Leaps of Imagination: The Evolving Meaning of Money

“In a very real sense, our early economy was built on thin air, on promises to pay, on optimism, on lack of viable alternatives and by sheer will. And the miracle is that the whole thing worked.”

– R.G. Doty, Former senior curator of numismatics, Smithsonian Institution

In the 19th century, newly minted Americans were hungry to expand their borders. Whole towns sprung up overnight as pioneers packed their belongings and headed west. In order to build their homes and businesses, settlers needed to quickly buy and sell goods, but there was no clear-cut method for conducting those transactions.

Precious metals such as gold and silver, called hard currency or specie, had been the chosen currency of Western civilization for centuries. The problem was, until the discovery of gold in the United States in the 1840s, there just wasn’t enough hard currency to keep up with booming expansion. In lieu of specie, institutions ranging from banks to factories and canals to railroads issued their own paper certificates as stand-ins. Because it was backed by real money, this “soft currency” was considered “as good as gold.”

Hundreds of separate banks and other institutions issued their own paper money at the same time each in different colors and different styles making regulation a monumental challenge. Ironically, it wasn’t until the Southern states seceded from the Union that the U.S. declared a common national currency, a necessary step to fund the impending Civil War. For the first time, Americans from Philadelphia to the edge of the frontier carried the same money.

Americans in the first 50 years of the 21st century are poised to experience another big shift, this time toward a world where financial transactions are conducted without any contact at all, where purchases are made with an eye scan or a measure of the pulse. The only place Americans in 2050 likely will see paper money is in a museum.

Everything — from their homes and cars to the roads they drive on and the clothes on their backs — will be connected to a network. Today’s kindergartners likely never will possess a plastic credit card; their entire financial lives will exist exclusively in digital form.

How will Americans view their spending differently when every purchase they ever make is tracked and recorded on a wearable? How will they view money when they never hold it in their hands, when it exists purely as digital currency in their e-wallets?

Just as it took a leap of imagination to accept paper bills in lieu of gold or silver, new ways to manage and understand money in the future will require a shift in perspective.

But even as technology continues to evolve, the competencies for successful financial decision making likely will remain constant. Regardless of whether you hand over a dollar bill, write a check, swipe a plastic card or flash a biometric wearable, you will make better financial decisions if you have a propensity to plan and possess basic numeracy skills. You will save more and spend less if you understand the value of delayed gratification.

The way we talk about and interact with money undoubtedly will evolve in the decades to come. Rapidly changing technology means financial education of the future will not look the same as it has in the past. The question is: Will it be more effective — or just different?

Browse through the timeline to see some pivotal moments in personal finance history:

Click the image to view the full graphic.
Evolving Meaning of Money the 1800's Evolving Meaning of Money the 1900's Evolving Meaning of Money the 2000's Evolving Meaning of Money the 2050's

Contacts

  • Paul Golden

    Media Relations Director

    Direct: 303-224-3514
    Cell: 303-918-3620
    [email protected]

  • Patricia (Pat) Seaman

    Senior Director of Marketing and Communications

    Direct: 303-224-3538
    [email protected]

Contacts

  • Paul Golden

    Media Relations Director

    Direct: 303-224-3514
    Cell: 303-918-3620
    [email protected]

  • Patricia (Pat) Seaman

    Senior Director of Marketing and Communications

    Direct: 303-224-3538
    [email protected]