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Rory Brown, Managing Partner of Nicklaus Brown and Co: From Lydian Coins to Chinese Bank Notes - History

Rory Brown, Managing Partner of Nicklaus Brown and Co: From Lydian Coins to Chinese Bank Notes - History


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Lydian staters were the world's first true coins, but there was a second major currency innovation that happened 4,000 miles away. Lydia may have invented modern coinage, but we have the Chinese to thank for paper money.

It Started With a Block
The Chinese art of block printing was the genesis for paper money. Around the ninth century, during the Tang dynasty, government officials began using block-printed paper certificates bearing specific currency amount to pay local merchants. This was in answer to the difficulties faced in transporting large amounts of coinage over the vast distances Chinese merchants traveled.

Merchants could exchange these certificates, colloquially called "flying cash" in honor of their propensity to blow away, for hard currency on-demand in the capital. Because these certificates could themselves be transferred, they became a de facto currency, with their face value guaranteed by the coins they could be exchanged for. However, flying cash was never intended to be an official currency, and its circulation wasn't large enough to support widespread use.

True Paper Money is Born
Flying cash represented the first time in human history that currency certificates were used as a medium of exchange, but it wasn't until 200 years later that China created the first paper currency.

Near the very end of the first millennium, a collection of wealthy Chinese merchants began using banks to print paper certificates that, like flying cash, were transferable into hard currency at the issuing bank's location. These currency certificates enjoyed wide distribution and created an interest in paper money among the population.

In 1023 the Chinese government required all private banknotes to be withdrawn, proclaiming that only government-printed bills would be legal tender. They then made two decisions that created paper money as we know it today (or rather knew it before the world abandoned the gold standard in exchange for FIAT currency).

The government made certain that every paper bill printed was backed up by hard currency. They also announced that paper bills and coins were directly transferable by the public. As a result, paper currency was just as valuable as the gold and silver coins it could be exchanged for, and paper money was born.

From China to the Rest of the World
Amazingly, even with Marco Polo's visits to China in 1271, where he was so impressed with paper money that he wrote extensively about it, Europe didn't begin using paper currency until the 17th century. The coinage system the Lydian's created and the rest of the world adopted was perfectly adequate for their needs. But once coins gave way to paper bills, the world never looked back.

About Rory Brown: Mr. Rory Brown is a Managing Partner of Nicklaus Brown & Co., the Chairman of Goods & Services, Nearshore Technology Company, and a member of the board of directors of Desano. He is passionate about delving into the history of money and how our modern currency has evolved into what it is today. In his spare time, he writes about the history of the Lydians - the first civilization to use gold and silver coinage.

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Rory Brown, Managing Partner of Nicklaus Brown & Co., On The Lydians and Other Historical Currencies

Since the dawn of civilization, humans have used trade to procure needed items. Barter is the oldest trading system, but money, in various forms, quickly eclipsed barter as the preferred means of trade. Though true coinage was invented in the middle of the seventh century BCE, with the introduction of the Lydian stater, money is much older, and below Rory Brown traces a path from cows straight to Bitcoins.


The World’s First True Coinage

The Lydian Stater was first minted by King Alyattes around 600 BC. These coins were the world’s first to be minted in specific, known denominations, using standardized measures of electrum, a precious metal which is a natural alloy of gold and silver. These coins also bore an official government-backed insignia, which proved their provenance and helped vouch for their value.

These coins became the first truly international currency, as neighboring civilizations, including the Persians, and the Aegean Greeks used and accepted Staters due to their relatively stable value. If a merchant saw the Lydian Lion insignia on a Stater, they knew they wouldn’t have to measure the coin and test the coin’s metallurgical quality. This significantly sped up transactions.


Rory Brown, Lydian Founder, Discusses How to Buy And Keep Gold Coins

Gold coins have been a popular choice for personal investing for centuries. In today’s financial environment, gold coins continue to be a key part of many investment portfolios. However, buying and maintaining gold coins as an investment asset is not as simple as it may seem. In this article, Rory Brown, Lydian founder outlines some principles in locating reputable dealers and storing and maintaining investment coins.

Where To Buy Gold Coins

There are two basic and reliable resources for purchasing gold coins: local shops and online sellers.

Shopping with a local dealer allows you to take immediate possession of your coins without shipping or insurance expenses. Working with a local dealer also generally provides a higher level of privacy. Local dealers usually have higher premiums than online sellers. Premiums are the overhead and profit charges that a dealer places on purchases. Depending on your location, you may also find that local dealers have more limited coin choices than online dealers.

Online dealers generally provide a lower total cost than local shops, even with shipping and insurance included. You will also not get your coins delivered until payment is complete, and you will not get to actually inspect your coins until they are paid for and delivered.

The most important factor for choosing any dealer is their reputation in the marketplace. Ask other local investors you may know and look at a dealer’s rating with the Better Business Bureau and any other available rating agencies. Look for a dealer with excellent customer service and completely transparent pricing including all premiums, shipping, insurance, and any extras. Reputable sellers should have industry certifications and will be able to provide full information on the provenance of the coins they sell. Beginning investors in gold coins will likely benefit from making an initial small purchase with a quality local dealer in order to get comfortable with the process before shopping among all sellers for the best combination of price and service.

Storing Gold Coins

There are generally three options for storing investment coins : keep them at home, use a bank safety deposit box, or use a third-party storage firm.

Home storage requires a capital investment in some type of safe and installing the safe. Insuring gold coins for home storage can be expensive and difficult to obtain. You are also directly responsible for preventing or mitigating loss from theft, fire, flooding, or other disasters. On the plus side, you know that you have direct access to your coins at all times.

Many people prefer bank safety deposit boxes for their coins. They are generally inexpensive. The major drawback to safety deposit box storage is access, as you are limited to banking hours and must travel to the bank to access the box. Banks generally do not insure the contents of safety deposit boxes as deposits are insured.

Depositing gold coins with a third-party depository is becoming a more popular option, especially for investors with large quantities of coins. Reputable depositories offer high liquidity, as investors can often sell coins with no transportation costs and can receive cash payments virtually immediately. Investors should be very cautious to investigate the insurance coverage offered by a depository and the company’s reputation.

About Rory Brown

Rory Brown currently serves as a Managing Partner of Nicklaus Brown & Co. and was a co-founder of VirtualBank in 2000. VirtualBank began as an early adapter of technology creating platforms and interfaces for customers of financial institutions to access financial accounts and records through the internet. VirtualBank has grown to be a multibillion-dollar company, named “Best Online Bank” by Money Magazine. Rory Brown is also the co-founder of Lydian, which garnered him recognition by Ernst & Young as Financial Service Entrepreneur of the Year. Mr. Brown received a Master of Business Administration from the University of Charleston and is a Certified Public Accountant. He has focused on financial technology and investment management for over 30 years. The app is designed to connect users with the best virtual banks around the world, providing comparative information on the best available rates for all types of banking. In his spare time, Mr. Brown studies the history of the Lydians , the first people to use gold and silver coinage.


Precision

Early staters mint with electrum, the same metallic alloy than other coins of the day used. Electrum is a naturally-occurring mix of gold and silver. This mixture offers coins the inherent value of precious metals paired with the durability of an alloy. However, because the exact proportions of the constituent metals weren’t knowable, it was never fully clear what a given coin was inherently worth.

Croesus, the last and most famous Lydian king, realized that using pure metals was a more reliable means of matching inherent value to ascribed value. He switched to a coinage system that used pure gold and pure silver coins. Using pure metals and exact weights, the value was easy to establish.


Precision

Early staters mint with electrum, the identical metallic alloy than different cash of the day used. Electrum is a naturally-occurring mixture of gold and silver. This combination gives cash the inherent worth of valuable metals paired with the sturdiness of an alloy. Nonetheless, as a result of the precise proportions of the constituent metals weren’t knowable, it was by no means totally clear what a given coin was inherently value.

Croesus, the final and most well-known Lydian king, realized that utilizing pure metals was a extra dependable technique of matching inherent worth to ascribed worth. He switched to a coinage system that used pure gold and pure silver cash. Utilizing pure metals and precise weights, the worth was straightforward to determine.


Early trading was not easy. The barter system, while advantageous in many ways, was not very portable. First, it was difficult for people to transport. Also, it was necessary to find a trade partner who was interested in what you had to barter, and that’s just the tip of the iceberg.

For instance, there was no way to determine the tradable value of certain things. Animals were prone to disease and sometimes did not produce a hoped-for result. Crops were perishable and invited rodents, so most offered only limited value and certainly did not endure. Plus, these items were often large and difficult to bring from place to place.

Early attempts at developing currency

There were many attempts to establish currency before coins were introduced.

Cowry shells, for instance, were an innovative idea that worked well in certain parts of the world. The shells were of various sizes and colours, so they were easily sortable into categories and could be carried without trouble, and they could not be counterfeited. Cowry shells were accepted as payment in many parts of Asia and Africa until the 20 th century.

However, there were no real controls and no standardized value. For instance, the further away from the production zone, the more value a cowry had. In scarcity, a few shells could purchase a slave or a cow, while in the Maldives, where they were harvested, the equivalent value might be several hundred thousand shells for the same item.

The first coins make their appearance

A type of coinage emerged in China, circa 1100 BCE. Tiny bronze replicas of tools and other objects were manufactured to use for trade.

As time went by, the oddly-shaped items were replaced by circular discs, which were a precursor to hard currency, possibly inspired by the remarkable innovation of a Lydian King.

Lydia was an ancient kingdom located in what is now western Turkey. Its King Alyattes, who ruled in the 7 th century BCE, is credited with the invention of the coin. Situated on the banks of a river rich in gold and silver deposits, King Alyattes was the first to mint a disc-shaped currency meant to use as payment for goods and services. Called the stater, it was made from a silver and gold alloy, electrum. The coins were sanctioned and controlled by the government and went on to travel far and wide, facilitating trade between countries and cultures across Europe and Asia.

The Lydian stater is widely considered to be the precursor to modern money. As a medium of exchange, a unit of measurement, and with an overarching measure of government control, it most resembles the currency we know today.

Though the Lydian kingdom did not survive, its legacy did its name and history are synonymous with wealth and prosperity to this day.

About: Mr. Rory Brown is currently most passionate about delving into the history of money and how our modern currency has evolved into what it is today. In his spare time, he can be found pouring over the history of the Lydians – the first people to have used gold and silver coinage.


Rotten to the Core

These counterfeit staters generally had a silver, billon, or iron core that was plated in gold and then stamped to resemble Lydian coins, completing the illusion.

The fakes were generally found among the lower denomination coins. The larger coins were harder to counterfeit because the weight difference between a large solid gold or electrum coin and an iron one was more obvious than in smaller denominations.

These fakes were created by wrapping a planchet in gold foil and then heating it before using it to strike the coin, transferring the gold in a thin layer. To the untrained eye, these fakes could be fairly convincing, and the ubiquity of Lydian currency assured that counterfeiters would attempt to pass as many fake staters as they could.


Lydia's Cultural Identity

There are scant few Lydian documents that survive today, which is why historians rely on mentions of Lydia in the writings of nearby cultures. The Greek historian Herodotus was the most prolific writer on the subject. However, archeologists have turned up various inscriptions that confirm that Lydian's spoke an Indo-European, Anatolian language.

It's clear that ancient Lydia maintained strong relations with Phrygia, their neighbor to the East. Not only does Herodotus comment on this frequently, but archaeological finds around the ancient site of Sardis, including Phrygian pottery and other vessels, Phyrigian pins, and decorative roofing tiles also attest to this relationship.

The Lydian custom of burial mounds or tumuli was likely largely borrowed from Phrygian traditions, and indeed the discovery of Phrygian artifacts in Lydian tumuli demonstrates the closeness of these two cultures.


The Beliefs and Legacy of Meir Barak

When he became a successful day trader and started making huge amounts of money from day trading, Meir Barak could have simply kept that success for himself. Many other traders out there are making a lot of money but stay silent and keep their techniques closely-guarded. Those kinds of traders are only in it for themselves, but Meir is different.

Since Meir Barak knows exactly how hard it can be to live without a lot of money, a big part of his philosophy is the idea of sharing his wealth and knowledge around. He decided to form Tradenet back in 2004 as a way of helping other aspiring traders reach their potential and make a living from day trading.

Tradenet has been a big success. It’s one of the best day trading academy options you can find today. Tradenet helps thousands of people become better at day trading and learn all the basics of day trading every day, and it’s all thanks to the generosity and efforts of Meir Barak.

As a leading expert in day trading, Meir Barak knows that many people are trying to make money from day trading and failing. He founded Tradenet and wrote The Market Whisperer to help these people enjoy more success.

Each day, Meir creates many day trading tutorials, tests, and educational resources, as well as running the Tradenet Live Trading Room. He stops at nothing to help day traders make big profits and will go down in history as one of the most influential day traders the world has ever seen.


Watch the video: Money Talks: An Introduction to the State Coinages of the Confederation, 1785 - 1788Ray Williams (June 2022).


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