The Ascent of Money Episode 1: From Bullion to Bubbles

Directions: Answer the following questions based on the movie. The questions are listed in the order they appear in the film. You do not need to use complete sentences.

  1. What empire 500 years ago had no real concept of money? What was the unit of value in this empire?
  1. What had driven the Conquistador Francisco Pizarro across the Atlantic Ocean in 1532? How many ounces of silver were extracted from South America over 250 years of Spanish rule?
  1. Why was the gold and silver from the New World unable to halt Spain's economic decline in the 16th and 17th century? What did the Spaniards “never get” (about money)?
  1. While dollar bills may say “In God We Trust”, what are we trusting the US Treasury Secretary not to repeat? What did the Conquistador's fail to see about money?
  1. What huge possibility was created by the emergence of money as a system of mutual trust? What does “credo” (the root of the word credit) mean in Latin?
  1. Why were financial transactions so difficult in Northern Italy during the Middle Ages? How did Leonardo “Fibonacci” of Pisa help reform this financial system?
  1. What Italian City state became the great money-lending laboratory? What does Shakespeare's fictitious resident of this city Shylock use to determine whether he will lend money to someone? (What does he mean when he says a person is a “good man”)?
  1. Why (in the Italian City States) did anyone who lent money to a merchant for an overseas voyage need to be compensated? What do we call this compensation?
  1. Why were Jews tolerated in the City of Venice? Why did Christian merchants need to use Jews in order to lend money?
  1. In what Italian City State does the key financial service of providing credit move out of the ghetto and into the banks? What family caused this?
  1. Prior to the 1390's, what were the Medici most notable for in Northern Italy? How did Giovanni Medici make the family's activities “legit”?
  1. What crucial lesson in finance did the Medici learn? How did the Medici spread their risks and reduce their exposure to defaults on loans?
  1. Aside from banking, what was Italy's other important contribution to the ascent of money? While banks generally financed commerce, what did the bond market arise to finance?
  1. What had the cost of constant warfare among the Italian City States done to city finances in the 15th century? How did the Italians fund these wars when the tax money ran out?
  1. What was the only problem to the Bond Market that the Italian City States had created to finance their wars? How do the basic interest rates on state-issued bonds affect the economy as a whole?
  1. After the rise of the loan and bond markets in the 15th and 16th centuries, what was the next development in the ascent of money? What invention did this development need to become such an influence in the next few centuries?
  1. What did the Scottish financial genius John Law invent? Where did the young John Law flee to when he was convicted of murder?
  1. What was 1690's Amsterdam the world capital of? What Dutch financial invention attracted the attention of John Law?
  1. How did Dutch Merchants afford profitable shipping missions to the East Indies? What Dutch company did the Amsterdam merchants and Dutch cities form to do this?
  1. What did the Dutch East India Company issue to its “shareholders” in 1606? What was born when the directors of the Dutch East India Company created a market for shareholders to buy and sell the companies stocks?
  1. What went “hand in hand” for the Dutch East India Company? What caused this company to have a virtual monopoly on trade from the East Indies?
  1. If an investor put 1,000 guilders into the Dutch East India Company at the beginning, what was his or her investment worth by the 1730's? What average annual dividend did the company pay back throughout its lifetime?
  1. What were the three financial institutions (and their relationships to each other) that Law studied while in Amsterdam? The Dutch East Indies Company, the nearby stock exchange, and the bank of Amsterdam. What two institutions did Law want to combine?
  1. What financial problems did France have in 1716? What solution did Law have for this problem?