Money, Gold and the Gold Standard

1. Introduction

Croesus, King of Lydians (Asia Minor), has been the symbol of wealth and power since ancient times. 650 BC he implemented his idea of making money from gold by having coins minted which then became official currency.

A new “era” had begun. The new small and handy exchange objects soon spread throughout the cultural area of the then Greek world and the adjoining regions.

Money represents the joint measure of all economic transactions. On the one hand, it is the (interim) means of exchange, which simplifies the exchange of goods (trade) amongst one another and, on the other hand, it embodies the function of the maintaining of value as well as a calculation unit.

Then, as today, money is a generally accepted means of payment prescribed by the state. The Latin word for money is “pecunia” and was derived from “pecus” = cattle.

When browsing through the history books of mankind, different objects (such as incense, wheat, metals, salt, stones, furs, shells, cigarettes, alcohol, paper money, etc.) were used as money medium, depending on the era.

Gold and silver were particularly significant here. This was and is not coincidence, because they are an ideal exchange and value maintenance medium due to their properties.

Wheat is only a luxury item in the event of a famine, but may rot and is thus not durable.

A diamond is durable and beautiful to look at, but arbitrarily divisible and similar.

Gold can be divided and melted arbitrarily and is in limited supply and has been known for centuries.

The history of money can be broken down into several steps, which may be by topic very different, but cannot be held apart in terms of time. In general, we distinguish the following steps: Natural exchange (goods for goods), natural money (a good, e.g. wheat or shells, was defined as money), metal money(full-value coins made from precious metals, expert term face-value coins, inferior to uncovered coins, expert term secondary coins),

cash (covered paper money and coins), as well as bank money is also called bank money (out money today, which is based on the creation of credit).

2. A glance into the past

In old Mesopotamia (3000 to 2000 BC) there was a money system that could be called the predecessor of the gold standard.

To be precise, the name “wheat standard” would be more befitting, because the underlying was not gold but wheat. It was defined that 1 shekel = approx. 170 grains. The word “she” roughly means wheat and “kel” was a measure similar to a bushel.

(The word “shekel” still exists in Hebrew as the name for the Israeli currency.)

Already back then, the attempt was made to define the exchange good (= money) by specifying money to the weight of the underlying (wheat) per unit. However, this money system was unsuccessful because wheat is entirely unsuitable as the underlying for a money system. (rotting, difficult storage, differing harvests, etc.)

In ancient times pieces of metal were finally applied as sign or emblem. Initially, every lump of gold had different measurements and weights, meaning that the value determination of every individual piece had to be re-established when trading; this meant that finally the idea was born to standardise the dimensions and weight of the metal pieces – the coin was born.

The thus minted coins made of gold (and silver) represent a gold currency, because they embody the value of the money in the form of firmly defined gold or silver proportion.

The fact that countries with a gold currency existed longest in history is remarkable.

The Eastern Roman Empire existed after introducing the solidus by Constantine the Great in 324 for more than 12 centuries, the Republic of Venice for half a millennium after starting to mint the ducat in 1284.

When introducing a gold coin currency, Julius Caesar saved Rome from a demise which would have occurred 400 years earlier. Rome only collapsed when the successors to Caesar continuously reduced the gold content of the coins.

Gold or silver coins of that time did not only have many benefits, but also drawbacks. Some drawbacks were the weight, storage and transport – in particular of large amounts over long distances.

Also the many centuries of attempts to dilute and minimise the precious metal content of the coins, had an adverse effect on money stability.

After several attempts, the gold deposit standard was implemented in Europe in the 17th century. It could be regarded as the predecessor of the gold standard, although it involved silver and not gold.

The historic gold standard, which is generally referred to in the publications and vernacular, started its global triumphal procession from England in the 19th century.

Here, an exchange rate set by the state was agreed. The value printed on the paper money was deposited in gold. The paper money was re-convertible at any time back into gold, while the exchange rate was the same.

A gold standard, i.e. a partial cover of the state money by gold, no longer exists globally. Some countries do have gold reserves (e.g.: USA 8,146 tonnes, Germany 2,960 tones, Switzerland 2,590 tonnes decreasing, France 2,546 tonnes, etc.), but they are in no way related or proportional to the relevant national currency.

If must, however, be noted that countries such as Mexico or Russia announced in 2001 to issue official currency money with silver or gold coins. On the internet numerous private providers, such as eGold or eDinar, offer a gold-covered currency on the basis of a clearing account.

2.1. The two forms of the gold standard

In the late Middle Ages, gold coins were the currency with the highest nominal value. Goldsmiths were regarded as particularly suitable to check whether the coins were pure and genuine. In addition, they had stable cassettes, in which they could protect the gold securely from thieves; this meant that private gold was deposited for safety reasons. Goldsmiths issued a receipt for the coins and charged a small safekeeping fee. If the owner wanted his gold back, he redeemed the receipt.

Over time, it was regarded as safer and, in particular, far more convenient to pay open invoices simply with such receipts. This means that the receipts of the goldsmiths became pledges to pay for the promise. And as soon as someone accepted the receipt as payment, he implicitly concluded a purchase agreement with the goldsmith, who thus fulfilled the function of a bank.

Summary: This type of gold standard is the gold deposit standard, where gold or silver was saved in a central clearing office (collection office), which corresponded to a gold coverage of 100%. In turn, the businessmen were issued with a voucher (=money substitutes) in paper form. With this credit, further transactions could be made in terms of accounting or exchanged for other goods and services.

The gold deposit standard, although based on silver, was used by private clearing banks, which played a major role in Venice, Genoa, Nuremberg, Amsterdam and Hamburg from the 17th century. In the 19th century there were more than 30 private so-called “note banks”, which all issued vouchers. The Hamburg-based clearing bank (Hamburger Banco) had its own currency for more than 300 years, the so-called “Mark Banco”, which was always linked to the specific silver price and thus fully stable.

However, Hamburger Banco nearly collapsed in 1857 when the businessmen had to withdraw silver and the bank was devoided of its precious metal. The crisis was avoided through major silver supplies from Austria-Hungary. A couple of years later, the private bank was closed by the state.

(It must be noted that this currency was simply a calculation currency which was never minted.

Mark was an old German weight measure, approx. half a pound).

A slightly different variant was the Banque Royale in France, founded in 1716 by John Law, which went down in history as the first state central bank. Law promised to cover bank notes with gold. The gold owners (mainly noble men) gave their gold to the bank and received shares in Banque Royale in return. Compared to interest-free gold, the shares promised a dividend. The gold served as the basis of trust for the issue of bank notes (livres). The notes were issued as credit to the state.

A couple of years later, John Law founded the Mississippi Compagnie, whose shares were sold for livres. Their business purposes was to promote the extraction of gold in Louisiana, which was a French colony at the time. In reality, the continuously increasing equity capital was diverted to the state treasury for consumption purposes. The more notes John Law’s central bank brought into circulation through state loans, the higher the share price of John Law’s Compagnie rose. As all bank notes were used for state consumption, they did not have any real value, except for the original gold amount.

In 1720 the first run on Banque Royale occurred. John Law was forced to undertake exchange control. He banned the private ownership of gold and jewellery in order to increase the gold stock of the bank. But the bank nevertheless went under.

The first central bank with strict rules for the gold cover of the bank notes in circulation was the Bank of England. Established already in 1694, it was forced to compete with private issue bank for the issuing of loans to the British state in the first 150 years of its existence.

Its main competitor was the South Sea Company, which in 1720 redirected the capital flowing out of the Mississippi Compagnie into its own shares. The money was partly invested into some opaque projects and partly in state consumption. The South Sea Company turned out to be as equally dubious as the company on the Mississippi, and its share prices and the trust in pound notes ended in a South Sea bubble.

The Bank of England survived the competition. The issuing of notes was subjected to a strict limit in 1844 as a result of the negative experiences, meaning that notes for a maximum of 14 million pounds were allowed to be uncovered. (Peel’s Bank Act). This trust contingent was covered by state securities, but did not have gold as the underlying. Every additional pound could only be issued if purchasing gold.

This resulted in the classic gold standard as the first internationally valid currency system with paper money on a gold basis, with which issuing banks were allowed to issue more vouchers (money) than they held in stock in the form of gold (=partial gold cover).

A 100% cover with gold, as with the gold deposit standard, no longer existed, but a minimum cover was introduced. Gold hence only played the role of a regulative, because it was not possible to lend more than permitted by the cover threshold (“golden break”). We will come back to this later.

When fixing the parity, Sir Isaac Newton made a mistake in 1707 (the gold-silver exchange rate was wrongly calculated), with the result that gold and not silver became the standard.

At the start of 1800, Britain was regarded as the world’s leading trade nation and thus the classic gold standard became the global system in the following years, after a short interruption.

Due to the war between Britain and France, which erupted in 1802, the Bank von England had to suspend the gold redemption of its bank notes. The gold prices subsequently rose strongly. (On the real reasons of this process, the banker David Ricardo informed the public in 1810/11 in his famous thesis On the High Price of Bullion.) After the end of the war in 1815, Britain reverted to the gold standard.

Other countries (France, Belgium, Italy and Switzerland) founded on 23.12.1865 in Paris a common coin association, which went down in history as the Latin Monetary Union. 3 years later (in 1868), Greece joined the association. Other countries, such as Austria, Finland, several small European states, some states in Central and South America, the colonies of contracting states, the German Empire (officially in 1873) and other states assumed the rules and regulations of the Latin Monetary Union.

The objective of the monetary union was to create a common money exchange as well as eliminate exchange rate fluctuations in order to establish in the long term a global currency covered with precious metal on the basis of the franc.

An outstanding figure in the 1870s was Britain’s Prime Minister Disraeli (in office: 1868 and 1874-1880). It is more or less thanks to him and his connections to the Rothschild family that the international gold standard was established and London became the centre of the international currency system.

It must also be mentioned that the Rothschilds were the world’s leading gold dealers.

Another important factor for the success of the gold standard were Britain’s domestic policies. The link of monetary and employment policies was little known, the influence of trade unions and socialist parties insignificant. National bankers were able to implement their monetary policy in a strong currency and low inflation without any consideration.

The strict policy of a stable currency gave national banks a lot of trustworthiness. Therefore, they had the opportunity to influence the behaviour of the investors – which was particularly beneficial in times of crisis.

Every currency was – in line with the British model – simply a national name for a certain amount of gold, while the gold price (per troy ounce) was specified by the intervention policy of the Bank of England at its London gold market. It remained (unchanged) for nearly a century at 3 pounds 17 shillings and 9 pence.

(parity rate: 1 kg of gold = £ 136.57 = M 2,790 or £1 = M 20.43).

This resulted in fixed, unchangeable exchange rates of the currencies amongst one another.

This means that there was a global currency, gold, which was circulated as different paper money throughout the world, but interlinked through fixed exchange rates.

With a gold content of the pound of 9 grams of gold and of the thaler of 3 grams of gold, everybody knew that 3 thalers = 1 pound and 1 thaler = 1/3 pound remained such, because the monetary laws could be changed by parliaments but not by markets.

It must again be pointed out here that not money but gold is the measure.

Money is measured by gold and not the other way round. (Money was always devalued compared to gold, an increasing amount of money units had to be handed over per gram of gold.)

The gold standard was until 1914 a guarantor for international stability, stable prices and full employment for nearly a century.

The gold standard’s stability was based on the strict compliance with national laws and cover provisions and the trust of the world of finance in the reliability of the system.

This is all the more remarkable as there were no international regulatory and monitoring authorities (IMF, World Bank, etc.).

(A couple of interesting calculation examples regarding gold then and today can be provided by Dr Timmermann.)

In addition, it should be mentioned here that employment rose and unemployment decreased during the era of the gold standard. Unfortunately, as the images prove, this fact is often presented differently.

How to Start Collecting Coins For Investment Or Profit

Coin collecting can be both educational and informative. Coin collecting, called numismatics, has become one of the most rewarding and popular hobbies in the world today. Over time as you begin to add more coins to your collection, you will be pleasantly surprised at the hours of enjoyment your collection will bring. Coin collecting is a very old hobby dating back thousands of years, Julius Caesar was a coin collector. Coin collecting can be very cheap, because many coins from the last century and from very late Roman times were made in large amounts, so there are lots of them to go around.

Coin collecting has become a very popular hobby over the years, and people collect coins for many reasons. Some people collect coins for their historical value, others collect them for their potential future value, some collect coins from a particular country, and some people even collect coins that are still in circulation.

Gold coins can tone over time, if they do so they usually do in various shades of red while some ancient copper coins, particularly Roman sestertii, take on a lovely green patina. On no account try to remove this as the coin would certainly be ruined during the process. A nice coin to start your collection of is the Gold Austrian 1 Ducat. At .9860 purity, the original Austrian 1 Ducat is historically one of the highest purity gold coins to be circulated..

Collectors have produced systems to describe the overall state of coins. One older classification describes a coin as being inside a scope starting from “poor” to “uncirculated”. Collectors have created systems to describe the overall condition of coins. One older system describes a coin as falling within a range from “poor” to “uncirculated”.

Valuations are included for both certified and non-certified coins, in up to 200 different grades. Research your coins with over 4000 links to coin variety information, as well as the ability to add unlimited file or URL attachments to your records and built-in links to hundreds of informational coin collecting sites. Valuations are included for many different grades, as well as the ability to add unlimited file or .

Invest in a good coin album or folder. Investors acquire this tangible asset for protection and have seen it rise over 180% in 5 years. One of the most popular ways to buy gold bullion is to buy Gold Maple Leaf coins.

Metal and water do not go well together! Almost everyone intuitively knows to keep their coins from getting wet but many collectors do not realize that even the moisture present in the air (humidity) can be enough to cause damage. An airtight container to house your coins in is a must to keep them in optimal condition.

Office Professional Schools – Training and Career Opportunities

Opportunities for enrollment in an accredited school or college are available for you to receive the education needed to become an office professional. You can seek the desired employment once you have obtained a higher education. Training and career opportunities are offered through office professional schools at various levels of training as well as specialized areas of study. Enrollment will allow you to receive the skills and knowledge that you will need to enter the workforce and pursue a successful career. Once the decision is made to receive training in this field you can begin by learning more about the opportunities available to you.

Accredited schools and colleges are designed to offer you the training that is necessary for the career you dream of. You can choose from a variety of programs when looking to enroll in a higher education program. Training to become an office professional is available at various levels which can include:

Associate Degrees
Bachelor Degrees
Master Degrees
Training will vary in length but can consist of spending several months to six years on studies and training. Enrollment will allow you to receive the career preparation that is needed for the specific area you wish to enter into. You can select an area of study and level of education and begin training today.

Specialized areas of study can allow you to choose the career filed that best suits your individual needs and goals. Studies can be completed in areas such as office professional and secretarial training. Accredited schools and colleges that offer this type of training can help you to enter into the career of your dreams by providing a variety of options. Career possibilities include working as a Certified Administrative Professional (CAP), office manager, Certified Professional Secretary (CPS), and more. Once you have decided on the specialized area of study and occupation that you wish to obtain you can begin completing coursework.

Topics that will be covered in an office professional or secretarial training program will vary based on the level of education and the occupation that is desired. You can look forward to covering different subjects that relate to the specific career you wish to enter. Accredited programs are able to help you learn bookkeeping, Excel, information technology, PowerPoint, English, Outlook, keyboarding, and much more. Once an education in these areas is obtained, you can look forward to seeking employment. Opportunities exist in a variety of places allowing you to find work in business, health care, education, and many other facilities and areas.

Accredited office professional training programs can help give you the best education possible. Full accreditation is awarded by agencies like the Accrediting Council for Independent Colleges and Schools ( ) to programs that offer the quality education that you need and deserve. Once you have made the decision to pursue a career in this field you can learn more by researching programs and requesting more information about the career of your choice. Enroll today to begin the path to the exciting new career you long for.

DISCLAIMER: Above is a GENERIC OUTLINE and may or may not d

Online Office Professional Training

Businesses, companies, and organizations all need office professionals to make things inside the office run smoothly. The men and women who make up this industry perform a number of duties that require training in a variety of areas to help promote and produce a healthy working environment. Accredited online colleges and universities offer training in the office industry.

There are a number of education opportunities online that fall under the category of office professional. Prospective students have the option to gain specialized training in a multitude of areas that include becoming a secretary, office administrator, administrative assistant, and more. Office professionals are often overlooked and not appreciated. The individuals who make up the industry are the behind-the-scenes workers who make the office run at its best. Some basic work duties include:

staff management
equipment maintenance
ordering of supplies
writing progress reports
and more. The office professional is responsible for the overall assistance and preparation work that goes into the businesses daily activities.

Let’s look at specific options available to students for online study. Online secretarial education programs are available from earning a diploma to a degree in the field. Students who are able to dedicate more time to schooling will find that an associate’s degree or a bachelor’s degree in secretarial training might be the right fit for them and their career goals.

A typical associate’s degree program will take approximately one to two years to complete.
To gain a more in depth understanding of the profession students can earn a bachelor’s degree.
Dedicated individuals who want to reach the top of the profession can enroll in a master’s program that will provide the skills and knowledge to be an executive secretary.
Basic computer programs will be taught so that students can apply the skills gained directly to their job within the industry.

Office administration is another aspect of the profession that can have students earning an education online. Office administrators have a wider set of responsibilities within the office. These professionals do secretarial work and are involved in training employees, implementing performance reviews on employees, and working with the businesses computer system to carry out a variety of tasks within the workplace. Depending on the level of program a diploma in this field can take just a few months. Degree programs will range from two to four years depending on whether a student enrolls in an associate’s degree program or a bachelor’s.

Students can also enroll in an administrative assistant program. A program like this can be set up over eleven instruction sets with length of study depending on the student. The instructional sets will cover numerous skills that include:

interpersonal communication skills
stress management
office technologies
records management
office finances
and more. This managerial secretary program will successfully prepare students to enter the profession.

Don’t let your skills with computers, writing, management, and professionalism go to waste. Search out accredited online colleges and universities that offer a quality degree program that fits your passion, schedule, and career goals. Full accreditation is provided to programs that offer a quality education. Agencies like the Accrediting Commission of Career Schools and Colleges ( can provide educational programs with full accreditation. Begin a fulfilling career tomorrow by starting your education today.

DISCLAIMER: Above is a GENERIC OUTLINE and may or may not depict precise methods, courses and/or focuses related to ANY ONE specific school(s) that may or may not be advertised at

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