History of Money

Topics: Money, Currency, Commodity money Pages: 7 (2375 words) Published: June 6, 2012
History of money
The history of money spans thousands of years. Numismatics is the scientific study of money and its history in all its varied forms. Many items have been used as commodity money such as natural scarce precious metals, cowry shells, barley, beads etc., as well as many other things that are thought of as having value. Modern money (and most ancient money) is essentially a token — in other words, an abstraction. Paper currency is perhaps the most common type of physical money today. However, objects of gold or silver present many of money's essential properties. -------------------------------------------------

Non-monetary exchange: barter, gift, and debt
Contrary to popular conception, there is no evidence of a society or economy that relied primarily on barter.[1] Instead, non-monetary societies operated largely along the principles of gift economics[1] and debt.[2][3] When barter did in fact occur, it was usually between either complete strangers or would-be enemies.[4] With barter, an individual possessing a material object of value, such as a measure of grain, could directly exchange that object for another object perceived to have equivalent value, such as a small animal, a clay pot or a tool. The capacity to carry out transactions is severely limited since it depends on a coincidence of wants. The seller of food grain has to find a buyer who wants to buy grain and who also could offer in return something the seller wants to buy. There is no common medium of exchange into which both seller and buyer could convert their tradable commodities. There is no standard which could be applied to measure the relative value of various goods and services. In a gift economy, valuable goods and services are regularly given without any explicit agreement for immediate or future rewards (i.e. there is no formal quid pro quo).[5]Ideally, simultaneous or recurring giving serves to circulate and redistribute valuables within the community. There are various social theories concerning gift economies. Some consider the gifts to be a form of reciprocal altruism. Another interpretation is that implicit "I owe you" debt[2] and social status are awarded in return for the 'gifts'.[6] Consider for example, the sharing of food in some hunter-gatherer societies, where food-sharing is a safeguard against the failure of any individual's daily foraging. This custom may reflect altruism, it may be a form of informal insurance, or may bring with it social status or other benefits. -------------------------------------------------

The emergence of money
In his book "Debt: the first 5000 years"[7] anthropologist David Graeber refutes the suggestion that money was invented to replace barter. The problem with this version of history he suggests, is the lack of any supporting evidence. His research indicates 'gift economies' were common, at least the beginnings of the first agrarian societies, when humans used elaborate credit systems based on gift economy to buy and sell goods prior to the invention of formal money. Since invading soldiers are not generally local, known and trustworthy people, money may have been invented as an alternative to economic tool to discourage or deter armed robbery and looting. The 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,[2] legal contracts and law codes relating to business practices and private property. Money was not only an emergence, it was a necessity.[8][9] The Code of Hammurabi, the best preserved ancient law code, was created ca. 1760 BC (middle chronology) in ancient Babylon. It was enacted by the sixth Babylonian king, Hammurabi. Earlier collections of laws include the code of Ur-Nammu, king of Ur (ca. 2050 BC), the Code of Eshnunna (ca. 1930 BC) and the...
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