My Science School

          There are thousands of banks in the world where currency notes are counted and packed in the denominations of hundreds. Job of counting and packing is done by a large number of people. The job of counting the currency notes is quite boring. Scientists have developed a machine which automatically counts and packs the currency notes. This machine is a wonder of electronics.

          Working principles of a currency counting machine is shown schematically in the figure. The bundle of notes to be counted is placed on platform P-1. These notes are pushed in the forward direction by a feeding roller R-1. These notes are counted by a sensor S-1. Thereafter the notes pass through the rollers R-2 and R-3 and channel C-1. Through the channel the notes reach the sensor S-2. In case of any error in counting, S-2 will shut the motor automatically and display the mistake. After sensor S-2, rollers R-4 and R-5 pick up the notes and throw them into the slots of the centrifuge roller. These notes are released as they reach the platform P-2 and start stacking upon it. This platform is equipped with another sensor S-3 which indicates whether P-2 is empty or loaded.

           It is a microprocessor based machine and hence its reliability is very high. These machines can not only count currency notes but also the coins. These are portable machines and can be installed anywhere. Nowadays these machines are being used by many banks.

          Money has always fascinated mankind from the time of Aristotle to the present day. Aristotle observed that man is a social being and establishes certain norms and regulations for their social interaction. Men employed money as a mode of exchange to facilitate such social dealings from their economical aspect.

          In the primitive societies, when people wanted to buy anything they had to give something else in exchange for it. For example, if a potter wanted to buy rice from a farmer, he offered him earthenware pots in exchange. The farmer would accept them because he needed pots. This was called the barter system which involved goods in exchange of goods. During those times goods served the purpose of money. But with the development of trade, the barter system could not meet the growing demands of a convenient exchange system for buying and selling. People started using token or symbolic goods in exchange all over the world. American Indians used beads of shells, Fijians used whale’s teeth and North Americans used tobacco in their exchange system. The Roman army men were provided salt for their services. But the topic of our interest is: when was coin first used as money? 

 

Continue reading "When did people first use money? "

The word ‘bank’ is derived from the Italian word ‘Banco’ which means bench. In the Middle Ages, Italians used to conduct their commercial transactions while sitting on the bench. Later, this very word ‘banco’ underwent changes and became ‘bank’. Now, all the countries of the world have banking systems. Do you know how the banks started?

               Initially money lending and banking was done by the Jews and later on by goldsmiths. Merchants, in fact, paid the goldsmiths to look after their surplus cash. These goldsmiths gave receipts like a bank note to the merchants for the cash, they deposited with them. Not only that, they could lend a part of that money to others earning an interest from them. They could thus make extra money. A part of thus earned money, they gave to the merchants as an incentive to deposit money with them. This was the starting point of the savings bank or the deposit scheme in the banks at a later date.

                 Merchants also wrote letters to the goldsmiths to pay another merchant from their deposited money. This amounted to issue of “cheques”. The modern banking system started in Venice in 1587, and in the same year the “Banco di Rialto” was established. People could deposit money in this bank and could draw when they needed it. In 1619 ‘Banco di Giro’ took over the management of this bank. People could deposit even their gold and silver items in this bank for which the bank issued receipts. These receipts were used as currency notes.

                 The first bank in the U.S.A. was set up in Philadelphia in the year 1782. In England, the first bank was started in the year 1825. In India, the first bank, the Presidency Bank of Bombay, was established in 1804.

                  However, the first full-fledged Indian bank was the Punjab National Bank, which was started in 1894. The Government established the Reserve Bank of India in April 1935. This bank issues all the currency notes and coins for circulation in the country. Today, a large number of banks have been established in all the countries of the world.

                  In the beginnings, Banks had only two functions, namely to receive money and to give loans on interest. Nowadays, Banks serve many other purposes such as giving credit cards and foreign currency to people going abroad. Banks also provide us the facility of lockers to keep our valuable jewellery.