THE HISTORY OF MONEY

In the early years of human civilization the most common and widespread mechanism to carry out economic transactions was barter: the exchange at the same time of one product by another. In this way, a fisher could, for example, deliver a piece of fish to a blacksmith in exchange for iron nails. However, as civilization started to develop, commercial exchanges became more and more complex. On one hand, it became difficult to measure goods accurately to ensure that the quantities exchanged were equivalent in value as well as transfering big quantities of heavy and bulky products to the places where exchanges used to take place. On the other hand, it was often difficult to find someone who simultaneously wanted what you had and was willing to offer in return what you wanted.

Money emerged as a way of solving all these difficulties. It was easlity carried, divided and stored and also ended with the issue of determining equivalent values in exchanges.

The first items used as money included cattle, iron, salt, shells, salted cod, animal skins, grain, sugar, tobacco, nails, and similar goods. Over time, precious metals such as silver and gold gradually became the preferred form of commodity money.

In Mesopotamia, silver was used under the kindgom of King Shinkashid, who ruled Uruk in the 19th century BC. Historians have discovered the first known price list, wihich shows the amount of goods that could be obtained with a shekel, a certain quantity of silver. Some Mesopotamian legal Codes, such as the Code of Hammurabi, also set fines for those who commited offences, expressed in shekels.

Silver and gold, unlike grain, did not spoil, which made them extremely useful and turned them into an widely accepted method for making payments anywhere. Regions with access to gold and/or silver enjoyed extraordinary economic advantages. This was the case in the kingdom of Lydia, in western Asia Minor (modern-day Turkey), where the first coins in history were created.

The Lydian Kings issued the first coins ever known at the end of the 7th century B.C, made by white gold, also called “Electrum”. They were stamped, slightly rounded and flattened.

Over time, certain images completely replaced the striations. The motifs most commonly found on ancient electrum coins are animals, either whole or in part. These include wild and domestic animals, real and mythical creatures, terrestrial, aquatic, and flying species, as well as vertebrates and invertebrates.

The idea was quickly adopted by the Greeks and soon nearly every Greek city and colony from southern France to the northern shores of the Black Sea began to produce their own coins.

Later, in the 3rd century B.C., the Romans adopted coinage from the Greeks and created the first fully monetized society. Coins were used in the daily transactions of most Romans, generating a huge demand. The Romans took advantage of this demand and became skilled at using coins as a form of propaganda. They developed a “language” of abbreviations and symbols on their coinage, some of which is still in use today.

After the fall of the Roman Empire, the use of coins continued, but trade and economic activity became more localized. In medieval Europe, coins were often minted by local rulers, and their value could vary greatly from one region to another. To facilitate larger transactions, merchants and banks began to issue promissory notes and bills of exchange, laying the groundwork for the first forms of paper money.

Paper money itself first appeared in China during the Tang and Song dynasties and later spread to Europe in the 17th century. Unlike coins, paper money was easier to transport and allowed for more complex commercial networks. Over time, national governments and central banks established official currencies, regulated their value, and introduced standardized banking systems.

In the modern era, money has continued to evolve. Digital payment methods, credit cards, and online banking have transformed how people conduct transactions. More recently, cryptocurrencies like Bitcoin have emerged, offering new ways to store and transfer value without the need for traditional banks. Despite these innovations, the fundamental role of money as a medium of exchange, a store of value and a unit of account remains unchanged.

References:

American Numismatic Association. (n.d.).
History of Money Exhibit. https://www.money.org/money-museum/history-of-money/
Britannica. (n.d.).
Origins of coins. https://www.britannica.com/money/coin/Origins-of-coins
Garzón Espinosa, E. (2019).
The origin of money from the money-debt approach. Iberian Journal of the History of Economic Thought, 6(1), 37–54. https://doi.org/10.5209/IJHE.64117
National Geographic. (n.d.).
Nacimiento de la moneda. https://historia.nationalgeographic.com.es/a/nacimiento-moneda_16542