Category All About Money

The international definition given for hawala is this – money transfer without money movement.

        Suppose you live abroad, and want to send money to your relative here in India. The proper way is to transfer the money through banks, or other authorized financial institutions. But they will exchange your dollar for rupees only at a rate fixed by the government. You may lose a lot of money there. Besides, the institution will charge an extra amount for delivery and service.

        In such cases, some people prefer to take a bigger risk. They approach a hawala broker, who will help transfer this money without much expense. They just have to be given some commission, which is low compared to legal methods. Also, it requires no paper work.

It is a system that works purely on trust. You will not get a receipt for the transaction, and any loss that occurs will be solely yours. Unlike a proper bank transfer, hawala brokers contact their counterparts in India or any country to which the money has to be transferred. The counterparts then deliver the amount to the concerned person. Hence, it is said that there is no actual movement of money. This is a crime in any country.

Hawala is illegal also because there is no tax paid on the amount transferred. It is used extensively across the globe to circulate black money, to provide funding for terrorist activities, and drug trafficking etc.

As they don’t operate through proper channels like banks, hawala money escapes governmental regulations, which has become a serious cause of concern. Yet another threat is that hawala is often linked with equally serious crimes like murder, kidnapping etc. 

As we know, counterfeit money is duplicates or imitation currency produced illegally in a country. The use or production of it amounts to fraud.

       It is believed that counterfeiting is as old as currency itself. Even coins were duplicated in ancient times, with base metals instead of pure gold and silver.

       As time passed by, newer methods were devised, and counterfeit became a big threat to countries across the globe.

       One of the most dangerous effects of money duplication is the reduction in the real value of money.

        Yet another is the increase in price of commodities. Suppose you are a trader and you get fake currencies from your customers. You take it to a bank, and find out that they are not real. You may be innocent, but you are not going to get the money reimbursed.

        Increase in prices, is also caused by the fact that there is an abundance of money being circulated in financial markets-even though some of them are duplicates. In such conditions, the economy of a country starts to collapse. In India, the government has taken various measures to control counterfeit, the latest being the withdrawal of Rs 500 and Rs 1000 notes.

        Considered as one of the earliest mass forms of coinage, silver currencies of varied shapes and sizes have been used for more than 1000 years.

        Among the earliest civilizations to use silver was the Mesopotamian, where payments were often made in terms of silver. Ingots of silver mass were cut into scraps or thin wires or even rings of certain weight. It was considered a symbol of power and wealth to use silver. As there was no production of the metal in the land, it had to be imported, which made it all the more pricey.

       Greeks too, are known to have used silver coins as currency. They were manufactured by hammering the metal.

       But, soon after the Roman invasion of Greece, minting of coins came to a halt, and Roman coins took over as currency.

       The presence of silver coins can be found in almost all civilizations. 

          It is believed that coins came into use during the 7th century BC. Coins appeared in different forms in different parts of the world, and it is quite difficult to trace their origins.

          The most widely accepted version of history holds that coins first appeared in Lydia, which is part of the present-day Turkey. They were made of ‘electrum’, a naturally occurring alloy of gold and silver, and had a design on one side.

           In the same era, coins were developed in the Indus Valley too, out of silver. They were of a standard weight, and were punched multiple times. It is believed that such coins were used till the 4th century BC.

              According to some historians, the first coins appeared in China sometime in the 7th century BC itself, but were in the shape of knives and spades. Later, they underwent a lot of changes in shape, size, and design. The Chinese cast coins in bronze with holes in the centre. There were sometimes strung together too.

             Yet another advancement that the era saw was the establishment of the weight-and-measure system. The first person to officially set standards for weight and money was Pheidon, the King of Argos, Greece. 

            History reveals that the money we see today has appeared in differing forms before- as cattle, as salt, as tea, as tobacco etc. But none of these lasted very long. Over a period of time, the need to develop currencies that were handy and long lasting arose. This led to the birth of metals as money.

            Different metals have been made use of by different nations. Chinese made Imitation cowries or mollusc shells out of bronze and copper. Metal money in the shape of knives and spades too, were made by the people there.

            It was in Lydia, a part of modern day Turkey that the earliest electrum coins appeared. Electrum is an alloy of gold and silver and Lydia was rich in its deposit. But their techniques were copied, refined, and used further by the Roman, Greek, Persian and other empires.

            Quite naturally, these metal coins had more inherent value than the previous currencies.

            By 500 BC, coins were stamped with images of gods and emperors by issuing authorities, and their values were fixed. Since then, coins have been widely used, and have also played a major role in making trade easy. 

          Giro was a mode of banking first used by Egyptians in the 4th century BC. The idea behind the system was to transfer money from one person to another. State granary units acted as banks then, and accepted ‘giro’ payments.

          What initially began as collecting the customers’ money to help them save it later became a form of banking. The granary authorities, in the course of time, helped the customer transfer their money to another person’s account.

           Such transactions were recorded in their storage books too, which formalized accounting. Large amounts of money could easily be transferred through the giro system. It is known that these banking (granary) units had a central bank in Alexandria.

            By 1619, Venice launched the Banco del Giro to facilitate payments from its creditors. By 1883, a concept of postal giro arose in Austria. The idea behind it was the same- direct transfer of money with the help of a centralized accounting office. But the banking system moved from granaries to post offices.

            By the mid 20th century, almost all countries in Europe had a postal giro service. 

          At a time when a tiny card can facilitate payments of all kind, it might seem strange that centuries ago, people used ‘tea’ as a mode of payment. But yes, some actually did!

         Tea money or tea bricks were used as means of payment in countries including China, Siberia, Mongolia, Russia and Tibet between the 9th and 20th centuries. They were leaves and stalks of tea plants, finely ground into brick forms of various sizes. They were also stamped with values that varied, according to the quality of the tea.

          In case of smaller transactions, the bricks were broken, and pieces of it given instead. The demand for these edible currencies was so high, that swords, horses, and other valuable properties were sometimes given in exchange for a certain number of bricks.

          Historians note that most of the tea bricks were made in China, and carried to other countries on camels and yaks. The popular belief is that the bricks were consumed in times of hunger, and also brewed as medicine. 

          Tobacco is something we have always been told to keep away from. It is hazardous to health, and can possibly kill its users. But ages ago, it was considered money, just like tea and salt.

          Starting from 17th century AD, tobacco had a major role as currency in American colonies. For its value on par with gold, tobacco was held as the safest and most stable currency in places like Virginia and North Carolina.

          In 1727, ‘tobacco notes’ became legal tender in Virginia, where the Legislature had already rated three shillings for high quality tobacco.

          As time passed by, almost all transactions including levies and fine were made in terms of the substance. The system went to the extent of estimating a person’s assets in annual pounds of tobacco.

          However, the price of tobacco fell in course of time, and it made way for other currencies. By mid 18th century, the tobacco-system was abandoned. 

       No diet can be complete without a pinch of salt. Not only does this mineral make our food tasty, but it also helps in preserving them. A healthy person should have an adequate amount of salt in his body to avoid many diseases.

       These are snippets of information most of us already know. But how many are aware of the fact that salt was once considered a form of money? Or that many global routes were initially established for the trade of salt?

        The use of salt as a way of payment came from the obvious reason that it is something Man cannot live without. This made the substance as precious as gold in earlier days. Believe it or not, there were times when merchants paid salt to buy slaves and other essentials. In Abyssinia, slabs of rock salt or ‘amoles’ were used for trade exchange.

        The most recent example of salt money was seen in Ethiopia, where people in remote areas used salt bars up till the 20th century.

        Now, one can guess how important ‘salt’ is in the history of mankind. The very word ‘salary’ is derived from the Latin word ‘salarium’ which means salt money.