Tuesday, November 26, 2013

Rolling like a coin: the evolution of money down the ages

This book review was first published in The Hindu on November 26, 2013


Easy Money: Vivek Kaul
Sage Publications India Pvt. Ltd.
B 1/I-1, Mohan Cooperative Industrial Area,
Mathura Road, New Delhi-110044
Rs 395

I wish somebody had told me these things when I was a student of Finance and while I was pursuing a PhD in finance. I would have had a much better perspective of how and why things work (or don't) the way they do! That's the first thought that came to my mind when I read the first book of the trilogy tracing the evolution of money.
The second thought was that this indigenous writer has written a book which is truly global in every sense. I would take the liberty of placing him in the same league as a Niall Ferguson or a Peter Bernstein, even though this is Vivek Kaul's first book.

We have heard of many college dropouts who have gone on to become billionaires. Here is an example of a PhD dropout, who it seems, is on the path to becoming a best-seller and an authority on Money, its evolution, regulation and consequences.
'Easy Money' published by Sage Publications takes us through the era when anything and everything was treated as money in some or the other part of the world. From salt, to dried cod, cowry shells to cattles and even slaves! Going as long back as the 12th century BC, the book chalks the path for evolution of Gold as money by meticulously laying forth the problems with alternatives and with having too many different money types.

There are many interesting facts throughout the book. It is fascinating to know that it was the Chinese who first started using coins and that they "believed that money is meant to roll around the world, and so it should be round". That the Chinese thought of this in the 12th century BC is fascinating.
The depreciation of the currency, or debasement, as it was known in the early centuries of the Christian era, and practised by reducing the metal content in the coins, eerily echoes the concept of printing more and more paper money to meet expenses, whereby 'money' systematically loses value.

From barter to commodities as money to paper money and then the evolution of the banking system, the journey has lessons, as highlighted by the author in the conclusion, that all regulators would do well to imbibe. Wildcat banking, free banking, bailing out institutions existed centuries ago as well. But we have not learnt from history and hence history repeats itself.
Kaul weaves together stories from Egypt, China, India, Rome, USA and UK effortlessly, as also he does with Marco Polo, Leonardo Fibonacci, Kublai Khan and the kings of the United Kingdom. He explains the evolution of concepts like 'settlement' and 'bill of exchange' through simple examples which make the book highly readable by even those who do not have a basic degree in Finance, Accounting or Economics. The research is thorough, language simple, stories fascinating. Everyone should read it.
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