emit bills.

 

1837 Free Banking movement triumphs in Massachusetts

The free banking movement claims that citizens have a right to set up banks rather than being dependent on a privilege granted by the state. The State of Massachusetts passes an act in accordance with these principles.

 

1837 US banking crisis

The uncontrolled, chaotic expansion of banking in the US is slowed, then partly reversed by a financial crisis in which every bank is forced to suspend specie payment of notes. The crisis leads to a depression in the economy which lasts until 1843.

 

1838 Dresden convention fixes the exchange rate between the thaler and gulden

The Prussian thaler is used mainly in northern Germany and the gulden in the south. A fixed rate of 4:7 is adopted.

 

1838 Caisse Général du Commerce et de l'Industrie founded

The bank is created to support French industry and commerce but it has only a troubled, ten year existence.

 

1840 US establishes an independent Treasury

Its powers are more firmly established by a later act in 1846. Without a central bank the US Treasury has to carry out its own banking operations, relying as far as possible on specie for government payments and receipts.

 

1840 Bank of Bombay founded

This is the second of the presidential banks to be established during British rule to supplement the internal money supply of India.

 

c. 1840-1844 Currency School versus Banking School

With hundreds of banks issuing notes in Britain in uncoordinated fashion the value of the currency is difficult to control. A controversy arises between the currency school which believes that gold and Bank of England notes are the only real money and the banking school which believes that notes are just one among many forms of money.

 

1841 The Second Bank of the United States crashes

By this time it is simply a private bank and no longer a national institution. When it ran into difficulties during the 1837 crisis it was still the largest bank in the world, but it finally crashes in 1841.

 

1842 Oriental Bank founded in India

This is an exchange bank established for financing external trade and foreign exchange, from which the presidency banks are debarred by their charters.

 

1843 Chartered Bank founded in India

This is another exchange bank for financing external trade and foreign exchange.

 

1843 Bank of Madras founded

This is the third of the presidential banks to be established during British rule to supplement the internal money supply of India.

 

1844 Bank Charter Act passed in Britain

This Act combines most of the rules demanded by the currency school with just a few of the discretionary powers demanded by the banking school for commercial banks, but these powers are mostly grabbed by the Bank of England.

 

1846 Royal Giro and Loan Bank becomes the Bank of Prussia

It was founded in 1765 by Frederick the Great and was Germany's first note-issuing bank. Later, in 1875, it becomes the Reichsbank.

 

1846 Germany's first rural credit co-operatives are founded

Friedrich Wilhelm Raiffeisen starts the movement.

 

1846 Minimum legal banknote size in France still too high for most purposes

Up until 1846 the minimum legal denomination is 250 francs, or more than a month's wages for the average worker. In the following years it is gradually reduced.

 

1847-1848 Numerous local banks fail in France

Only in Paris has the Bank of France enjoyed a monopoly of note issues since its foundation. The rest of the country is largely dependent on the note issues and bill discounting of local banks, many of which are weak.

 

1847 The Woolwich, Britain's first permanent building society, is registered

Previous building societies were temporary associations which terminated when all members had purchased houses. The Woolwich, which was actually founded a few years before its official registration, is the first permanent building society and thereafter permanent societies quickly become the norm.

 

1847 Railway Mania in Britain reaches a peak

This increases the need for liquidity and strengthens feelings that the 1844 Bank Charter Act is far too restrictive. One of the reasons that railways are attractive to investors is that before limited liability becomes more generally permitted, shareholders are liable for the debts of their companies without limit, except in cases where the company has a royal charter or, as in the case of many railway companies, is specifically authorized by act of parliament.

 

1848 Bank of France is given a nationwide monopoly of note issues

The national bank is given a monopoly of note issuing to fill the gap left by the failure of numerous local banks. The Bank of France also begins to develop a large network of branches in different parts of the country.

 

1848 Schaaffenhausen is reconstituted as Germany's first joint-stock bank

The banking house of Schaaffenhausen in Cologne runs into difficulties and is reconstituted as a joint-stock company with the help of the Prussian state which acts in order to save the bank's industrial customers from the consequences of its failure.

 

1848 Gold Rush in California

The discovery of gold in California leads in the following decade to a massive increase in the production of gold coins by the mint with the result that in practice the US moves away from bimetallism towards a gold standard.

 

1850-1914 Huge amounts of capital are exported from Britain

Huge amounts of British capital are invested abroad, especially after 1890, in the United States, parts of the British Empire, and Argentina. The total reaches billions of pounds. Britain's later economic problems may be partly due to the neglect of British industry by the banks during this period.

 

1850 Number of German savings banks reaches 1,200

The pace of savings bank formation has accelerated since the mid-1830s.

 

1850 Germany's first industrial credit co-operatives are founded

Herman Schultz-Delitzsch inspires the movement.

 

1850 National Bank of Belgium founded

Later, in 1882, the National Bank of Belgium serves as a model for the Bank of Japan.

 

1851 Gold discovered in Australia

Along with the discovery in California 3 years earlier this leads to a huge expansion in the world's supplies of gold for money.

 

1852-1872 New French banks support economic development

The Crédit Mobilier, founded in 1852, is the first effective major French bank to be established specifically for providing funds for industry and infrastructure. It is followed by many other new banks in the next two decades. Despite the failure of the Crédit Mobilier in 1867 these banks channel savings into essential investments in transport, communications, agriculture and industry.

 

1853 Association for the Prevention of Counterfeiting founded in the USA

During the 1850s many thousands of different types of banknotes, both genuine and counterfeit, are in circulation causing considerable problems for bankers and traders.

 

1853 US Subsidiary Coinage Act

The silver content of half-dollars, quarters and dimes is reduced by about 7% making it no longer worthwhile to sell them to silver metal dealers. Therefore the new coins remain in circulation.

 

1856 The Mercantile Bank becomes the first note-issuing bank in Singapore and Malaya

This London-registered bank expands from its Indian base to Malaya and Singapore.

 

1857 The Münzverein, German coinage union

Different German states use different currencies, e.g. the thaler in the north and the gulden in the south. The Münzverein is a step towards the wider acceptance of different currencies.

 

1857 US removes legal tender status from all foreign coins

By this time coins are merely the small change of commerce.

 

1857 World-wide banking crisis starts in the US

In the month of October 1,415 US banks are forced to suspend specie payments. Because of huge European, especially British, investment in the US the effects are felt on the other side of the Atlantic. In Germany many of the new idustrial banks founded in the early 1850s fail. However recovery from the crisis is rapid.            

 

1860-1921 Number of banks in the US increases by over 19 times

During the same period bank numbers fall in other advanced countries but in the US a peak of nearly 30,000 is reached in 1921.

 

1860 Crédit Agricole founded

Its primary function is the supply of credit for French agriculture. The Crédit Agricole develops into one of the world's largest banks. (During the early 1980s it was the largest, and in 1991 the sixth largest).

 

1860 The Russian State Bank established

Two public banks had been established by Catherine the Great in 1768 to finance her wars with the Ottoman Empire (Turkey), but in 1860 a proper state bank with wider functions is belatedly established.

 

1861-1865 The US Civil War

The Confederacy finances its war effort mainly by printing money. In addition to the Confederate notes, the States, railway, insurance and other companies also issue notes. The resulting hyperinflation renders Confederate paper worthless. By comparison inflation in the North is relatively moderate as the Union government raises very substantial sums of money by taxation and borrowing.

 

1861 US Congress suspends convertibility of notes into specie

Priority in the use of gold and silver is given to government purposes as a result of the war.

 

1861 Post Office Savings Bank founded in Britain

The widespread geographic coverage of the post offices and their long opening hours makes them very convenient as savings bank branches. The government too gains since the savings are under the control of the Treasury and come to provide Gladstone's government with large funds at a low rate of interest.

 

1862 US Legal Tender Act and the issue of Greenbacks

The United States Treasury starts issuing notes that are not convertible into silver or gold but are legal tender for all purposes except payment of customs duties and interest on government securities.

 

1862 Tax placed on US state bank notes The rate is set at 2%.

 

1864 US National Bank Act

This amends and expands the provisions of the Currency Act of the previous year. Any group of five or more persons are allowed to set up a bank, subject to certain minimum capital requirements. As these banks are authorized by the Federal, not the State governments, they are known as national banks. To secure the privilege of note issue they have to buy government bonds and deposit them with the Comptroller of the Currency.

 

1865-1926 The Latin Monetary Union

This comprises France, Italy, Belgium, Switzerland, and later Greece. The gold and silver coins of each country are legal tender throughout the union. The union has faded away by the 1920s before its formal ending.

 

1865 French law on cheques simplified

French businesses have tended to prefer notes to bank deposits and cheques. The law is simplified to encourage greater use of cheques.

 

1865 Hong Kong and Shanghai Bank founded

Ever since it has been the main bank of issue in Hong Kong. In the 1980s it was still responsible for about 80% of the colony's note circulation (the other 20% being supplied by the Chartered Bank) and by 1990 the Hong Kong Banking Group is the 13th largest in the world.

 

1865 US Contraction Act

By the end of the Civil War the Greenbacks are only worth half as much in gold as their nominal value. Under the terms of this act the government begins to withdraw them from circulation.

 

1866 Tax on US state bank notes is raised to 10%

The state bank notes are taxed out of existence and replaced by the national bank notes which are of uniform design, apart from the name of the particular bank. Despite the demise of their notes the tax does not lead to the disappearance of the state banks.

 

1867 International Monetary Conference in Paris

An attempt is made to widen the area of common currencies based on French gold and silver 10 and 5 franc coins. The US, being on a bimetallic standard, sends representatives.

 

1867 Singapore makes dollars from Hong Kong, Mexico, Bolivia and Peru legal tender

In the British colonies of Malaya and Singapore the official currency is the Indian rupee but the general public keep their accounts and make most of their payments, including taxes, in dollars and cents. Therefore in 1867 the public's preferences are recognised when legal tender status is given to various foreign coins.

 

1868 US halts withdrawal of the Greenbacks

Their withdrawal was exacerbating a depression in the economy. In the following years some increases in Greenback circulation are made.

 

1868 Meiji restoration in Japan

Japan's isolationist policy is ended. As a result the few pre-Meiji banking organisations set up by the Zaibatsu family groups prove completely inadequate to meet the needs of liberalized trade.

 

1870-1893 Plentiful silver supplies cause fall in value of Indian and other Asian currencies

After 1870 there is a vast increase in the amount of silver coming on to world markets because of new mines and the demonetization of silver as Germany, Scandinavia and other countries switch to the gold standard. As a result the undebased silver coinage of India, and the currencies of China, Japan and south east Asia, countries comprising half the world's population, suffer an unprecedented fall in value.

 

1870-1872 Huge increase in the number of German joint-stock banks

No fewer than 107 are founded in this period.

 

1870-1871 Franco - Prussian War

The victorious Germans force France to pay a huge indemnity of 5 billion francs. The money is raised easily by a loan which is more than 10 times oversubscribed. This experience partly explains French reliance on borrowing in preference to taxation in the First World War and French insistence on German reparations afterwards.

 

1871 Germany becomes a united country

The German states unite and adopt the Mark as their common currency and base it on the gold standard.

 

1871 Japanese Currency Act

A national mint is established at Osaka and the decimal system of yen and sen is introduced.

 

1872 Japanese National Bank

Act American rules serve as a model for Japanese commercial banks.

 

1872 Paris Clearing House created

This is over 100 years after the creation of the London Bankers' Clearing House. The backwardness of French banking prior to the second half of the 19th century has retarded the country's economic development.

 

1873-1924 The Scandinavian Monetary Union

Denmark, Sweden and Norway form a monetary union similar to the Latin one but with gold as the standard for their currency.

 

1873-1886 The Great Depression in Britain

The British economy is in decline relative to those of the US and Germany. One effect of the so-called depression is to cause doubts about the merits of the gold standard.

 

1873 Dai-Ichi Bank founded in Japan

The Dai-Ichi Bank is set up by the government with the support of some of the larger Zaibatsu banks. It is the first bank to be created under the terms of the 1872 Act.

 

1873 US Coinage Act

The silver dollar ceases to be the standard of value. Thus the US is virtually on the gold standard, in practice if not in law.

 

1873 Bank panic in the US and Germany

Lacking a central bank or lender of last resort able and willing to supply sufficient liquidity to quell crises in their early stages the US proves prone to bank panics. As in 1857 the panic spreads across the Atlantic and causes many bank failures in Germany.

 

1874 Singapore makes the Japanese yen and US dollar legal tender

This is in addition to the other foreign coins granted legal tender status in 1867.

 

1875 Bank of Prussia becomes the German Reichsbank

On becoming the national bank of the whole of Germany it absorbs and replaces the note issues of about 30 other state banks with its own notes.

 

1875 Scottish Institute of Bankers founded

This is the world's first bankers' institute. In the last couple of decades of the 19th century many trained young bankers from Britain, especially from Scotland, take up positions in overseas banks.

 

1875 Greenback Party formed in the US

It aims to at least secure and preferably increase Greenback circulation.

 

1875 US Resumption Act

This is intended to restore the convertibility of banknotes into gold. Full redemption is promised by 1 January 1879.

 

1876 Canadian Indian Act bans the potlatch

The potlatch, a ritualized form of barter involving competitive gift exchange that is widely used by various Indian tribes, is banned by the Canadian government.

 

1876 Japanese Bank Act revised

The regulations are altered to make them more appropriate for Japanese conditions. This leads to a surge in the formation of new banks.

 

1876 Mistsui Bank founded in Japan

The new bank is based on the exchange bureau run by the Mitsui family as part of their Zaibatsu (family-based) trading empire.

 

1878 Greenback Party returns

14 members to Congress A compromise between the Party and its opponents fixes the Greenback circulation at its existing level, halting the previous trend to scarcer, dearer money.

 

1878 US Bland-Allison Act

The silver lobby pushes through this act forcing the US Treasury to buy between $2 million and $4 million of silver each month for coinage and fixes the relative prices the mint pays for gold and silver.

 

1878 France abandons bimetallism and in practice adopts the gold standard

By the end of the 1870s the gold standard has become an international standard with London as the world's main financial centre.

 

1879 Institute of Bankers (England and Wales) founded

This is 4 years after its Scottish counterpart. Soon there is a brain-drain of young bankers from Britain to other parts of the world.

 

1879 Limping bimetallism in the Latin Monetary Union

Vast increases in the world's supplies of first silver and later gold unsettle the Latin Union's bimetallic policies and only gold coins are universally accepted throughout the Union.

 

1879 Number of Japanese banks reaches 153

The growth in numbers is a result of the 1876 Act.

 

1880

Mitsubishi and Yasuda Banks founded in Tokyo

These are both Zaibatsu banks based on existing family trading empires. By 1912 the Yasuda Bank has absorbed 17 other banks.

 

1880 Yokohama Specie Bank founded

This is the first of a number of special banks established to assist the growth of the Japanese export trade.

 

1881 Postal Orders are introduced in Britain

These are an immediate success and although they are introduced instead of Post Office notes which would have competed with commercial banknotes, the postal orders are nevertheless used as currency in some areas for the next 10 years and are made legal tender after the outbreak of the First World War.

 

1882 Bank of Japan founded

After a careful study of European central banks - the Americans do not have one at this time - the Japanese decide that the National Bank of Belgium is peerless and it is chosen as a model for Japan's national bank.

 

1883 Austria establishes the world's first postal giro system

Subsequently this example is widely followed in other European countries and Japan.

 

1886 Gold and Silver Commission considers replacing Britain's gold standard

The Commission is asked to advise the government how best to overcome the fall in prices caused by the Great Depression. Two famous economists, Alfred Marshall and F.Y. Edgeworth, recommend symmetallism where the legal standard would consist of a fixed weight of both gold and silver but nothing comes of this suggestion.

 

1890 First Barings crisis

Barings have become heavily involved in financing British investment in South America, especially Argentina. After the failure of one deal and a revolution in Argentina, Barings is within 24 hours of bankruptcy when it is saved by support from the Bank of England and all the main City of London banks.

 

1890 China issues silver coins

Up to this time China has rarely used precious metal coins, its normal coins being base metal cash of a design unchanged since ancient times.

 

1890 US Sherman Act

This obliges the Treasury to buy 4.5 million ounces of silver each month.

 

1890 Cheques account for 90% by value of financial transactions in the US

The supply of the main source of money in the US is not subject to uniform rules but to the regulations of the different state and federal authorities responsible for banks.

 

1891-1901 Number of Japanese savings banks increases twentyfold

By 1901 the total is 441. Up from a score ten years earlier.

 

1892 Liberator Building Society fails in Britain

The Liberator had become involved in speculative deals, lending money secured only by second or third mortgages. It is brought down by the failure of the London and General Bank and in turn the Liberator brings down a number of other building societies.

 

1893 Bank panic in the US

A bank panic, similar to the one 20 years earlier, breaks out. Bank clearing houses use clearing house certificates for settling inter-indebtedness, leaving the precious notes and gold available for their fearful personal customers.

 

1893 US silver purchase laws cancelled

The abundance of silver on the world market enables gold to be purchased in the US at favourable rates, leading to a gold drain. Fearing that supplies of gold will be insufficient to back note circulation President Cleveland cancels the silver purchase laws.

 

1893 Herschell Report on India's silver currency

In accordance with the recommendations of the committee set up because of the fall in the value of the Indian rupee, the British authorities close Indian mints to the free coinage of silver. The resulting reduction in the circulation of rupees raises their exchange value and it is stabilized at 15 rupees to the gold sovereign, preparing the way for a move towards the gold standard.

 

1894-1895 Sino-Japanese War

By the conclusion of the war Japan has acquired sufficient gold reserves to make possible the replacement of its traditional silver standard by the gold standard two years later.

 

1894 Building Societies Act

This act is the outcome of a parliamentary inquiry into the fall of the Liberator. It forbids advances on second or subsequent mortgages, increases the powers of the Chief Registrar of Building Societies, and prevents new societies from allocating mortgages by ballot.

 

1894 Bank of British West Africa founded

The first bank to be created in Britain's west African colonies starts operations in Lagos. Branches are also opened in Accra, Gold Coast (Ghana) in 1896 and Freetown, Sierra Leone in 1898.

 

1894 British dollars minted for colonies in the Far East

Most of the British dollars are minted in Bombay.

 

1895 Sumitomo Bank founded in Osaka

This Japanese bank is founded by an existing Zaibatsu trading organization.

 

1896 Hypothec Banking Act in Japan

This provides umbrella legislation under which a number of industrial and agricultural banks are set up.

 

1896 William Jennings Bryan runs for the US Presidency

Bryan is a very vigorous supporter of bimetallism and opponent of the gold standard but he loses the election to the Republican candidate William McKinley.

 

1897 Japan officially adopts the gold standard

Following the successful conclusion of the Sino-Japanese War two years earlier Japan has accumulated sufficient gold reserves to make the transition from the silver to the gold standard.

 

1897 Hypothec Bank of Japan founded

This is the first bank to be established under the Hypothec Law of the previous year. The bank provides farmers and entrepreneurs with long-term loans.

 

1898 Fowler Report on Indian Currency

The reduction in the circulation of rupees after 1893 and the high rates of interest needed to maintain its value have led to complaints that trade is being strangled. The Fowler Committee recommends renewed issues of gold sovereigns and half sovereigns as part of the move towards the gold standard.

 

1899 Bank of Japan completes replacement of other banks' note issues

The Bank of Japan's notes are fully convertible into gold. All other notes cease to be legal tender.

 

1899 Hokkaido Colonial Bank founded

It is established to strengthen the economy of the northern Japanese province of Hokkaido.

 

1900 US Gold Standard or Currency Act

The great increase in America's stock of gold leads to abandonment of bimetallism. The act also halves the minimum capital requirement for the smallest national banks, thus stimulating an increase in their numbers, and raises the limitations on the issue of notes.

 

1900 Bank of France has representation in 411 towns, including 120 full branches

Owing to its very extensive network of branches and offices, commercial banks have not developed as vigorously as their British and German counterparts.

 

1900 Industrial Bank of Japan founded

Its purpose is to provide long-term loans and debentures to assist the mining and metallurgical industries in particular.

 

1901 Number of Japanese banks reaches a peak of 1,867

Thereafter amalgamation and mergers reduce the number.

 

1902 Straits Settlement (Singapore) dollar introduced

This is intended as a replacement for the foreign coins which are demonetized two years later.

 

1903 French coins and notes are still far more important than bank deposits

Bank deposits form only a tenth of the French money supply whereas coins account for half. Bank note circulation is 8 times as high as the Bank of England's issues and the Bank of France's gold reserves are even higher than its note issues.

 

1904 Foreign coins lose legal tender status in Singapore

The demonetization of Mexican and other foreign dollars simplifies cash transactions.

 

1906 Switzerland and Japan establish postal giro systems

They are the first countries to follow the example of Austria which established the world's first postal giro system in 1883.

 

1907 International bank crisis starts in New York

Unlike earlier US panics which tended to start in weak country banks, this one starts in the trust companies in New York. They are not members of the clearing system that might have been able to prevent the crisis snowballing. Hundreds of American banks fail. In contrast Britain weathers the storm with ease and this motivates proposals for a system of central banks in the US.

 

1908 US Aldrich-Vreeland Act

As a response to the panic of the previous year this allows groups of a minimum of 10 national banks to form National Currency Associations to issue temporary currency. The act also sets up a National Monetary Commission which authorizes 42 separate reports, most of which contain studies of foreign banking systems.

 

1909-1911 Lloyd George anticipates the British welfare state

As chancellor of the exchequer Lloyd George introduces a revolutionary series of budgets. In order to finance welfare benefits the taxation system is made much more progressive, efficient and buoyant - just in time to finance the First World War. Warfare engulfs welfare.

 

c. 1910 Horses still used as money by the Kirghiz in the Russian Empire

The Kirghiz people in central Asia have long used horses as their main monetary unit and store of value. Sheep are used as subsidiary units and small change is given in lambskins.

 

1911 US Postal Savings system established

Because of opposition from the commercial banks the postal savings system does not develop in a substantial way.

 

1911 Issues of silver coins in British west Africa exceed those in Britain

The annual amount of silver issued increases from an average of £24,426 in the 5 years up to 1890 to £847,850 which exceeds the amount currently being issued for use in the United Kingdom.

 

1912 West African Currency Board (WACB) established

The WACB is set up to be responsible for the issue of currency in the British colonies of Nigeria, the Gold Coast (Ghana), Gambia, Togoland and the British Cameroons. The main form of currency produced is silver coins. Gold coins quickly vanish from circulation to be used as ornaments while bank notes are used mainly by traders and government agents.

 

1912 China ceases minting its traditional cash coins

After a couple of millennia use of these traditional Chinese base metal coins comes to an end.

 

1913 Chamberlain Report on Indian Currency and Finance

The report includes a memorandum from one of its members, J.M. Keynes, arguing that there is no need for the internal circulation of gold in India. He also points out that India's strong habits of acting as a sink of the precious metals pose deflationary dangers not only to India itself but also to Europe.

 

1913 Pujo Committee Report on the powers of the US money trust

The committee, established the previous year, reports that power over money and credit is concentrated in just a few hands. It signals an end to laissez-faire in US banking.

 

1913 US Federal Reserve System established

Instead of a single central bank, like the First and Second Bank of the United States, 12 Federal Reserve districts are established each with its own reserve bank. All national banks have to become members of the system and the state banks are given conditional permission to join. Banks are also allowed to establish branches abroad.

 

1913 Number of German savings banks reaches 3,133

Their total assets are more than double those of the commercial banks.

 

1913 Number of industrial credit co-operatives in Germany reaches 1,500

By this time they have well over 800,000 individual members and outstanding credits of over 1.5 billion marks.

 

1914 Number of rural credit co-operatives in Germany reaches 17,000

Their growth has mushroomed since the first one was set up by Friedrich Wilhelm Raiffeisen in 1846.

 

1914 German Reichsbank has over 100 main branches In addition it has 4,000 sub-offices.

Thus the Reichsbank's regional representation is far stronger than that of the Bank of England in Britain.

 

1914-1918 First World War

Despite the huge revenues raised from taxation the British national debt rises tenfold. The government fails to use its bargaining power, as the only really massive borrower in wartime, to get money at low rates of interest.

 

The French national debt rises from 28 billion to 151 billion francs and the note issue increases over 6-fold.

 

Germany relies more on borrowing, particularly short-term, and less on taxation than Britain. Consequently its policy is more inflationary.

 

Japan's industry is greatly stimulated by the war. By 1918 Japan has passed from being a debtor to a creditor country.

 

1914 New British notes issued and gold is withdrawn from circulation

New one pound and 10 shilling notes are issued by the Treasury, not the Bank of England, and postal orders and Scottish and Irish banknotes are made legal tender. The success of the new notes allows banks to withdraw gold gradually from internal circulation, thus putting a quiet end to the gold standard.

 

1917 The world's first billion pound loan is raised

Within 6 weeks of the issue of the third War Loan by the British government the money is raised.

 

1917 US enters 1st World War

As a result the national debt increases from about $1 billion in 1916 to $25 billion in 1920.

 

1918 French Giro established

As France makes relatively small use of cheque payments at the time of the giro's foundation, this system of money transfer fulfils unmet needs and grows rapidly. By the time Britain's giro is established 50 years later the French one is the largest in the world.

 

1919 US Edge Act to promote foreign banking indirectly permits bank branches

This amendment to the Federal Reserve Act allows the chartering of corporations for the purpose of engaging in international or foreign banking. Despite the legal prohibition of branch banking these corporations can be set up anywhere, including other states in the US. 1920 Keynes publishes his Economic Consequences of the Peace He argues against German war reparations and in favour of mutual cancellation of Allied war debts.

 

1920 Japanese economy enters a chronic depression

By 1920 the boom generated by the First World War has petered out and a depression starts.

 

1921 Note issuing by commercial banks in England ceases

Fox, Fowler & Co. of Wellington, Somerset, the last note-issuing country bank in England and Wales is taken over by Lloyds. However Scottish banks continue to issue their own notes.

 

1921 The Imperial Bank formed in India

It is formed by the merger of the three presidency banks. The Imperial Bank performs some of the functions of a central bank and so some of the relevant recommendations of the Chamberlain Report of 1913 are partly and belatedly put into effect.

 

1922-1923 Germany suffers from hyperinflation

The situation gets so bad that wages are paid as frequently as twice a day to give people a chance to spend them before the notes lose their value. Other countries agree to ease the burden of war reparations. A new, interim currency, the Rentenmark, secured on mortgages on land and industrial property, restores stability.

 

1923 Tokyo earthquake

On 1 September an earthquake kills around 140,000 people and devastates large parts of Tokyo and its port, Yokohama. The Bank of Japan coordinates the activities of the main banks to finance reconstruction.

 

1924 Germany adopts the Reichsmark and returns to the gold standard

The Reichsmark, which replaces the Rentenmark, has a value equivalent to the pre-war gold mark.

 

1924 US Federal Reserve System adopts easy money policy

The decision is taken in order to combat a decline in business activity and to encourage international capital flows. This action helps Britain to import enough gold to return to the gold standard the following year.

 

1925-1926 Florida land boom

Massive speculation in land in Florida is halted by devastating hurricanes in September 1926. Subsequently the interest of speculators moves to the stock market.

 

1925 Britain returns to the gold standard

Keynes argues that the value of sterling has been fixed at an unsustainably high rate.

 

1926General Strike in Britain

The over-valued pound and the attempt to reduce prices and wages to compete overseas provoke a general strike.

 

1927 New York Federal Reserve Bank cuts rediscount rate

The rate is cut from 4% to 3½% partly in order to help Britain to stay on the gold standard. However the supply of credit is eased just as a speculative boom is starting on the stock market.

 

1927 Canadian ban on potlatches is strengthened

The 1876 act proscribing potlatches has proved ineffective and therefore a new act stipluating maximum and minimum prison sentences is passed.

 

1927 Japanese financial crisis started by a run on the Bank of Taiwan

Taiwan became a Japanese colony in 1895 and therefore the crisis spreads to Japan. As many as 37 Japanese banks are closed, at least temporarily.

 

1927 Japanese Banking Act

This act, passed in response to the crisis of the same year, tightens up the definition of a bank and prohibits banks from engaging in non-banking business.

 

1928 France returns to the gold standard

Silver convertibility is no longer guaranteed, ending France's attachment to bimetallism. Gold convertibility is only for wholesale transactions of a minimum of 215,000 francs.

 

1928-1929 Stock Market boom in US

The Fed takes no effective action to stop the boom getting out of control.

 

1929 The Great Crash

The New York stock market crashes on 24 October. The Fed, whose easy money policy stoked the boom, now tightens credit causing a slump in the US economy.

 

1929-1930 The Great Depression

Widespread bank failures and the surviving banks' curbs on lending cause businesses of all kinds to go bankrupt. The US net national product falls by over half.

 

1930 Bank for International Settlements founded

Its initial task is to help with reparations and with large financial transfers for reconstruction. Later it plays a key role as a forum for central bankers.

 

1931 Report of the Central Banking Enquiry Committee in India

The Imperial Bank, which performs some of the functions of a central bank, is not allowed to issue notes, which have been a government monopoly since 1861. The Committee accepts the case for the creation of a proper central bank.

 

1931 Macmillan Report on Finance and Industry

The committee tends to side with bankers in the dispute over whether or not the banks are doing enough for British industry and criticises other countries for not adhering to the rules of the gold standard. However, it emphatically points to a lack (henceforth famous as the Macmillan Gap) in the long-term finance available for small and medium firms.

 

1931 Failure of the Austrian Creditanstalt Bank

A number of bank failures in Germany ensue and the resulting large international currency movements trigger off Britain's decision to abandon the gold standard.

 

1931 Därmstadter and National Bank collapses

As a result of the crisis German banks cut back on lending, leading to a steep rise in unemployment.

 

1931 US and France hold 75% of world's gold stock

This figure is reached by September. During the previous 6 weeks over £200 million worth of gold was withdrawn from London.

 

1931 Britain abandons the gold standard

This marks the beginning of the move from classical to Keynesian economics. The Commonwealth (except Canada), Ireland, Scandinavia, Iraq, Portugal, Thailand, and some South American countries follow Britain off gold.

 

1931 Japan abandons the gold standard

Japan's military actions along the Manchurian border with China frighten foreign creditors into withdrawing gold and are therefore partly responsible for the decision to abandon the gold standard in December.

 

1932-1941 Japan enjoys strong economic growth

Reflation and competitive devaluation stimulate production and exports with the result that Japan recovers rapidly form the world slump of the 1930s and is able to devote increasing resources to rearmament.

 

1932 Bank rate as a policy tool is abandoned by the Bank of England

Until the financial crisis the Bank of England has sought to control the monetary system by varying the interest rate it charges. After June 1932 bank rate remains unchanged for nearly 20 years, apart from a brief period just before and after the outbreak of the Second World War.

 

1932 The Great Conversion reduces the burden of Britain's national debt

The rate on over £2,000 million of loan stock is reduced from 5% to 3½%. Cheap money, and the effect of the world slump in reducing investment opportunities abroad, lead to a housing boom and investment in new industries, helping Britain to make a relatively early recovery from the Depression.

 

1932 Ottawa Agreement on Commonwealth Preference in Trade

This provides a more stable basis for trade arrangements than can be obtained elsewhere and strengthens the attractions of membership of the sterling area.

 

1932 President Hoover sets up the Reconstruction Finance Corporation

Its purpose is to provide emergency financing for US financial institutions and to help agriculture, commerce and industry.

 

1932 US Federal Home Loan Banks created

Eleven of these banks are set up to provide housing finance.

 

1933-1938 Housing boom in Britain

The bulk of construction takes place in the Midlands, London and the South East where most of the new, light industries are being established.

 

1933 Adolf Hitler becomes German Chancellor

The social turmoil resulting from mass unemployment leads to Hitler's installation as Chancellor. Thereafter Germany's financial system and the economy in general are geared to rearmament.

 

1933 Roosevelt becomes US President and launches his New Deal

Roosevelt's first action is to declare a national bank holiday closing every bank in the US. After a week the Federal Reserve Banks reopen and later other banks are allowed to reopen if investigators declare them solvent. This restoration of confidence in the financial system is a necessary preliminary to the New Deal involving aid to industry and agriculture.

 

1933 US Home Owners Loan Corporation created

Like the Federal Home Loans Banks created the previous year this institution is intended to combat the depression by stimulating the building industry.

 

1933 US Agricultural Adjustment Act

Existing financial institutions are given greater resources and their efforts coordinated through the Farm Credit Association. The Thomas Amendment to the Act authorizes an increase in note circulation, a reduction in the dollar's gold value, and promotes and subsidizes official purchases of silver.

 

1933 US Federal Deposit Insurance Corporation created

Through payments of a small premium by practically all banks a fund is set up to guarantee repayment of customers' deposits.

 

1933 National Bank of Nigeria founded

This is one of only 3 indigenous banks to be founded in Nigeria before 1945. The other two fail after only a short period.

 

1934 US Gold Reserve Act

The official price of gold is raised from $20.67 to $35 per ounce, a substantial devaluation of the dollar, and the internal circulation of gold is ended.

 

1934 US Silver Purchase Act

The Act obliges the government to buy large quantities of silver. This raises its price in world markets to such an extent that China is forced off its silver standard and many other countries demonetize their silver currencies. Thus in the long run the Act reduces the demand for silver, contrary to the intention of its supporters.

 

1934 German Banking Act

This establishes a national Banking Supervisory Board authorized to license every bank.

 

1935 - c.1970 Continuous moderate inflation in Britain

The general level of prices rises every year but at a moderate rate.

 

1935 US Banking Act

The changes this makes in the Federal Reserve System have the effect of shifting power away from New York and the Federal Reserve Districts towards Washington.

 

1935 Reserve Bank of India begins operations

India's central bank is modelled on the Bank of England.

 

c. 1935 Cowries still used as money in Nigeria

Their use in fairs in rural areas is not uncommon before the Second World War but declines rapidly afterwards.

 

1936 France abandons the gold standard

The French government's policy of a strong franc is undermined by competitive devaluation. After abandoning the gold standard France continues to be the centre of a Franc bloc including most of the non-German European countries south of Scandinavia until the Second World War.

 

1936 Tripartite Agreement between Britain, France and the US on exchange rates

The aim of the agreement is to stabilize exchange rates. It falls apart with the advent of the Second World War.

 

1938 US Federal National Mortgage Association created

The Association, known as Fanny Mae, increases the availability of finance for housing.

 

c. 1938 Cattle still used as money in parts of Africa

Even scrawny cattle are highly valued because of their monetary functions. Overgrazing resulting from attachment to cattle as a store of value continues to cause environmental problems as late as the 1980s.

 

1939-1945 The Second World War

Keynesian policies are successfully put to the test as the British government borrows larger sums than ever before at lower interest rates than in the First World War and other wars. From being a large creditor to, mainly poorer, Commonwealth countries Britain becomes a large debtor.

 

The US national debt, which was only $16 billion in 1930, reaches a peak of $269 billion in 1946 but this borrowing is also made at very low interest rates. Whereas the economies of most European countries are devasted the US gross national product rises substantially.Revenue raised from taxation (48% of government expenditure) and the resources of the occupied countries, together with a compulsory price freeze, enable the German authorities to suppress inflation until near the war's end.

 

In Japan the financial, administrative and industrial powers of the Zaibatsu are strengthened as they form the economic heart of the military machine.

 

1944-1971 The Bretton Woods agreement

The agreement, reached at Bretton Woods in New Hampshire, USA, envisages a system of convertible currencies, fixed exchange rates, and free trade. New financial institutions are to be established; the International Monetary Fund and the International Bank for Reconstruction and Development. Plans for an International Trade Organization fail as they are not ratified by the US Congress but they pave the way for the General Agreement on Tariffs and Trade (GATT).

 

1944-1960 Prolonged high inflation in France

Following the Liberation in August 1944 economic controls are lifted step-by-step, releasing previously suppressed inflation.

 

1944-1946 Hungary suffers from the world's worst ever hyperinflation

Hungary's monetary system destroys itself as note issues increase from 12,000 million until at its maximum it comes to a figure containing 27 digits. By July 1946 the 1931 gold pengo is worth 130 trillion paper pengos.

 

1945-1955 Banking boom and crash in Nigeria

Between 1945 and 1948 145 banks are registered followed by a similar number in the next 4 years. However their growth is unregulated and owing to inexperience, incompetence, nepotism and corruption by 1955 all but 3 indigenous banks have failed.

 

1945-1948 Germany suffers from hyperinflation

Owing to the devastation of the war Germany experiences hyperinflation for the second time in a generation. In the official markets ration cards and permits are more important than currency while on the black market cigarettes, soap, tinned beef and chocolate serve as currency.

 

1945-1948 Anti-monopoly and decentralization laws affect Japanese banks

The American occupying forces pass laws to break up the Zaibatsu by separating their banking activities from their industrial bases. They also close down a number of the special banks, such as the Yokohama Specie Bank, and insist on the separation of commercial and investment banking.

 

1945 Bank of France and the four largest deposit banks nationalised

At the same time a rigid separation between deposit and investment banks is enforced.

 

1946 US Employment Act This act is evidence of the power of Keynesian philosophy.

 

1947 The Marshall Plan or European Recovery Programme

General George Marshall proposes a huge programme to assist reconstruction in war-torn Europe. The programme goes ahead the following year. West Germany is later included among the recipients.

 

1947 IMF, IBRD and GATT start functioning

The International Monetary Fund and the International Bank for Reconstruction and Development, both of which are established as a result of the Bretton Woods agreement start functioning and the General Agreement on Tariffs and Trade, which also inspired by the agreement, holds its first meeting.

 

1948 Organization for European Economic Cooperation formed

Its initial purpose is to distribute Marshal aid effectively. It also broadens the existing bilateral payments systems into wider multilateral clearings.

 

1948 Germany replaces the Reichsbank by autonomous Landesbanks Each province has its own central bank. Their activities are coordinated by the Bank Deutscher Lä in Frankfurt.

 

1948 Germany replaces the Reichsmark by the Deutschemark

Simultaneously the freeze on prices and wages and most of the rationing system are abolished. These reforms lay the foundations for the West German economic miracle.

 

1948 Reserve Bank of India nationalized

After independence in 1947 the banking system is reorganised to fit its Indian environment.

 

1948 Industrial Finance Corporation founded in India

Its goal is to provide medium- and long-term finance to industrialists unable to get such funds from normal banking services.

 

1949 Britain devalues and starts an international realignment of exchange rates

Britain devalues the pound from $4.30 to $2.80 i.e. by about 30% against the dollar. This sparks off a major international realignment of exchange rates in which most other countries also devalue their currencies against the dollar. Britain's action reduces the value of sterling assets held by other Commonwealth countries and stimulates moves towards financial and political independence in the remaining colonies.

 

1949 Manillas withdrawn from circulation in Britain's west African colonies

Even after the Second World War the United African Company found it necessary to trade in manillas (currency worn as ornament) but, after a long struggle, they are officially withdrawn in 1949.

 

1949 Economic reforms in Japan

The US abandons the idea of exacting war reparations and instead supplies aid to Japan, like that given to Europe under the Marshall plan. At the same time rationing is abolished, runaway inflation brought under control, the budget balanced, and a single exchange rate for the yen, at 360 to the dollar, established.

 

1950-1970 Japanese economic miracle

Average annual growth in the 1950s is 9.2%, comfortably exceeding an ambitious plan for doubling the average income in a decade. In the 1960s growth is even higher, averaging 10.7% annually.

 

1950-1958 The European Payments Union

This is set up by the Organization for European Economic Co-operation. The 15 members can mutually offset deficits and surpluses up to the limits of their quotas which are set according to their share of world trade. By 1958 most European currencies are sufficiently convertible for the payments union to be terminated.

 

1950-1953 The Korean War

The Japanese economy is boosted as the country benefits from being the main Asiatic base for supplies to the United Nations forces in Korea.

 

1950 Export Bank founded in Japan

This is established to finance exports as part of Japan's efforts to rebuild the economy after the Second World War. In 1952 it becomes the Export-Import Bank.

 

1950 The European Coal and Steel Community established

This is the first step towards the creation of the European Economic Community.

 

1951 Bank rate restored as a policy instrument in Britain

During the era of the gold standard the Bank of England could successfully control the monetary system by varying bank rate. However, when the policy is used again in the 1950s it is much less successful.

 

1951 British colonies' sterling balances exceed £1,000 million

Whereas the independent Commonwealth countries had managed to reduce their sterling balances those of the colonies are still increasing with the result that the British economy is benefiting at the expense of poorer countries.

 

1951 Canada repeals law against potlatches

The provisions of the 1927 Act are repealed but by this time the custom is already on its last legs and by the end of the 1960s potlatches have virtually died out.

 

1951 Japan Development Bank founded

This is a special bank for granting long term loans for industrial or regional development.

 

1952-1967 Mergers and amalgamations greatly reduce the number of Indian banks

The authorities encourage mergers and amalgamation among smaller banks to strengthen the banking system. The number of reporting banks declines from 517 in 1952 to reach its low point of 90 in 1967.

 

1952 Reconstitution of the Zaibatsu in Japan

Following the peace treaty in 1952 American-type anti-trust laws are repealed and the Zaibatsu, complete with their core banks, are rapidly reconstituted.

 

1952 German law on Regional Scope of Credit Institutions

This divides the Federal Republic into three zones within each of which branching is allowed to spread.

 

1952 Japan joins the International Monetary Fund and International Bank for Reconstruction and Development

At the time of joining Japan is running chronic trade deficits. The assistance it gets from the Fund and the Bank in the following years help it to achieve its economic miracle.

 

1953 Japanese Small Business Finance Corporation founded

Along with the Export Bank (founded in 1950) and the Japan Development Bank (1950) this is one of the financial institutions established to fill gaps in supplying finance for the re-building of the Japanese economy.

 

1954 First attempt to create a money market in west Africa

The colonial government of the Gold Coast (Ghana) issues its first tranche of 90-day Treasury Bills.

 

1955 The Imperial Bank is re-formed as the State Bank of India

Its few remaining central banking functions are taken over by the Reserve Bank leaving the State Bank to concentrate on its commercial business but with its duty to promote an active branching policy re-emphasized.

 

1956 Restrictions on the Regional Scope of German Credit

Institutions abolished The restrictions of the 1952 Act are abolished and nationwide branching is allowed in West Germany. East Germany is included after July 1990.

 

1956 Milton Friedman's Restatement of the Quantity Theory published

This triggers off the development of modern monetarism.

 

1956 US Bank Holding Company Act

Holding companies doing some limited banking are allowed to set up shop elsewhere. This act is used as a way of avoiding legal restrictions on branch banking.

 

1957 The Treaty of Rome establishes the European Economic Community

The original six members are Belgium, Holland, Luxembourg, France, Germany and Italy. The treaty also sets up the European Investment Bank to foster regionally-balanced growth by long term loans for infrastructural projects.

 

1957 Deutsche Bundesbank founded

The new central bank for the Federal Republic (West Germany) has its headquarters in Frankfurt. The 11 Länder or provinces retain their own subsidiary central banks, each with its own branch system.

 

1958 Rueff Report on the Financial Situation in France

The committee, chaired by Jaques Rueff, was established because of France's continuing inflation problem. It recommends reform of the currency.

 

1959 Radcliffe Report on the Working of the Monetary System

Owing to doubts about the effectiveness of bank rate policy the British government set up a committee of enquiry in 1957 which reports 2 years later. No official report in Britain (nor possibly any other country) has shown such scepticism about the idea of trying to control the economy by controlling the money supply, representing the zenith of Keynesianism and the nadir of Monetarism.

 

1959 Central Bank of Nigeria founded

Nigeria's Central Bank is created in advance of the country's independence in 1960.

 

c. 1960- The Population Explosion becomes a matter of increasing concern

The rapid increase in the world's population, especially in the Third World, hampers the attempts of the poorest nations to escape from their poverty and adds to inflationary pressures, which tend to be far worse in developing countries than industrial ones, as well as exacerbating environmental problems.

 

c. 1960 Primitive money largely superseded

By the 1960s primitive forms of money, e.g. cowrie shells and manillas, that were still in widespread circulation only a few decades earlier have virtually disappeared from use in most countries, with a few minor exceptions (e.g. the use of fei stones in Yap). The replacement of primitive by modern money, together with the move from subsistence to market economies, means that the lives of more people are directly affected by monetary policy.

 

1960 French currency reform

The main recommendation of the Rueff committee is carried out with the replacement of the old franc by a new heavy franc equivalent to 100 of the old.

 

1961 Organization for Economic Cooperation and Development founded

This is created by broadening the membership of the old Organization for European Economic Co-operation.

 

1961 Lagos Stock Exchange starts operations in Nigeria

Initially it deals in only 19 securities but by 1983 the total reaches 168 and the number of shareholders exceeds 700,000.

 

1962 West African Currency Board abolished

The new central banks in Ghana and Nigeria have taken over its functions.

 

1963 Repeal of the US Silver Purchase Act

The longevity of the Act, passed in 1934, was a sign of the lingering power of the silver lobby.

 

1965-1987 Rapid expansion of US banks abroad

From 13 US banks with a total of about 200 foreign branches the numbers increase to about 200 banks with around 800 branches. The growth is temporarily interrupted by the stock market crash of 1987.

 

1965-1967 Liberalization of the French financial markets

The rigid barriers between deposit and investment banking are broken down and opening new bank branches is made easier. Freedom is given for the leasing of capital goods on hire purchase and various other restrictions are removed.

 

c. 1965 Fei stone currency still in use in

Yap Despite the inroads of coins and banknotes the use of fei stones as currency in the central Pacific islands of Yap has still not completely disappeared by the mid-1960s. These stones, varying in size from saucers to millstones were quarried in Palau, 260 miles from Yap, or the even more distant Guam.

 

1967 Britain devalues the pound against the dollar, from $2.80 to $2.40

The prime minister Harold Wilson's pronouncement that the pound in your pocket is not devalued is rendered invalid by an increase in inflation.

 

1968 National Giro set up in Britain

Much later than most European countries, Britain sets up a postal giro system for money transfer. Because of the lateness of its creation the clearing banks and building societies have already captured a large part of the working class market that is one of its main targets.

 

1968 US balance of payments in deficit

For the first time since 1893 the US runs a deficit in its balance of trade.

 

1968 Development Bank of Singapore founded

It is created to provide long-term finance for industry and to support the government's chosen priority sectors.

 

1969-1983 Number of banking offices in India increases five-fold

The government's attempts to control rural moneylenders result in such a shortage of credit in many villages that agricultural output falls. The authorities react by stimulating the growth of cooperatives and the formation of bank branches in villages. The number of banking offices increases from 8,262 to 42,016.

 

1969 India nationalizes its 14 largest private banks

Later other private Indian banks are also nationalized but not foreign banks.

 

1969 International Monetary Fund creates Special Drawing Rights

These are to tide over countries with balance of payments difficulties. By this time all countries have dispensed with internal circulation of gold and, in most cases, do without gold backing for their currencies. The creation of SDRs makes international trade less dependent on the constraints of an almost fixed supply of gold or the vagaries of favourite currencies.

 

1970 Building society deposits overtake those of London clearing banks

The building societies' success in capturing a growing share of the rising total of personal savings is partly due to the huge growth in their branch network and partly due to the official belief that only banks create money and hence need to have their powers controlled.

 

1970 American banks in Britain overtake the London clearing banks

By the end of 1970 deposits in American banks in Britain have grown seventy-one times since 1959 and exceed those of the London clearing banks and are also 10 times those of the Scottish banks.

 

1970 US Bank Holding Company Amendment Act

This is intended to close the loophole allowing banks to evade restrictions on opening branches. However its effect is limited as subsidiaries are allowed to engage in certain banking activities.

 

1971 The Bretton Woods agreement breaks down

After a big drop in US gold reserves and a large increase in foreigners' claims on US dollars, the US suspends the convertibility of the dollar to gold. Although the IMF had been set up to promote exchange rate stability it adapts quickly to a world of floating exchange rates.

 

1971 Britain decimalises its currency

Instead of 12 pence in a shilling and 20 shillings in a pound, the pound is divided into 100 new pence.

 

1972 Britain leaves the EEC Snake and floats the pound

The EEC narrower margins scheme (the so-called snake) sets narrow limits for fluctuations in the values of members' currencies. After only 6 weeks Britain leaves and the pound floats freely against all other currencies for the next 18 years.

 

1973 Britain joins the European Economic Community

The European Economic Community is enlarged by the accession of Britain, Denmark and Ireland in January 1973.

 

1973 The US abandons the gold standard

As the system of fixed exchange rates starts to break down the US devalues the dollar twice and then gives up the attempt to fix its price in terms of gold.

 

1973-1974 Secondary banking crisis in Britain

Partly as a result of the Bank of England's adoption of a new policy in 1971 of increasing competition in the supply of credit a crisis develops in finance houses lending money for the purchase of consumer durables. A lifeboat operation prevents about 30 secondary banks from collapsing and at least another 30 receive other forms of assistance.

 

1974 OPEC oil shock

The price of oil is quadrupled transferring large sums which would have been spent, to OPEC countries whose powers of absorption are low and savings high. The rate of growth of world trade is greatly reduced as is the growth of the Japanese economy compared with its miracle years. Although western economies are badly hit the less developed countries fare worst of all.

 

1974 Eurodollar market crisis

The failure of the West German Bankhaus I.D. Herstatt precipitates an international crisis. Prompt co-operation by various international authorities averts widespread failure.

 

1976 Maine legalizes entry by banks from other states

This starts a widespread move in other states to legalize interstate banking. In most cases entry is restricted to banks from neighbouring states but some states allow entry from any part of the US.

 

1976 British government adopts monetarism

A financial crisis causes the socialist government to abandon Keynesian policies after inflation reaches over 25% and adopt monetarism instead.

 

1976 Friedrich Hayek calls for choice in currency and the denationalization of money

Hayek argues that the freedom of consumers to use whatever currency they choose would be a better guarantor of the value of money than government monopoly.

 

1978-1980 2nd OPEC oil price shock

OPEC doubles the price of oil between 1978 and 1980. This leads to an increase in interest rates, pushes industrial countries into a deep recession, and is a contributing factor in the Third World debt crisis of the 1980s and 1990s.

 

1978 US Humphrey-Hawkins or Full Employment and Balanced Growth

Act This seeks to combine Keynesian concern for full employment with monetarism: two incompatible bed-mates.

 

1978 Occidental Petroleum in $20 billion barter deal with Soviet Union

Barter is still widely used in world trade, particularly in deals involving communist countries and countries short of hard currency.

 

1979-1990 Thatcherism in Britain Margaret Thatcher greatly strengthens the commitment to monetarism. Manufacturing industry is badly affected but the financial sector is strengthened. The average rate of inflation is actually higher than during the Keynesian era from 1934-1976.

 

1979 European Monetary System created

This includes an exchange rate mechanism allowing narrow fluctuations of 2.25% (6% in the case of certain weak currencies) either side of an agreed central rate, a strengthening of the European Monetary Cooperation Fund, founded in 1973, by the deposit of 20% of each member's gold and dollar reserves, and the creation of the new European Currency Unit or Ecu, based on the weighted average of 10 European currencies.

 

1979 Britain abolishes all foreign exchange controls

Their removal strengthens the role of the City of London in the world's financial markets.

 

1979 Banking Act increases regulatory powers of the Bank of England

The purpose of the Act is to rectify weaknesses in the financial system revealed by the secondary banking crisis in 1973-1974.

1980 - ? Third World debt crisis

During the 1970s many developing countries borrow large sums, many of the loans being at variable rates from commercial banks which are very eager to lend money after their coffers are swollen by money from OPEC countries following the oil price hike in 1974. When interest rates rise in the industrial world in an effort to curb inflation, the debts of many developing countries start to rise beyond their capacity to repay them.

 

1980 US Depository Institutions Deregulation and Monetary Control Act

Some banks have been seeking to evade restrictions by leaving the Federal Reserve System. Under this act all deposit-taking institutions are to be subject to the Federal Reserve System's reserve requirements in a planned, seven year programme.

 

1980 Poland is unable to meet its debt obligations

A few members of the Soviet bloc, like many Third World countries, are affected by the developing international debt crisis. Poland's creditors agree to a rescheduling of its debt obligations but western bankers rapidly withdraw funds from other eastern European countries.

 

1982 Mexican debt crisis

A crisis caused by massive flight of capital from Mexico to the USA is tackled by loans from the US government, the New York Federal Reserve Bank, the IMF and the Bank for International Settlements. However the Mexican crisis triggers off a flight of capital from other heavy Latin American borrowers such as Argentina, Brazil and Venezuela.

 

1982 US Garn-St Germain Act

The powers of the Savings and Loan Associations (thrifts) are widened and as a result the thrifts begin to diversify their assets.

 

1984-1990 Rapid expansion of foreign banks in the US

The value of foreign banks' assets in the US increases from $80 billion to $209 billion.

 

1984 US Federal Appeals Court legalizes nationwide ATM networks

It had been argued that automatic teller machines (ATMs) were branches and therefore subject to laws restricting branch banking but the Court rejects this argument.

 

1985 Savings and Loan Association crisis starts

A run on thrifts in Ohio and Maryland leads to the insolvency of their state-chartered deposit insurance agencies.

 

1985 EEC agrees to a Single European Act

The aim is to create, by the end of 1992, a unified economic area in which goods, services, people and capital would be able to move freely.

 

1986 Federal Savings and Loan Insurance Corporation declared insolvent

Large losses by thrifts in Texas and elsewhere lead to the FSLIC's insolvency.

 

1986 British building societies get new banking powers

The Building Society Act gives them greater freedom, allowing them to become public limited companies if they wish. For some this is a first step towards becoming fully fledged banks.

 

1986 London Stock Exchange's Big Bang

The Stock Exchange is opened up to new competitors and at the same time a new system of automated operations is introduced. These changes coincide with a great boom.

 

1987 US Competitive Equality Banking Act

An injection of $10.8 billion under the terms of this act keeps the Federal Savings and Loan Insurance Corporation in existence.

 

1987 The Great Crash

A fall on Wall Street reaches record levels on Friday 16 October. The same evening a hurricane sweeps over southern England and on Black Monday the London Stock Exchange suffers a similar fall to the one on Wall Street. Fearing that this crash, like the Wall Street Crash of 1929, might cause a world-wide slump the world's monetary authorities increase the money supply.

 

1987 Japanese trade surplus reaches $87 billion

This is higher in absolute terms than that previously recorded by any country. Much of Japan's export earnings during the 1980s are used in the form of direct and portfolio investments abroad particularly in the United States but also in Britain as a gateway to the European Union.

 

1988-1990 Housing boom in Britain

Tax relief on mortgage interest, too many institutions lending too much credit, and the diversion of personal savings into the housing market after the Great Crash, all contribute to the boom.

 

1988 15 countries have debts greater than their GNP

They range from Mozambique with debts of 399.7% of its GNP to Mali whose debts are 100.8% of its GNP.

 

1989 US Financial Institutions Reform, Recovery and Enforcement Act

Following a worrying increase in bank failures on top of the shambles of the savings and loan institutions, a new regulatory system is introduced.

 

1989 Delors Report on Economic and Monetary Union

The report contains a three-stage plan for the establishment of a single currency for the European Community which will be administered by a European System of Central Banks.

 

1989 Collapse of communism in Eastern Europe Eastern

Europe faces the challenge of restructuring command economies along market lines, similar in some respects to the problems successfully tackled by West Germany in its reforms of 1948. The scale of the investment needed raises fears in developing countries that the needs of the Third World will be ignored.

 

1990 Reunification of East and West Germany

The East German Ostmark is replaced by the Deutschemark in the ratio of 1 DM for 2 OM for business and large personal holdings, and 1:1 for small personal holdings.

 

1990 Britain joins the European Exchange Rate Mechanism (ERM)

The decision to join is motivated, at least in part, by Britain's repeated failure to meet its money supply targets.

 

1990 - c.1998 Negative equity as Britain's housing boom ends

The collapse of the boom results in the phenomenon of negative equity as house prices fall below mortgage obligations, especially in London and the South East. This does have the effect of helping to curb inflation.

 

1990 Japanese banks are the largest in the world; US has none in the top 20

In 1970 the 10 largest banks in the world were all American. Legal restrictions on nationwide banking in the US have prevented its top banks from growing sufficiently to match the biggest in other countries. The 4 biggest banks are all Japanese, as are 6 of the top 10, 9 of the top 20, and 109 of the top 1,000.

 

1990 Japanese banks have the largest foreign holdings in London The assets of Japanese banks in London are higher than those of any foreign country and are around twice those of American banks.

 

1990 New Zealand introduces inflation targets

In pursuing an inflation target the monetary authorities are required to look at money in a very broad context. Over the next few years New Zealand's lead is followed by Canada (1991), UK (1992), Sweden, Finland, Spain and Mexico (1993).

 

1991 BCCI in world's biggest banking fraud

The Bank of England is forced to close the British branch of the Bank of Credit and Commerce International, thus exposing a banking fraud bigger than any in previous world history.

 

1991 The dissolution of the USSR

The former republics of the Soviet Union face similar challenges of reconstruction to those of those of the eastern European countries following the collapse of communism. Many subsequently introduce new currencies in the early years of independence.

 

1992 London maintains position as the world's leading foreign exchange centre

In April London' daily foreign exchange turnover is $300 billion compared with $192 billion for New York, and $128 billion for Tokyo. However the volume of financial transactions completely dwarfs turnover in world trade (in 1989 a report claimed the former was 25 times the latter) making exchange rates volatile.

 

1992 Maastricht Treaty on European Union signed

Among the provisions of the treaty is a target date of 1999 for the creation of a single currency.

 

1992 Britain leaves the European Exchange Rate Mechanism (ERM)

Massive international speculation, which hits different European currencies at various times, forces Britain to leave the ERM. Subsequently British interest rates are reduced substantially, helping to revive the economy. In retrospect Black Wednesday (16 September) is luckily seen to be "white".

 

1992 European single market comes into effect

By the end of 1992 the European Union officially has a single market with no barriers to capital, labour, goods or services. The inclusion of banking and financial services in the single market increases the pressure for a single currency.

 

1993 European Exchange Rate Mechanism reorganised because of speculation

After a number of currencies, especially the French franc, are the target of speculation like that which forced Britain's departure from the ERM the width of the official currency bands is increased greatly in order to preserve the system.

 

1993 Frankfurt is chosen as the site of the European Monetary Institute

This decision means that the future European Central Bank will also be sited there.

 

1993 Kyowa Credit and Anzen Credit rescued by Japanese Ministry of Finance

This is the first such rescue operation carried out by the Japanese central bank since 1927.

 

1994 Nippon Trust Bank saved by Mitsubishi Bank

Nippon Trust Bank is the latest victim of Japanese banking's mounting problem of bad debts but it is saved by being taken over by Mitsubishi Bank.

 

1994 Sumitomo Bank, the world's biggest, makes a loss

This is the first time in 50 years that any of the largest Japanese banks have declared a loss.

 

1995 Kobe earthquake

A devastating earthquake strikes Kobe in Japan on 17 January. Official funds are extended to the Bank of Kobe. The effect of the earthquake on the Nikkei 225 index of leading Japanese companies brings about the downfall of Barings Bank since Nick Leeson had risked enormous sums on the assumption that the index would not move materially from its normal range.

 

1995 Barings Bank fails

Barings, which nearly failed over 100 years previously in 1890, is brought down by the activities of the rogue trader, Nick Leeson, and taken over by Internationale Nederland Groupe.

 

1995 Daiwa Bank's New York branch loses $1.1 billion

The losses are caused by illegal deals by Toshihide Iguchi.

 

1995 By value over 90% of all transactions in the US are made electronically

The high costs of cheque and coin payments is a strong motivating factor in the development of electronic payment systems in the US and abroad.

 

1995 Mondex electronic cash card introduced

Trials of the Mondex smart card which is intended as a replacement for cash begin in Swindon in Britain.

 

1995 Mark Twain Bank adopts DigiCash

This is an anonymous form of digital money developed by the cryptographer David Chaum.

 

1997 David Bowie issues Bowie Bonds

The rock star issued bonds backed by the copyrights of his previously published songs - a remarkable example of securitization of intangible assets and a demonstration of the fungibility of money.

 

1999 European single currency is created On 1st January 1999

the Euro becomes the currency of 11 of the member states of the European Union (Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland). Therefore Europe enters the 3rd millennium with a new currency.

 

2002 New Euro coins and notes are introduced by the European Union

These replace the national coinages and banknotes of the countries which adopt the new single European currency.

 

2009-2017 Rise of Crypto-Currencies

Bitcoin, invented in 2009 by the pseudonymous Satoshi Nakamoto, became the gold standard--so to speak--for virtual currencies. Virtual currencies have no physical coinage. The appeal of virtual currency is it offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government issued currencies

 

c. 2014-2017 Cellphone apps featuring ways to pay online come into being.

This starts out with ApplepPay and SamsungPay. Then other companies start to jump onboard and create their own propreitary variations.