History of Money
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Money:
While barter was a very clear and easy-to-see way of dealing, it was fairly rigid in the structure and in the types of arrangements people could make with one another. You could, or more properly would, only trade for what was “at the table”. You traded your grain because you needed a goose, and the man with a goose, he needed your grain. And the deal was done at that time because the one needed the grain, and the other a goose, right then.This kept trading rather limited in the context of time. It helped if you could time your acquisition. If you could trade for needed livestock or produce exactly as you needed them and just as your items were at their peak value then everything would be perfect.
It was issues like these that were the reasons for the appearance and popular acceptance of money. The characteristics people were looking for in developing a currency was that it be: Something that people wanted. Precious metals fit this description. They are fairly compact ant easy to carry and conceal. Gold and silver are the most popular metals for currency but nickel, copper, brass and alloys are also used.It was also desirable that the money come in different denominations, or amounts. Merchants and buyers often needed “change” when the agreed upon bargain failed to fit squarely at the currency amount. This is another advantage a money market system has over a barter system.
Livestock are indivisible and this could make bargaining very difficult- especially between two people trying to exchange things that could not be broken up into smaller parts and retain their integrity. Imagine if you will the problem posed by one bartering partner with a horse who wants to trade with another for poultry and the deal that folks in the community find to be fair and acceptable is 100 chickens per horse.What will the man with the horse do if the chicken farmer has only 89 birds? He cannot “remove” 11% of his animal to make the deal even out. He must be resigned to take the loss or find some kind of substitution-11 ducks, perhaps; even if he doesn’t want any substitutions.
In the earliest days of coined currency it was common practice to cut coins into pieces, or “bits”, to get exact amounts. Another feature those who issue minted money want is that it lat a long time. This also points to the advantage of metal coinage. It need not be cared for to or from market, as would livestock, fish or produce.We know that it was long ago that merchants who lived far apart traded with frequency and that trade between villages, nations and even continents was going on hundreds, if not thousands, of years ago. Money is a convenient way for people to exchange the value of their labor and to accumulate wealth that would not go bad or spoil. And this suggests the reason for money and its evolution.
Distant merchants liked money made from precious metals, like silver and gold, because everybody everywhere likes them. This means the buyer and seller don’t have to worry so much about whether or not the places they go will take their money and this is important. Every one of us has times where we have had something of value to trade that nobody else liked. Think of the grammar school kid at lunch time that wants to trade his peanut butter and jelly sandwich. The sandwich has value, but nobody ever takes it in trade.This is the problem many merchants wanted to avoid with local currencies in the olden days. They used precious metals because silver and gold are like dessert, everybody want s them. But gold and silver are heavy and hard to transport in large amounts over great distances and so paper money was developed to try to overcome these problems. As banking got bigger and better so that they could be found everywhere checks were used as another way to quickly and easily exchange value.
People needed an easy way to transport their wealth so they could make their deals. As trade picked up in the amounts of money involved between merchantsMoney provided, where ever it was accepted, some way of trading different things at different times. It also made it easier to transport one’s worth so they had a broader scope of selection. And though it would still be some time before people would be choosing between different household appliances or automobiles the basic framework for the way things are today was being established.
With money came the need for accurate counting and there is evidence of accounting recordings that date back nearly 10,000 years. Reliable counting methods and accurate records keeping helped to make money become a really useful trading tool. Flanked by these powerful allies the money lender could use money in the same way the farmer uses his plough or the skilled craftsman his trusty chisel.
