History of Cash

History of Cash

The use of cast-metal pieces as a medium of exchange is very ancient and probably developed out of the use in commerce of ordinary ingots of bronze and other metals that possessed an intrinsic value. Until the development of bills of exchange in medieval Europe and paper currency in medieval China, metal coins were the only such medium. Despite their diminished use in most commercial transactions, coins are still indispensable to most modern economies.

Money and Cash Money is a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed; as currency, it circulates anonymously from person to person and country to country, thus facilitating trade, and it is the principal measure of wealth. The subject of money has fascinated people from the time of Aristotle to the present day. The piece of paper labelled 1 dollar, 10 euros, 100 yuan or 1,000 yen is little different, as paper, from a piece of the same size torn from a newspaper or magazine, yet it will enable its bearer to command some measure of food, drink, clothing, and the remaining goods of life while the other is fit only to light the fire. Whence the difference? The answer is that modern money is a social contrivance. People accept money as such because they know that others will. This common knowledge makes the pieces of paper valuable because everyone thinks they are, and everyone thinks they are because in his or her experience money has always been accepted in exchange for valuable goods, assets, or services. Originally meaning a box, the word cash, derived from the French casse (a box or chest), is now commonly applied to ready money or coins and banknotes. Hence “to cash” means to convert cheques, bills, drafts and securities into coins and banknotes. Whereas the term currency has been used variously to designate a part or the whole of the circulating medium or money of a country.

Paper Currency

The use of paper as a form of currency dates back to ancient China and possibly Carthage BC. The first issue of banknotes as we know them today began with the foundation of the Bank of England in July 1694. In Australia during the early days of the Colony of New South Wales, there was a great scarcity of money as the First Fleet did not bring any money with it. Various methods were adopted to overcome this lack of currency. Many Colonists resorted to barter, the exchange of goods for other goods, whilst others resorted to IOUs. The earliest notes were store receipts and paymaster’s bills issued by the military authorities for produce or labour. These receipts passed freely from hand to hand, but were supposed to be presented to the Commissary General every quarter for payment — although frequently they remained in circulation for much longer periods. Often the private IOUs and promissory notes proved worthless, as many were issued by dishonest people and those issued by honest merchants were subject to forgery. In 1800, Governor King attempted to regulate matters by ordering that no handwritten promissory notes were to be issued and that printed promissory notes were to be used. Unfortunately, the handwritten notes continued to be issued during Governor Macquarie’s time. In 1810, Macquarie issued a proclamation outlawing the issuing of promissory notes of five pounds or less. However the situation did not improve until the arrival of an adequate supply of coinage and improved facilities for printing notes. Some of the first notes issued were the Police Fund Notes, around 1816. Shortly after these were issued the Bank of New South Wales was established, and commenced to issue Bank notes. Subsequently other banks were established, and they too issued notes. Banks continued to issue notes until there was a major depression in the early 1890s. This caused 54 of the 64 banks operating to close, many never to re-open, and the Queensland and New South Wales State Governments were forced to issue State Government Treasury Notes. Federation in 1901 gave the Commonwealth Government the right to legislate for an Australian note issue, but it was not until 1910 that the first Australian note was issued. At the same time a tax of 10% on private bank notes was introduced, and this effectively stopped the circulation of the private bank notes. The first notes were temporary issues, as the Commonwealth Treasury did not have the ability or time to produce their own notes. Unissued Bank Notes were purchased from the banks, overprinted and then issued. These overprinted or “super scribed” notes were withdrawn when the first Australian notes were printed and issued from 1913 onwards. The original overprinted notes were payable in gold coin. Denominations of 10 shillings, 1, 5, 10, 20, 50 and 100 pounds circulated in the economy, although 1000 pound notes were used by the banks for inter-bank settlements. During the Second World War the 50 and 100 pound notes were withdrawn. On 7 April 1963 the Treasurer announced the change to a decimal currency. Over 1,000 names for the new currency were considered before Sir Robert Menzies, showing loyalty to the Crown, decided it should be called a “Royal,” but public opinion was so strong against the “Royal,” that it was changed in favour of “Dollar.” On 14 February 1966 four denominations were issued: 1, 2, 10 and 20 dollars. Subsequently 5, 50 and 100 dollar notes were issued, and the 1 and 2 dollar notes were replaced by coinage.

Source APCA 2014