When and What Played Money in the Past
As we know it, Money is valuable only when people consider it an essential medium of commerce or a measurement unit and a depot of wealth. It could be in any form – a shell, a metal coin, or a piece of paper. With the help of Money, people informally trade products and services, and it also helps in communicating the prices of various goods – through written forms such as in dollars or cents.
A part of human history
Money has been a part of human history in some form or shapes for as many as three thousand years. Prior to this, bartering was used as a system of exchange. Bartering refers to the trade of goods or services in exchange for the same. For instance, a farmer could trade a bag of whets in exchange for a pair of shoes.
The barter system as initial Money
The barter system is the old system of exchange that has been practiced for long centuries where goods and services used to be exchanged for other goods and services. It used to be very long because if one party did not like the goods in exchange, then one had to wait for a party who agreed.
Owing to this, a sort of currency-involving items that could be easily traded began to be used. These items included salt, animal skins, and weapons, among others. Today, the items might not seem important or, in fact, might seem weird, but it held optimum value in those days.
Different forms of Money
|Forms of money||Period of use|
|Obsidian||12000 to 9000 BC|
|Animals or cattle||9000 to 6000 BC|
|Buckskins||Early 18th century|
|Shells||9000 years ago (Approx.)|
Anatolia, regarded as human civilization's birthplace, was also the place where the first form of 'money' was discovered. Obsidian was the Money that was used for exchange during the time between 12000 BC and 9000 BC. Obsidian was highly valued because of its use in making high-quality tools.
Apart from obsidian, cattle or animals were also used as Money during ancient times. Animals such as cows were essential items for bartering because cows had multiple uses – from their skin to their milk. These were items that could be used as barter but only when someone had some needs for these.
Shift From the Barter System:
For example, a cow could only be exchanged to a person who needs it. This is the reason why the barter system slowly began to be replaced. Some even consider the Mesopotamian shekel as one of the earliest forms of currency that existed some five thousand years ago. Shekel referred to the amount of weight for varied materials. For example, one might be offered a shekel of barley as fees or even a shekel of gold. Nevertheless, before coins became official currency, several other items were being used as money later.
Buckskins, for instance, were used as objects of exchange from ancient times and continued to be used as late as the 18th century, especially during the American colonial period. Buckskin or deerskin was considered valuable because these were used to make rugs, tapes, blankets, and other important usable items, especially clothes.
Shells and Tobacco:
Shells were also used as Money in the past. These were considered valuable because they created jewelry items and hair adornments. Every individual couldn't go to the ocean and bring shells; hence, shells were used as money to exchange goods and services.
Other than shells, tobacco was also considered valuable and used as exchange for trade because, apart from being used for enjoyment, tobacco had medicinal properties.
Barley was also among the items that were used as money in the past. Years ago, it was not easy to have barley, which was the main ingredient for making flour (used to make bread) that was important in those days. For this reason, barley was regarded as an important item for trading and commerce.
Salt, too, was used as Money in the past. In ancient Rome, salt was considered a valuable item, and hence, it was used for trading and commerce. For example, the soldiers recruited to be part of the Roman Empire were given salt as payment for their services. In fact, salt was so important that the word 'salary' is derived from this word to denote payment in exchange for services. In those days, salt was essential for survival, and owing to this; ancient civilizations used to settle in places where there were rivers or other water bodies from where they could obtain salt. The suffix ‘which' used in sandwich and Norwich, in fact, denotes the places where salt was once broadly available.
Around 5000 BC, metal objects began to be used as Money. These metal objects were used because of the easy availability and ease of work, along with the ease of recycling them. Around 770 BC, the Chinese began to use miniature replicas of usable objects such as weapons and tools as Money, which were cast in bronze. However, these miniature objects were impractical since they caused injuries to people due to their sharpness.
The use of coins made of silver, gold, lead, and copper throughout the globe, particularly in Asia, Europe, and Northern Africa, was documented as commodity money during the start of the millennium AD. Commodity meant a rudimentary item that is used by the majority of people in a specific society. For example, salt, tobacco, tea, and cattle were regarded as commodities and, hence, were used as Money in the past.
The Reason For The Popularity of Coins:
The period between 1250 BC and AD 1450 saw the wide circulation of coins pertaining to Roman, Indian, Chinese, and Islamic cultures, pointing to pre-modern commerce.For the reason that other forms of currency were difficult to be carried or transport, coins as Money became hugely successful. The coins were easy to carry, were durable, and possessed an inherent value. As already mentioned, after the Lydians officially manufactured coins as currency, other nations and kingdoms followed suit. With the advantage of having a designated value, people found it easier to trade goods and services using coins.
During AD 960 to AD 1279, the Song Dynasty in China made the first use of paper money, thus ending the dominance of coins as money, but in some parts of Europe, coins were still popular as Money because of the availability of precious metals in massive amounts. Coins continued to be used in Europe until the 16th century.
Eventually, banks started to use what came to be known as banknotes as currency for deposits from borrowers and depositors. Back in China, paper money began to lose its importance because it had no inherent value, and it could be produced in mass production without much hassle.
For several hundred years, paper currency ceased to be used in China, although in Europe, banknotes were beginning to grow in importance. This paper currency was known as representative Money, meaning that the Money did not have to be of great value in itself because of the items of which it was made.
It was rendered necessary because the government or bank-backed it with a promise to exchange this form of Money for a specific amount of gold or silver. To cite an example, the possessors redeem the British Pound or Pound Sterling in the past for a pound of sterling silver. As the process came to be known, the gold standard dominated most of the 19th and early 20th centuries.
Nowadays, Money has become intangible with more and more digitization. Cryptocurrency such as Bitcoin is the new form of Money. As of November 2021, the number of cryptocurrencies being used worldwide has risen to 7,557 as compared to just 66 in 2013. The below given pie chart demonstrates how cryptocurrency peaked as a source of money in less than a decade.
This is how money played in the past, and with this article, you are now aware of the different forms of money, and how they emerged through the years.