A monetary system is a system where a government manages money in a country's economy. Modern monetary systems usually consist of the national treasury, the mint, the central banks and commercial banks.
Choice of monetary system affects inflation rates, trade balances, and exchange rates. Throughout history, countries have used various approaches, including commodity money like gold, representative money backed by precious metals, and modern fiat money backed by government authority.
The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. Silver was far more widespread than gold as the monetary standard worldwide, from the Sumerians c. 3000 BC until 1873. Following the discovery in the 16th century of large deposits of silver at the Cerro Rico in Potosí, Bolivia, an international silver standard came into existence in conjunction with the Spanish pieces of eight. These silver dollar coins were an international trading currency for nearly four hundred years.
The Bretton Woods system of monetary management established the rules for commercial relations among 44 countries, including the United States, Canada, Western European countries, and Australia, after the 1944 Bretton Woods Agreement until the Jamaica Accords in 1976. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent states. The Bretton Woods system required countries to guarantee convertibility of their currencies into U.S. dollars to within 1% of fixed parity rates, with the dollar convertible to gold bullion for foreign governments and central banks at US$35 per troy ounce of fine gold (or 0.88867 gram fine gold per dollar). It also envisioned greater cooperation among countries in order to prevent future competitive devaluations, and thus established the International Monetary Fund (IMF) to monitor exchange rates and lend reserve currencies to countries with balance of payments deficits.
Preparing to rebuild the international economic system while World War II was still being fought, 730 delegates from all 44 Allied countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference. The delegates deliberated from 1 to 22 July 1944, and signed the Bretton Woods agreement on its final day. Setting up a system of rules, institutions, and procedures to regulate the international monetary system, these accords established the IMF and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group. The United States, which controlled two-thirds of the world's gold, insisted that the Bretton Woods system rest on both gold and the US dollar. Soviet representatives attended the conference but later declined to ratify the final agreements, charging that the institutions they had created were "branches of Wall Street". These organizations became operational in 1945 after a sufficient number of countries had ratified the agreement. According to Barry Eichengreen, the Bretton Woods system operated successfully due to three factors: "low international capital mobility, tight financial regulation, and the dominant economic and financial position of the United States and the dollar."
The economy of the Han dynasty (206 BC – 220 AD) of ancient China experienced upward and downward movements in its economic cycle, periods of economic prosperity and decline. It is normally divided into three periods: Western Han (206 BC – 9 AD), the Xin dynasty (9–23 AD), and Eastern Han (25–220 AD). The Xin regime, established by the former regent Wang Mang, formed a brief interregnum between lengthy periods of Han rule. Following the fall of Wang Mang, the Han capital was moved eastward from Chang'an to Luoyang. In consequence, historians have named the succeeding eras Western Han and Eastern Han respectively.
The Han economy was defined by significant population growth, increasing urbanization, unprecedented growth of industry and trade, and government experimentation with nationalization. Another large component of the government is that it was run by influential families who had the most money. In this era, the levels of minting and circulation of coin currency grew significantly, forming the foundation of a stable monetary system. The Silk Road facilitated the establishment of trade and tributary exchanges with foreign countries across Eurasia, many of which were previously unknown to the people of ancient China. The imperial capitals of both Western Han (Chang'an) and Eastern Han (Luoyang) were among the largest cities in the world at the time, in both population and area. Here, government workshops manufactured furnishings for the palaces of the emperor and produced goods for the common people. The government oversaw the construction of roads and bridges, which facilitated official government business and encouraged commercial growth. Under Han rule, industrialists, wholesalers, and merchants—from minor shopkeepers to wealthy businessmen—could engage in a wide range of enterprises and trade in the domestic, public, and even military spheres.
Limping bimetallism was a monetary system in the United States that was dependent partially on silver but primarily on gold. It was developed after the abandonment of bimetallism and the adoption of the gold standard in 1873. The Bland–Allison Act of 1878 allowed the coining of new silver dollars, thus creating this system. Contrary to popular belief, the limping standard was not abandoned upon enactment of the Gold Standard Act of 1900.
Monetary economics is the branch of economics that studies the nature, role, and impact of money and monetary institutions. It provides a framework for analyzing money and its core functions—as a medium of exchange, a store of value, and a unit of account—and examines how money can achieve widespread acceptance, including through its role as a public good.
Historically, monetary economics has both prefigured and remained closely integrated with the development of macroeconomics. The field investigates the functioning and regulation of different monetary systems, the design and role of financial institutions, and the international dimensions of monetary relations such as exchange rates and global liquidity.
John Pierpont Morgan Sr. (April 17, 1837 – March 31, 1913) was an American financier and investment banker who dominated corporate finance on Wall Street throughout the Gilded Age and Progressive Era. As the head of the banking firm that ultimately became known as JPMorgan Chase & Co., he was a driving force behind the wave of industrial consolidations in the United States at the turn of the twentieth century.
Over the course of his career on Wall Street, Morgan spearheaded the formation of several prominent multinational corporations including U.S. Steel, International Harvester, and General Electric. He and his partners also held controlling interests in numerous other American businesses including Aetna, Western Union, the Pullman Car Company, and 21 railroads. His grandfather Joseph Morgan was one of the co-founders of Aetna. Through his holdings, Morgan exercised enormous influence over capital markets in the United States. During the Panic of 1907, he organized a coalition of financiers that saved the American monetary system from collapse.
John Sherman (May 10, 1823 – October 22, 1900) was an American politician from Ohio who served in federal office throughout the Civil War and into the late nineteenth century. A member of the Republican Party, he served in both houses of the U.S. Congress. He also served as Secretary of the Treasury and Secretary of State. Sherman sought the Republican presidential nomination three times, coming closest in 1888, but was never chosen by the party. Between 1861-1897, John Sherman served in the U.S. Senate for nearly 32 years and holds the record for longest serving senator from the state of Ohio (1861–1877; 1881–1897).
Born in Lancaster, Ohio, Sherman later moved to Mansfield, Ohio, where he began a law career before entering politics. He was the younger brother of Union general William Tecumseh Sherman, with whom he had a close relationship. Initially a Whig, Sherman was among those anti-slavery activists who formed what became the Republican Party. He served three terms in the House of Representatives. As a member of the House, Sherman traveled to Kansas to investigate the unrest between pro- and anti-slavery partisans there. He rose in party leadership and was nearly elected Speaker in 1859. Sherman was elected to the Senate in 1861. As a senator, he was a leader in financial matters, helping to redesign the United States' monetary system to meet the needs of a nation torn apart by civil war. He also served as the chair of the Senate Agriculture Committee during his 32 years in the Senate. After the war, he worked to produce legislation that would restore the nation's credit abroad and produce a stable, gold-backed currency at home.