These historical events illustrate the fact that in finance small is seldom beautiful. The family managed to achieve the transfiguration of finance and make the transition from financial success to hereditary status and power. While illustrating the potential weakness of moneylenders with the help of certain examples, the chapter shows their potential power by presenting an example of the rise of the Medici, considered one of the first European bankers.

This term refers to the people offering loans at tremendously high-interest rates. The development of the network of moneylenders caused the evolvement of loan sharks. Its history dates back to the early thirteenth century and originated in Italy, where the practice of lending money for interest started though was considered a sin. The next part of the chapter helps to discover the origins of the modern system of loans. The foundation of borrowing and lending systems in the ancient world led to the development of credit concepts we use nowadays. The current prevalence of paper money proves the fact the main aim of the money is to provide a promise to pay. These historical events illustrate the fact that the value of the precious metal is not absolute.įormation of money concepts based on sources other than precious metals began in Mesopotamia, where clay tokens were used instead of coins. However, the abundance of silver became a resource curse.

The discovery of a mountain of solid silver-ore has made the Spanish crown “rich beyond the dreams of avarice”. The conquest of the Inca Empire described as an example of a moneyless society appreciating precious metals for their aesthetic qualities let the Europeans find a new source of precious metal. After the region faced the lack of silver, certain attempts, including crusading, were taken to deal with the crisis.

The ancient Mediterranean appears to be the place where the monetary system finds its origins. The history of using precious metal as a medium of exchange dates back to Ancient Greece times. The first part of the chapter presents information about the historical backgrounds of money ascent.

Ferguson the ascent of money