Understanding Credit

Introduction to Money, Credit and Interest:

Meeting the Parents!

In the earliest of times man probably fended for himself.  He hunted and fished, and harvested as opportunity presented itself.  Man may have been an individual in the beginning but it is clear that as some time he became a social animal.  Unity gave strength, and this, in turn, provided protection.  As time passed it was probably discovered that some people were skilled in special areas, and that it was then that the tribal leader decided it was more beneficial to exploit the abilities of the talented.  It is probably about this time that agriculture, supported by some understanding of the principles of engineering and irrigation, began to appear.

So then there were enough crops to augment the bounty brought in by the hunters and the society became self-sustaining.  So all went along well as the society had all that it needed to survive, and perhaps even enough to support growth.

But did they have everything they wanted?  Could they get everything they needed? 

I’m not an expert on the history of crafts and trades of earlier times, but I think we can generally agree that there have to have been times when people needed to get some types of things that were either unavailable where they were or that they couldn’t produce by themselves.

Take tools, for instance; there were certainly craftsmen who knew how to carve and shape the wood, and later found and form the metal, for hunting devices and farming tools.  In the beginning these may have been little more than spears and shovels, but we know that eventually it would require skilled engineers to design reliable, high performance hunting rifles and the sophisticated machinery used in today’s agriculture.

And, as noted, the availability of materials could also impact the self sufficiency of the individual.  In earlier times the availability of raw materials could settle the question of ability altogether.  Absence of iron would simply mean that unless there was some type of trade there could be no steel-tipped spears or steel farming instruments. 

In the world of today we see the increasing reliance on making deals with partners from all around the world as the necessary way to keep competitive.  Without out access to the cheapest labor and resources only highly protected commerce conducted on a very local scale can compete with those accessing the most cost-efficient labor and materials.

So how did people, from the earliest time to today, did people legitimately acquire the things they wanted and needed when they found they couldn’t make them by themselves?

People probably began getting the things they needed by simple barter.  Barter is s system by which people exchange items so that both parties get something they want or need but do not have.  A fisherman, for example, could trade some of his catch with the net maker so that each could get something they needed.  The baker could trade with the patch-quilt maker so that they could both benefit; and the cattleman with the crop farmer- the list of possibilities is both clear and endless.

The barter system works well so long as there is someone who will trade with you for what you need when you need it; and this explains the appearance of huge markets where people could trade for many things. 

But barter does have certain problems.  You have to find someone who has what you want and who will trade with you for what you have at just the time when you need what they have.  And then there is the problem of deciding on value.  What is, say, a fish worth?  Is it worth the same tomorrow as today?  Is it worth the same to the cabinet maker as to the baker?

Bartering also presents some problems in transportation.  The cattleman must trade close to where he can maintain his stock, the fisherman can only go so far as his catch will stay fresh and the cabinetmaker does not wish to lug his items too far.  Yet the jeweler may travel more easily, as the sellers of spices and small trinkets.  So while some of the basic needs of these all these individuals is the same some face more obstacles in participating in the market then do others.