History Of Bartering And Money

originally posted from models & moguls on http://www.modelsandmoguls.com/2010/08/05/history-of-bartering-and-money/

History Of Bartering And Money

history of bartering and money

Money makes the world go round.

Money is the root of all evil.

A fool and his money are soon parted

Few things directly affect the quality of our lives more than money.

  • Where we can live
  • How we must spend our time each day.
  • Who we can date
  • What we eat
  • Where we go to school
  • How healthy we are.


Money may not buy happiness, but it does buy freedom and options.

By the time most of us can talk, we realize money is something that’s very, very important.

Yet as much as money influences our lives, most of us go through our entire lives without really understanding what money really is.

Here is a brief and simple article on the definition and the history of money for the average person.

The word money comes from the Latin word “moneta” which means, “warning.”

By itself, money is nothing except maybe a strip of paper or a bit of metal. Sometimes and in some places, money can be a sea shell, a bead, a rock or even a lump of salt.

Nowadays, much of the world’s money doesn’t even exist in real life….its just bits of data on an outdated computer, hidden away in a dingy basement somewhere.

If you can’t eat it or wear it, then what good is it?

The value of money has nothing to do with what you can physically do with it.

Money gets its value from being a “medium of exchange, a unit of measurement and a storehouse for wealth.”

Money lets you trade goods and services and allows you to “save” value for future purchases.

If you are a chicken farmer and have a bunch of eggs, you can only “save” your eggs for but so long. But you can trade your eggs for money (sell them) and save your money almost indefinitely (barring inflation)

The value of money comes when everybody will accept it as payment for goods or services provided.

So how and when did people start using money?

As far as historians know, people have been using money for no less then 3,000 years.

money-tribes-bartering

Before then, people mostly traded or “bartered” for what they wanted.

“I’ll give you 100 eggs, if you give me your goat.”

“I’ll give you 4 goats, for your lion skin coat”.

“I’ll give you 10 lion skin coats if you let me have your daughter”

Bartering is great system of exchange which is still used today!

But bartering has it’s problems.

People often tend to disagree on what’s a fair trade. Then theres that issue again that sometimes the things we trade have expiration dates on them.

Money helps solve both of those problems.

Over time, crude “prehistoric currencies” evolved where people went from trading things like food, animal hides, salt, weapons and tools to standard mediums of exchange.

Ancient Chinese Cutlery

Tools and weapons, like arrowheads, spades and hoes (both the garden tool and the other kind) became some of the earliest mediums of exchange for pre-historic man.

But who wants have to keep reaching in their pockets and get their hands cut handling sharp objects over and over again?

Around 1,100 B.C., the ancient Chinese started making miniature rounded replicas of their tools and weapons. These became some of the first coins.

Coins and Currency

At around 600 B.C, the King of Lydia (the area now known as Turkey) began “minting” coins out of a natural mix of silver and gold (called electrum) and then stamping pictures on them to let people know how much each coin was worth.

This new form of currency helped Lydia to become a wealthy kingdom by increasing domestic and international trade.

(Though Lydia’s wealth could not protect it from being conquered by the Persian Empire.)

China Kicks Economic Ass…Even 2500 years ago

By the time European Marco Polo got to China in 1,200 A.D., the Chinese had a well developed paper monetary system.

And they meant business. Just like how American bills say “In God We Trust,” Ancient Chinese bills said “All counterfeiters will be decapitated.”

Europe stayed big on coins as currency for a minute, especially after they started bringing in more gold and silver from The New World.

Only thing was, lugging gold and silver currency everywhere started to become a real pain, so gradually banks started to issue “bank notes” that were easier to carry around and could be taken into the bank and exchanged for their face value of silver or gold coins.

Of course people started trading these bank notes for goods and services as though the notes were the gold/silver coins themselves.

Some historians say that the first paper currency issued by European governments, as opposed to banks, were actually issued by the colonial governments of North America!

This was because colonist would run out of money waiting for shipments between Europe and the colonies.

money-barter-colonist-trade

Instead of going back to bartering the colonial governments would just issue paper IOUs which were traded like money.

For instance part of the history of money in  Canada, involves how,around 1685, French soldiers would use playing cards signed by the Governor like cash.

History Of Paper Money

The more people started using paper money, the more international trade took place.

As Banks, Royals and Rich people started buying currencies from other countries, the first currency markets started to emerge.

If a King( or Queen) could keep a stable rule over their country then their countries currency would be stable and that country would had an advantage over other countries, trading goods internationally.

Currency wars were waged where countries would try to affect the value of the competitor’s currency by

  • driving currency value up to make enemy’s exports too expensive
  • driving currency down to reduce the enemy’s buying power (and ability to pay for war)
  • eliminating the enemy’s currency all together.

(Hmmh wonder how much things have changed since then?)
“Let me issue and control a nation’s money and I care not who writes the laws.”Mayer Amschel Rothschild, 1790

So is money really “the root of all evil”?

Who knows (I don’t).

But what I do know is that, no matter what people tell you, money is the untold story behind  most of what we hear on the evening news.

money-5,000-stacks

And if you want money to be a solution in your life, rather then a problem, you need to know everything you can about it.

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