When Did Humans Start Using Money Instead Of Trading Items? Did You Ever Wonder?

A long time ago, people did not buy or sell with money; let alone with Steem or Bitcoin ;-) Instead they traded one thing for another to get what they wanted or needed. This exchange of goods or services is called barter.

Source

At the beginning this was sufficient, but with the evolution of societies, certain needs made the creation of a more stable and more efficient way of trading imperative. Many cultures around the world eventually developed the use of money whose value was based on the value of the material from which it was made. 

This type of money is known as “specie money” and its value is guaranteed by the precious metal it contains. The first coins were originally manufactured from copper and then iron because these were strong materials used to make weapons. The monetary value of currencies was based on the value of the metal from which they were made. 

Coins were convenient because they could be counted rather than weighed. Coins were a trusted and efficient medium of exchange because they helped to significantly boost trade in the ancient world. The first type of coin was used around 3000 BC in Mesopotamia and was called siglos or shekel. The shekel was an ancient unit of money and weight used to define both a specific weight of barley and equivalent amounts of materials such as bronze and copper. 

The great importance of formalizing the role of money in civil society was even mentioned in Hammurabi‘s law code created around 1760 BC. Mesopotamian civilization developed a large-scale economy based on commodity money. The Babylonians and their neighboring city-states later developed the earliest system of economics as we think of it today, in terms of rules on debt, legal contracts, and law codes relating to business practices and private property.

Source

In 700 BC the Greek king Pheidon of Argos was the first ruler known to have officially set standards of weight and money and to have coins made from a rather useless and decorative metal like silver rather than of iron. King Pheidon coined silver coins in Aegina, in the temple of the goddess of wisdom and war Athena Aphaia, and developed currencies with turtles on them. (Turtles are a symbol of capitalism today.) 

Turtle currencies were accepted and widely used as an international medium of exchange until the days of the Peloponnesian War, when the Athenian drachma replaced them.According to Herodotus, the first gold coins of the Grecian age were struck in Lydia, in Asia Minor, around 700 BC, under King Croesus, but it was not until 390 BC when King Philip II of Macedonia issued the first gold currencies. 

Source. Illustration created by Mark Cartwright

The Lydian coins were made of a weighed amount of precious metal and were stamped with the image of a lion. Even in ancient times the excessive importance given to money was recorded by Livy, who mentions a temple that was built and consecrated to the worship of Hera Monitas, hence the English “money,” in Rome around 413 BC. The temple contained the mint of Rome for four centuries.

The First Paper Money in History 

The first paper money or banknotes were first used in China during the Song Dynasty, between 600 and 1455. These banknotes, known as Jiaozi, had been used since the seventh century AD. In Europe the first banknotes were issued by Stockholms Banco in 1661 and used alongside coins. it did not work well, and had to be stopped because the banks kept running out of coins to pay on the notes. 

But in the 1690s, the Massachusetts Bay Colony printed paper money and here the use became more common. Using coins as money based on the value of the material from which they are made eventually led to representative money. This happened because gold and silver merchants or banks began to issue receipts to depositors redeemable for cash value, which were tabulated.

Ultimately, these receipts were widely accepted as payment and began to be used as money. The convenience of transactions provided by the issuance of banknotes allowed notes used for exchange to become a widespread and commonly accepted business practice. This monetary system, where the means of exchange is paper that can be converted into preset, fixed quantities of gold, replaced the use of gold coins as money between the seventeenth and nineteenth centuries in Europe.

Fiat Money Enters Our Lives 

In the early twentieth century almost all countries adopted this system for which certificates were issued, and there was a predetermined amount of gold for redemption. After World War II and the Bretton Woods Conference, most countries adopted “Fiat money,” whose value was determined according to the US dollar. In turn, the US dollar was determined by reference to gold.

Source

In 1971, the US government ended the convertibility of the dollar into gold, leading many countries to follow its example, and the majority of the money worldwide stopped being backed by gold reserves. 

Money, in whatever form it is found, has proved a necessary evil from its creation, and there is no more apt definition of its origin than Aristotle’s: “When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use.”

The article was written by me and originally published at my blog theo-cracy.com and Ancient Origins

Bonus Facts:   

• The earliest places of storage were thought to be money box containers similar in construction to a beehive, akin to the Mycenaean tombs of 1550–1500 BC.
• The word used by Thucydides for money is chremata, translated in some contexts as “goods” or “property,” although with a possibly wider-ranging application, having a definite meaning of “valuable things.”
• According to myth, Zeus punished Hera and tied her with a gold chain between heaven and Earth. Hera, with the help of Hephaistos, broke the gold chain and was set free. It is said that all the gold on Earth comes from the pieces of this gold chain, which fell from the sky.
• According to Aristotle, King Pheidon of Argos devoted some of the iron coins that were left (they were actually iron bars) to the temple of Hera.
• Although gold and silver were commonly used to mint coins, other metals were also used. For instance, ancient Sparta minted coins from iron to discourage its citizens from engaging in foreign trade.
• “Fiat money” derives from the Latin fiat, which means “let it be done” or “it shall be.” This type of money has been defined as currency that derives its value from government regulation or law.

Sources:

Barter, Bills and Banknotes: The 5,000 Year History of Money

History of Money 

Aristotle on Money 

Money in Classical Antiquity (Book) 

The History of Money