An Overview

On this page, we’ll travel back in time and trace the evolution of History of Futures Trading to modern day Futures Trading.

We’ll cover the following:

- Commodities Market History

- Commodity Markets in the Early Middle Ages

Ancient History of Futures Trading

The history of futures trading shares many of the same basic elements. the transfer and hedging of risk. with modern-day commodity trading.

But, our main focus and interest — — — futures profit speculation — — -

is probably a more recent development.

So,let’s step into our wayback machine for a trip into the foggy past.

Commodity trading and future markets have a long and storied history.The history of futures trading dates back several thousand years — perhaps a lot longer.

To the area we now call Iraq, the historical city of Babylon, to the ancient Sumerians and the Biblical King, Nebuchadnezzar.

People of those times used livestock, including goats, pigs and sheep, and other items of value as a form of commodity money in trading one good for another.

In the ancient history of futures trading, their motivation for doing so was probably much the same as ours today. to make trading for goods they needed, whether immediately or later on in the future, easier and more predictable.

Archaeologists have uncovered many fascinating artifacts from the sands of time, including coins, tokens and tablets recording the activity thousands of years in the past, helping us learn a great deal about the storied past of trading.

Some of these tokens — baked of clay — were in the shape of goats or livestock or may have had an image of same baked into the token — and are believed to have been used in trading activities of long-gone predecessors to our modern futures commodity markets.

Used in trading for large quantities of goods, it is believed that in the long-ago history of futures trading set quantities of tokens in the shape of sheep for example, were sealed in a clay jar(s) of sorts, with the number of tokens marked on the outside of the jar.

This, historians believe, was how ancient traders promised — with an I.O.U. of sorts — to deliver an agreed to number of sheep for example, to some other party, for some specified consideration, along with promises of the date and time of that delivery.

Even more fascinating in the history of futures trading, is that records of these ancient futures commodity markets transactions survive today, including promises of the date and time of transaction deliveries.

This provides us an interesting picture of ancient accounting and long since vanished commodities markets history and trading activity.

Commodities Markets History

What goes around, comes around

While not as technically sophisticated as current future markets with modern clearinghouses, instantaneous electronic trading and the like — — — back in the history of futures trading, ancient civilizations had their own forms of commodity market trading ‘oversight’ to handle disputes that arose, and to vouch for sellers/buyers reputations in the event of same.

As today, civilizations of old exchanged needed hard goods for another consideration.

It might have been trading lumber from Lebanon for Roman gold currency, Oriental spices for finished weapons. or Chinese silk cloth for durable leather goods.

To continue growth of their respective civilizations and kingdoms. and the resulting power a strong trading business brought these kingdoms. trade routes needed to be kept open and protected from thievery, piracy, etc.

Those civilizations which were able to ensure the orderly flow of needed commodities over key trade routes became extremely powerful in the ancient history of futures trading annals.

Throughout history, a civilizations’ trading power evolved into a highly respected trust factor by surrounding kingdoms. due to the ability to guarantee important trade and commerce to and from their own, and neighboring kingdoms.

The trust that powerful and successful trading kingdoms gained, allowed them to become arbitrators — — — ancient futures commodities markets oversight and regulators of sorts — — — resolving trading disputes in the long-ago history of futures trading.

This helped ensure orderly and fair trading for all parties.

The Templar Legacy

in Commodities Markets History

Another more sophisticated chapter in long-ago commodities markets history developed in commodity trading oversight.

This was the rise and dominance of The Knights Templar, during the earlier middle ages circa 1200 AD — 1400 AD.

As the wealthiest and most politically powerful organization in Europe for almost 200 years, the Templars’ oversaw and controlled a huge segment of trade and commerce — and by extension, most likely a large chunk of commodity market goods transactions — including acting as key trade arbitrators — between parties across much of the European continent.

They grew so powerful that they even became the bankers to the ruling families of Europe, and helped ensure a highly efficient and orderly manner of conducting trading, banking and finance between countries and kingdoms.

Wild Commodities Markets History

Tulip Mania

In the mid 1600’s, a form of trading speculation ran wild in Holland. the Tulip bulb craze.

Tulip bulbs brought back to Holland from other parts of the world quickly developed a following, first among royalty in Holland, the spreading to other parts of Europe.

Competition for the more desirable and rare tulips developed among royal families and wealthy individuals, driving prices for these flower bulbs to stratospheric levels in those times.

Hope and greed were fueled by ever increasing prices for the rarest of tulip bulbs.

This speculation tricked down to the less affluent who bought more common and affordable tulip bulbs, with the hope of selling them to others at higher prices.

Eventually, a large segment of the Dutch population were chasing their Tulip bulb dream fortune on the hopes of rising Florin (Dutch currency) prices for the bulbs.

So intense was the market for tulip bulbs, that the equivalent of months or a year or more of income was spent and invested in purchasing just a single rare/unusual bulb. and sometimes on far more ordinary bulbs.

History of Futures Trading Wrap Up

Considering the above Tulip craze example, not much has changed when it comes to present-day mass market trading behavior!

Just recall the incredible dot-com stock run-up of earlier this decade, and what happened to those who put all their financial eggs in one basket when the dot-com market bubble finally burst.

As you’ve seen here, speculation and futures commodities markets existed long before the modern commodity market and CME, Comex, NYBOT and LME exchanges of today, as did long-since departed traders in ancient commodities market history.

Civilizations and traders of old were reasonably sophisticated by our standards, realizing much the same goal as today’s Commercial Commodity Producers and Commercial Commodity Consumers in the futures commodities markets or the spot commodity market.

Makes one wonder where’d we be today, if not for our trading forefathers in long-ago commodities markets history and the history of futures trading.

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