Episode 014: When Money Fails
MONEY AND ECONOMICS (HISTORY). Recorded February 8, 2023. Published February 10, 2023.
Throughout history, too little money has harmed entire populations, and it is generally the poor and especially urban poor who suffer the most.
In Episode 14, Jeff and Rasheed show that a shortage can be so catastrophic that the private sector will often intervene to meet the needs of the desperate citizenry.
The consequences of not having enough money in the system include recession, deflation, revolution or re-enslavement. So dire are the alternatives, that private solutions will often risk severe penalties, including death, by being boiled in oil.
One of the best examples of private money filling a key need was the rise of copper tokens issued by mining companies and others in late 18th century Britain. As late as 1812, tokens were circulating at five to ten times the rate of official currency. One issuer minted three hundred tons, at 600+ coins per minute.
Without private intervention the coin shortage would have been catastrophic for the industrial revolution, where former agricultural “smallholders” were forced from their lands, entered new workplaces and needed to be paid in small amount per week, and where they in turn need to buy provisions on an almost daily basis.
Listen in for more of the story.
For more on this subject read:
Chambers, D., Saleuddin, R. and Mcmahon, C., 2019. Alternative finance: a historical perspective.
Kuroda, A., 2005. Copper-coins chosen and silver differentiated.
Lurvink, K., 2014. Strapped for cash: Non-cash payments on Louisiana cotton plantations, 1865–1908.
Selgin, G., 2008. Good money: Birmingham button makers, the Royal Mint, and the beginnings of modern coinage, 1775–1821
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