The Medici

To look back at the ascent of the concept of modern day money, we need to take notice of Italy in the 1200s. Money, in token form, had come into being by then. However, lending was still not a profession of good standing. Christianity forbade usury, the practice of charging interest on the loan doled out. However, if a money-lender didn't charge interest, how would he make a living? How would he cover the defaults?

Jews were the answer to this riddle. A different religion allowed them a different set of rules. In Florence, sitting behind their benches, they gave loans without compunction or fear of the after-life. Dealing with numbers for generations on an end has clearly made them a smart bunch of fellows. The Christians could only sit in the side-lines, working away at their 'legitimate' professions.

This changed in the latter part of the 1300s. Giovanni de Medici, of the notorious Medici family in Venice, rose to clear his family of their stamp of infamy. Using his sharp intellect, he hit upon an ingenious way of tapping into the money business, and still remaining within the remit of the Christian laws. He started to work on Forex! There was no low forbidding a commission on changing currencies at the time. The commission, after all, was not interest. It was just a commission. And once this happened, there was no stopping the Medici family. By spreading their services far and wide in Italy, they grew in scale, allowing lower operating costs. Low costs and higher profits - the family became richer and more powerful. Two (three) queens and a pope eventually came from this family.