Capitalism Connected: A History of tTrade, Money and Industry.
The ascent of money and industry is about the history of finance in the world. It revolves around warfare, diplomatic issues, and globalization. The Ascent of money and industry was experienced mainly in the major world economies. England was in the frontline in witnessing exponential growth in its industries. The country was at an advantage due to its position as a major colonizer. England dominated major economies including the United States in the early years of industrialization. England obtained most of the raw materials it used in its industries from other countries. This led to propulsion in the English industries while industrialization in other places was significantly slow.
According to the Professor Fergusson, money increases the likelihood of human action or reaction to some issues (Fergusson 2009 27). The history of finance goes hand in hand with the emergence of money. In ancient America, people participated in barter trade as a means of exchange. Bartering turned out to be a problem as some traders got a bad deal when exchanging their products. Barter trade needed the farmers to be in a trading coincident. A farmer dealing in vegetables coincidentally exchanged them with other traders dealing in grains.
There need to come up with a standardized medium of exchange that would be satisfactory to all traders. The use of coinage was later established to be used as a medium of exchange. Bronze and silver were the first metals to be used in money coinage. A huge number of slaves were used to mine the silver and bronze that was used in manufacturing the money. The silver was mainly transported by soldiers from one empire to the next. After the discovery of touchstone, it became easy to identify and measure the value of money.
Great improvements came by as the touchstone easily determined the metal content in the coin. The metal coins carried their financial value in them. The existence of gold silver and bronze in the financial markets brought about confusion. Traders valued gold coins than the silver coins. Asians got into the trading scene and made a good impression of the prevailing trade situation. The Asians preferred the use of silver in trading rather than gold. The use of paper money was introduced immediately afterwards. Paper money was introduced as a receipt for the storage of precious metals such gold in financial institutions. This idea evolved into paper currency that has since been used the world over for business transactions. The traders wanted to reduce the bulk that would be caused by carrying large volumes of metals when travelling.
The merchants usually move from one business sector to the next. Paper money has been used with the coins presenting different values (Chaurasia 2012 37). Paper money is valued more than coins. The professor states that money runs many aspects in human lives. In view of the recent economic slowdown and recession, Professor Fergusson refers to the situation as the dissent of money.
Humans tend to be in a celebratory mood when the economy is going on well. There is a sense of widespread depression during the times that there is an economic slump. The financial state of the world resonates concurrently with human feeling. Economic gains and slumps are as a result of human feeling. This activity is unpredictable as it affects human life and every aspect of it.
There is a need to understand the history of finance and the factors that drive financial systems in the world. In the recent past, most governments have been forced to step in to rescue most financial institutions that made wrong moves in making financial decisions. This is due to the dynamic nature of the World economy that has brought about great changes in the financial markets (Fergusson 66). Private firms and financial institutions such as banks have had to work with state policies as a result of getting state help. This would lead to more strict rules than before and increase in operating rates.
The market works with greater regulation than before especially when dealing with securities and stock exchange. There is an increase in credit Boom orchestrated by Asian intervention in the savings financial sector. Many scholars have been against regulation of the financial markets. Over the recent past, some flaws in the financial system have been linked to the strict measures and attempts to regulate the financial system. Americans waited until the depression became a crisis to rescue their financial institutions.
This reduction lasted for a few months in the summer of 2007 that caused a major crisis in the World. The affected sectors were the banking industry and the job industry. There were significant job cuts that led to widespread panic across the Nation as many firms were forced to cut on their expenses. The economic recession was brought about by several factors. Inflation was the main reason the economy went into a recession. The prices of essential goods and services significantly rose up for a long time. Inflation is brought about some reasons that include the following: The increase in national debt enhanced the rate of inflation in different economic sectors.
The GDP reduced significantly as the number of the unemployed continued to rise. Many workers were laid off to enable the companies to support their operations across the country. The economy’s failure to remain stable during the slowdown is a strong indicator of financial blunders. Financial institutions were also hit hard by the economic slowdown. Some banks needed a bailout to be able to get back to business (Fergusson 2009 87). The government came to the rescue of the financial institutions and gained some control in their operations.
Many currencies lost their values against major currencies during the financial crisis. This occurrence turns out to be a threat to the economies of many nations. Financial panics are easily resolved by lenders of last resort (Postan 1966 89). These are local institutions acting as the financial custodians of many countries. Many emerging markets have been subjected to the financial crisis. These crises occur when the prices of property and other assets drops.
When a bank panics and falls in its operations the situation can be referred to as an internal drain. These drains would happen in such a way that the banks are unable to liquidate their deposits (Fergusson 89). When a currency of a country faces a crisis, this situation becomes an external drain. People holding their currencies in such situations tend to convert them into foreign currencies or gold. Fergusson states that the peoples' savings are insured by the government in case there are eventualities.
In conclusion, significant industrialization was witnessed in England because had its military muscle and colonized others. They had easy access to raw materials and labor that enabled them to build their industries. The ascent of money was orchestrated by the difficulty faced by bartering as it was not easy to quantify products. Significant industrial and financial growth was witnessed in countries that had countries. A trickle down effect was not felt till the colonies were finally liberated. This explains why major economies are capitalistic in nature.