A Brief History of Currency

It’s pretty hard to even imagine a world where money or currency didn’t exist. Most

people base their entire lives on earning enough money to get by and have a comfortable

life. Some form of currency has been around for roughly 3,000 years, and it has gone

through quite a few changes in that time.

Money as we know it is basically a way to trade goods and services indirectly, and its real

value lies in the fact that everyone accepts it as a form of payment. Here’s a brief history

of currency.

Bartering

Before there was any type of money as we know it, there was bartering. Barter refers to

exchanging or trading services, goods or resources so that each person benefits from the

transaction. One might offer carpentry skills to build a new barn in exchange for a cow

or some wheat. You could trade that same cow for some chickens, or some cotton for

tools. The limits are literally endless and many people, organizations and even

governments still engage in bartering today.

Cowrie Shells

In China around 1200 BC, the use of cowrie shells as currency became prevalent. These

mollusk shells were easily found in the Indian and Pacific oceans, and according to PBS

are longest used form of currency in all of history.

Metal Money

In around 1000 BC, the Chinese began manufacturing the first metal currency made of

copper and bronze. Metal money made from things like knives and spades was also first

used in China. Eventually, these forms of metal money evolved into round coins like the

ones we use today. Many Chinese coins were made with holes through them so they

could be strung together like a chain.

Modern Coins

The first coins that were made outside of China were created from lumps of silver around

500 BC. They ended up being made in the round shapes we know today, and were often

stamped with images of emperors or gods to let everyone know they were authentic.

Originally, these coins popped up in Lydia, which is known as part of Turkey today.

The techniques and styles of these modern-type coins were copied and refined by the

Greeks, Macedonians and Persians. Later, the Roman empire also got in on the act.

These coins were made from precious metals and had more inherent value than the earlier

Chinese coins.

Leather & Paper

The first actual type of banknote was made from leather and used in China around 118

BC. The first paper notes also came out of China around 800 AD. Paper was used and

overused for the next 500 years to the point where the value took a nosedive. The use of

paper money disappeared from China for several hundred years and wouldn’t be

considered common in Europe for three hundred years.

Indian Customs

Potlach and wampum are two Indian customs that came about in 1500 and 1535

respectively. Potlach refers to ceremonies where dances and rituals were performed and

gifts were exchanged. These ceremonies helped establish a leader’s social rank and

initiated people into secret societies.

Wampum refers to strings of beads that were made from clam shells. This was a form of

currency that was likely used long before the first known date. Wampum means ‘white’

which is the colour of the beads.

Gold

Eventually, gold became the standard of value in England. In 1816, guidelines and rules

were created to produce banknotes that represented a certain amount of gold. In 1900,

the United States officially enacted the Gold Standard Act. However, the gold standard

didn’t last long as the Depression hit in the 1930’s and the price of gold was devalued.

Today’s Money

Today, currency is always changing and evolving with paper money, coins and the

prevalence of electronic transactions that doesn’t require any exchange of physical

currency. International currency is a complex and confusing subject for most people, as

we try to keep up with all the changes that are made with our own country’s currency.

In all likelihood, specific coins and bills will continue to be taken out of circulation, more

polymer bills will be added and new ways to make transactions electronically will be

created.

Resources

http://www.cashtechcurrency.com/

CashTech Currency

http://www.investopedia.com/articles/07/roots_of_money.asp#axzz2LvMkR72r

Investopedia

http://www.pbs.org/wgbh/nova/ancient/history-money.html

PBS.org