If you haven’t read Part 1 of this post yet, CLICK HERE to do that first.  Also, take time to click on this “How Stuff Works” article to learn more details on what I’m writing about in this post.  Now, where were we?

As the 20th Century progresses, technology affects how currency is exchanged.  Attitudes and concepts of money and exchange advance along with technology, leading us to the modern monetary system you’re to understand for requirement 4b.  Let’s look at some of these advancements.

Have you ever seen the movie “3:10 to Yuma”?  It’s a western, and in it, the bad guys rob a stagecoach transporting gold in a big crate.  Nasty scene; people get hurt, people die.  The gold is heavy and hard to move around.  Not too hard to chase something big and heavy – it’s a good target for robbers.

Instead of lugging around all that gold, using currency or notes, like IOU’s, is a lot lighter, smaller, less noticeable, safer, and easier.  So the Federal Reserve banks (the government’s banks) develop these kinds of notes for transferring money from one location to another.  Here’s a famous example – the $100,000 bill.  These large bills weren’t used by people to buy things, they were used to safely and easily transfer money.

A. Telegraph or Wire: In the 1800’s, the telegraph was invented.  People eventually figured out that while notes and certificates could be transported more safely than gold, it still takes a lot of time (we’re talking about railroads and horses; automobiles and planes don’t exist yet).  Why not telegraph a message between cooperating banks or businesses that you agree to send/receive money, and settle up with the actual currency in a few days?  That’s exactly what happened.

B. The end of large notes: By the end of World War II, electronic communications had become so reliable, advanced, and secure, the practice of actually transferring large notes was becoming obsolete.  The government stopped printing them, then finally removed them from circulation in the 1960’s.

C. Electronic technology: The 1950’s saw the advent of the credit card and electronic banking.  Transactions became quicker, more reliable, more flexible, and easier.

D. The digital age: Today’s world of money is even more advanced, due mostly to the internet and computer technology.  People use cash less and less, while making electronic transactions more and more.  Some predict that the day will come where paper and coin money is no longer used (I don’t agree with that, but that’s another story).

That gives you a good foundation for understanding Requirement 4b.  My next post starts going into how advancements in currency exchange have affected international commerce and relationships.