Re: Capital Flight
Posted: July 15th, 2020, 11:09 pm
As part of promoting trade, countries agreed to peg their currency to a set/fixed amount/price of gold and then periodically they'd tally up the trade figures and have the bars of gold moved between the segments within the vaults. Money was gold (finite, tangible), and money (coins/notes) are just a more convenient way to be carried around. Similar to how a sovereign gold coin has a face value of one pound, but where the actual physical gold was being handed between buyer and seller rather than being tallied up on paper and then having gold moved around the vaults.
2p coins used to be around 2p of copper value, but when the price of copper spiked and 2p copper coins were worth 3p in raw copper value, they switched over to using copper plated steel when minting 2p coins (in around 1992 IIRC). It's illegal to damage legal tender, but even still if its costing 3p to mint a 2p something had to change. In the case of sovereigns however, people wont give you one as a payment of £1 value, when the gold value is worth £350 or whatever. Nor a Britannia that has a face value of £100 as a legal tender coin, but has gold value of £1500.
Prior to coins that were worth their weight, people used the likes of tally sticks. Where a stick of wood would have scratches made across it and then it would be split down the grain/length so that both parties had a distinctly matching partner part where the grain would match when pressed back together again and if the scratches (that indicated value) were tampered with, such as another scratch having been added to say you owed them more that could easily be contested as the additional scratch on their half wouldn't be evident on your half. Awkward swapping such sticks around however between multiple individuals, let alone across countries, so a coins worth their metallic value/gold standard helped promote easier international trade/transactions.
2p coins used to be around 2p of copper value, but when the price of copper spiked and 2p copper coins were worth 3p in raw copper value, they switched over to using copper plated steel when minting 2p coins (in around 1992 IIRC). It's illegal to damage legal tender, but even still if its costing 3p to mint a 2p something had to change. In the case of sovereigns however, people wont give you one as a payment of £1 value, when the gold value is worth £350 or whatever. Nor a Britannia that has a face value of £100 as a legal tender coin, but has gold value of £1500.
Prior to coins that were worth their weight, people used the likes of tally sticks. Where a stick of wood would have scratches made across it and then it would be split down the grain/length so that both parties had a distinctly matching partner part where the grain would match when pressed back together again and if the scratches (that indicated value) were tampered with, such as another scratch having been added to say you owed them more that could easily be contested as the additional scratch on their half wouldn't be evident on your half. Awkward swapping such sticks around however between multiple individuals, let alone across countries, so a coins worth their metallic value/gold standard helped promote easier international trade/transactions.