Cash as Becoming Obsolete, Research Paper Example

Introduction

Cash, in some form or another, is so inextricably connected to cultures and societies as to be considered an expression of their fundamental being.  In a sense, this relationship is inevitable; societies exist through interaction and commerce, so it is only logical that any form of monetary exchange would take on such meaning.  Moreover, this association has been in strong evidence since the beginnings of recorded civilization, whether the “cash” was in animal skins,  gold coins, British pound notes, or American silver dollars.  It has always been, simply, money, or the tangible evidence of commercial worth.  If it has not been the gold itself, it has been the paper representing ownership of the gold, even as this evolved into the paper as being supported in value by the strength of the government.  It seems irrational, then, that anyone could have conceived of cash as being a thing of the past.  One may as well have conjectured that commerce itself would become unimportant in human affairs.

Enter electronic technology and the capabilities of the Internet, and the scenario radically shifts.  In a relatively very brief span of time, traditions regarding cash have given way to the immense advantages of being free from its tangible presence.  These advantages are, moreover, evolving as technology evolves, and it is reasonable to foresee an imminent result: cash as it is known today will become obsolete, and this new reality is gaining in stature all the time: “The dollar, mark, and yen will join the ducat, cowrie shells, and the guinea in the scrap box of history” (Weatherford  1).  Technology is changing the world in extraordinary ways, but one of the most extraordinary of these is that cash will soon be a thing of the past.

Background

There can be no real identifying of the first “cash,” simply because it was whatever token was exchanged between any persons that was acknowledged by them as having a separate worth.  Consequently, very early cash may have been a primitive community’s agreeing upon pledges to do labor in exchange for goods.  What is considered organized money, however, developed in the form of a universal recognition of gold and silver as having high value.  Coined metal became the standard throughout most ancient cultures, with the notable exception of the Incas (Chown  2), and its life as an essential part of these cultures would reflect, and influence, innumerable changes in them.  In the most basic terms, once cash is used within any culture, it takes on enormous import because it reflects and generates the prosperity or poverty of the culture.  Then, and no matter which century or society turned more to silver or gold, or in what manners they chose to define weights and values, another aspect has tied cash to the society’s life. Simply, making money costs money.  This alone led to issues, in terms of exploitation of the coins themselves, as well as in governmental ownership of mints, that would further empower cash as something of an emblem of national identity, and as a fluid form of the society’s basic functioning.

It is ordinary today for people, perhaps not entirely comfortable, to perceive cash traditions as more substantial and reliable.  This ignores a dramatic reality seen time after time, historically; namely, the cash has often been a cause o extreme concern, and even widespread revolt.  Unfortunately, the gold and silver standards for cash have never created an infallible flow of supply and usage: “The history of coined money is a history of an intermittent and from time to time dramatic fall in value” (Chown  11).  Gross debasement of gold and silver coins occurred, in fact, frequently in the histories of European nations, and particularly when rulers were in desperate need of funds.  Then, debasement could also be achieved by private individuals, and usually in the same manner.  Essentially, and most commonly, the weight of the coin was maintained by substituting some measure of the precious metal with base metals, and pocketing the difference (Chown  11).  If this seems like a form of intermediate counterfeiting, that is precisely what it was, and the ultimate advantages to the elimination of cash are supported by awareness of these vast lapses in maintaining cash integrity.

These lapses also had enormous social ramifications, as when the value of English coins had been so debased in the 16^th century, merchants abroad would no longer take English money.  This particular instance of issues with cash, in fact, greatly illuminates how money impacts on societies, and dangerously so.  English honor was linked to English pride in its prosperity, so the lack of faith in the money itself was creating both domestic and international problems.  In 1566 Elizabeth I, with William Cecil as her Secretary of State, undertook the immensely complex task of gathering all coins minted since 1543, having them melted down, and issuing back to the people coins worth their face value in precious metal.  A number of historians have claimed that this economic maneuver was the crowning achievement of Elizabeth’s reign, and the praise is not lightly given.  More exactly, this single act of correcting the cash situation enabled England to enjoy unparalleled credit in the years to come, when hostilities from Spain and France were tempered by the inability of those nations to raise money (Carrington, Jackson  294).  Here, cash turned the tide on events that shaped history far beyond the realms of commerce.  The same impact cash could have occurred earlier when, in 1378, the entire government of the city-state of Florence was overturned by wage earners, unwilling to tolerate the existing powers’ increased debasement of the gold Florin (Chown  22).  History is, again, replete with such instances wherein issues with cash itself revolutionized whole societies.  From this, it may well be argued that the mutable nature of cash itself creates high risks for societies, and there is greater security in monetary systems not subject to such forms of debasement and exploitation.  More exactly, remove the metal, and there is no metal to be corrupted.

The Modern Scenario

Those today questioning the increasing turning away from cash typically point to electronic banking and commerce as the primary forces behind it, but this overlooks practices long in place, and very much eroding the actual presence of cash: the check, or bank note.  Dating from the 18^th century, this system of substituting paper for coins would give rise to major upheavals in European societies, as it would in the newly forming United States (Chown  117).  As is seen today with the advent of Internet banking, mistrust was the typical reaction as the public gradually would come to trust the governments and institutions guaranteeing the notes.   This is critical, in considering just how effective the elimination of actual cash may be.  More to the point, and as noted, money has a meaning beyond its monetary value:  “Money is an institution, a set of rules that produces the dominant means of accounting economic value and means of payment in the confines of a market” (Papadopoulos).  It is a concept, and people tend to cling to cash because the concept is given as tangible a form – in terms of a genuinely valuable item – that they may possess.  What must be remembered, however, as the world goes more to electronic cash, is that even paper bills were once viewed as suspect.  Not unexpectedly, societies require time to fully accept the new translations the concept of money takes.

There remains significant debate regarding the true likelihood of cash becoming completely obsolete, a state of affairs rendered all the more interesting by the consistently rising numbers of people opting to go without it.  Estimates in 2010 placed the number of electronic transactions amounting to roughly $1 trillion, as opposed to the approximate $40 billion written in traditional checks annually (Needles, Powers, & Crosson  274).  Then, there are the many and obvious advantages to not using cash.  It is portable, which renders it vulnerable to loss or theft.  Its same “attribute” as a literal form of money, existing only as itself, creates these very real dangers.  There is as well the factor of convenience.  In electronic interactions, there can be no issue of “running short,” or of not having the funds available to make a necessary or desired payment.  Moreover, in response to inescapable need, security measures of all kinds, from banking insurance from the federal government to encrypted passwords, offer more than sufficient protections.  This factor is still argued by many: “Chip cards, debit and credit cards and other forms of cashless payments are huge opportunities for data gathering” (Moyer).  The same individuals also tend to then refer to the instinctive trust attached to cash.  It is real, it is solid, and it has strong associations with independence and power.  Research, in fact,  reveals that, since the attacks of 9/11, many store emergency wads of $20 bills (Moyer).

These concerns are certainly understandable, particularly in so cash-driven a society as the U.S.: “Money is a part of virtually every interaction of the American’s day” (Weatherford  21).

What must be comprehended, however, is that, just as societies have historically adjusted to using variations on cash, electronic money is nothing but another reflection of the same, fundamental concept of what cash represents.  There is as well the inescapable fact that, today, online technology is restructuring all basic societal functions, and money is among them.  Even as a significant percentage of Americans still at least partially rely on cash or checks, there remains the immeasurable impact of the Internet to contend with, in terms of the foreseeable end of cash transactions.  The reality is that all online spending is inherently electronic; as increasing numbers of people then both makes purchases and pay bills through the Internet, the exponential growth of the process itself translates to the eventual elimination of cash (Litan, Baily  108).  All that is required to make the process easy is the willingness of the public to abandon associations with coins and bills quickly becoming irrelevant.

Conclusion

If the history of cash reveals anything, it is that this seemingly immutable form of money has always been subject to disruptions in value, as well as overt criminality more extreme than Internet theft.  Not surprisingly, people uniformly become attached to cash on something of an emotional level, because they perceive it as a tangible possession going to their own economic standing.  What must be accepted, even as technology “speeds the plow,” is that today’s electronic forms of money in no way eviscerate these time-honored associations; they merely shift the form the product takes.  Cash is going away, but money is not, no more so than it vanished with the first bank notes issued.  Then, given the extraordinary omnipresence of the Internet in everyday life, and globally so, it seems that the eventual elimination of cash will soon be a reality, and because that elimination carries with it so many advantages.   The way is clear, and likely both inevitable and beneficial.  Technology is changing the world in many and extraordinary ways, and one of the most significant of these is that cash will soon be a thing of the past.

Works Cited

Carrington, C. E., & Jackson, J. H.  A History of England.  New York: Cambridge University Press, 2011.  Print.

Chown, J. F.  A History of Money: From AD 800.  New York: Psychology Press.

Litan, R. E., & Baily, M. N.  Moving Money: The Future of Consumer Payments.  Washington,  D.C.: Brookings Institution Press, 2009.  Print.

Moyer, L.  “The Myth of the Cashless Society.”  Forbes.  Feb., 2006.  Web.  Retrieved from http://www.forbes.com/2006/02/11/cashless-society-cash_cx_em_money06_0214cashless.html

Needles, B. E., Powers, M., & Crosson, S. V.  Principles of Accounting.  Belmont: Cengage Learning, 2010.  Print.

Papadopoulos, G.  “Electronic Money and the Possibility of a Cashless Society.” Feb., 2007.  Web.  Retrieved from SSRN: http://dx.doi.org/10.2139/ssrn.982781

Weatherford, J.  The History of Money.  New York: Random House, 1998.  Print.