The History of Money

The History of Money
IN THE BEGINNING: BARTER

Barter is the exchange of resources or services for mutual advantage, and the practice likely dates back tens of
thousands of years, perhaps even to the dawn of modern humans. Some would even argue that it's not purely a
human activity; plants and animals have been barteringin symbiotic relationshipsfor millions of years. In any case,
barter among humans certainly pre-dates the use of money. Today individuals, organizations, and governments still
use, and often prefer, barter as a form of exchange of goods and services.
9000 - 6000 B.C.: CATTLE

Cattle, which throughout history and across the globe have included not only cows but also sheep, camels, and other
livestock, are the first and oldest form of money. With the advent of agriculture also came the use of grain and other
vegetable or plant products as a standard form of barter in many cultures.
1200 B.C.: COWRIE SHELLS

The first use of cowries, the shells of a mollusc that was widely available in the shallow waters of the Pacific and
Indian Oceans, was in China. Historically, many societies have used cowries as money, and even as recently as the
middle of this century, cowries have been used in some parts of Africa. The cowrie is the most widely and longest
used currency in history.
1000 B.C.: FIRST METAL MONEY AND COINS

Bronze and Copper cowrie imitations were manufactured by China at the end of the Stone Age and could be
considered some of the earliest forms of metal coins. Metal tool money, such as knife and spade monies, was also
first used in China. These early metal monies developed into primitive versions of round coins. Chinese coins were
made out of base metals, often containing holes so they could be put together like a chain.
500 B.C.: MODERN COINAGE

Outside of China, the first coins developed out of lumps of silver. They soon took the familar round form of today, and
were stamped with various gods and emperors to mark their authenticity. These early coins first appeared in Lydia,
which is part of present-day Turkey, but the techniques were quickly copied and further refined by the Greek, Persian,
Macedonian, and later the Roman empires. Unlike Chinese coins which depended on base metals, these new coins
were made from precious metals such as silver, bronze, and gold, which had more inherent value.
118 B.C.: LEATHER MONEY

Leather money was used in China in the form of one-foot-square pieces of white deerskin with colorful borders. This
could be considered the first documented type of banknote.
A.D. 800 - 900: THE NOSE

The phrase "To pay through the nose" comes from Danes in Ireland, who slit the noses of those who were remiss in
paying the Danish poll tax.
806: PAPER CURRENCY

The first known paper banknotes appeared in China. In all, China experienced over 500 years of early paper money,
spanning from the ninth through the fifteenth century. Over this period, paper notes grew in production to the point that
their value rapidly depreciated and inflation soared. Then beginning in 1455, the use of paper money in China
disappeared for several hundred years. This was still many years before paper currency would reappear in Europe,
and three centuries before it was considered common.
1500: POTLACH
"Potlach" comes from a Chinook Indian custom that existed in many North American Indian cultures. It is a ceremony
where not only were gifts exchanged, but dances, feasts, and other public rituals were performed. In some instances
potlach was a form of initiation into secret tribal societies. Because the exchange of gifts was so important in
establishing a leader's social rank, potlach often spiralled out of control as the gifts became progressively more lavish
and tribes put on larger and grander feasts and celebrations in an attempt to out-do each other.
1535: WAMPUM
The earliest known use of wampum, which are strings of beads made from clam shells, was by North American
Indians in 1535. Most likely, this monetary medium existed well before this date. The Indian word "wampum" means
white, which was the color of the beads.
1816: THE GOLD STANDARD

Gold was officially made the standard of value in England in 1816. At this time, guidelines were made to allow for a
non-inflationary production of standard banknotes which represented a certain amount of gold. Banknotes had been
used in England and Europe for several hundred years before this time, but their worth had never been tied directly to
gold. In the United States, the Gold Standard Act was officialy enacted in 1900, which helped lead to the
establishment of a central bank.
1930: END OF THE GOLD STANDARD

The massive Depression of the 1930s, felt worldwide, marked the beginning of the end of the gold standard. In the
United States, the gold standard was revised and the price of gold was devalued. This was the first step in ending the
relationship altogether. The British and international gold standards soon ended as well, and the complexities of
international monetary regulation began.
THE PRESENT:
Today, currency continues to change and develop, as evidenced by the new $100 U.S. Ben Franklin bill.
THE FUTURE: ELECTRONIC MONEY

In our digital age, economic transactions regularly take place electronically, without the exchange of any physical
currency. Digital cash in the form of bits and bytes will most likely continue to be the currency of the future.

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The History of Money

IN THE BEGINNING: BARTER

9000 - 6000 B.C.: CATTLE

1200 B.C.: COWRIE SHELLS

1000 B.C.: FIRST METAL MONEY AND COINS

500 B.C.: MODERN COINAGE

118 B.C.: LEATHER MONEY

A.D. 800 - 900: THE NOSE

806: PAPER CURRENCY

1816: THE GOLD STANDARD

1930: END OF THE GOLD STANDARD

THE FUTURE: ELECTRONIC MONEY

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