Money - the emergence and development
Paula Stöckelle, 28th April 2021
Nowadays buying things is fairly simple however in former times, when the money we know today hadn’t existed yet things were a bit more difficult. People were paying rather intricately with shells, huge stones with holes or heavy metals but let’s start at the beginning.
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It all began when our ancestors very long ago started to exchange things in order to have all they need. So if a farmer that harvested rice needed, let’s say new shoes, he simply went to the shoemaker and traded his farmed goods for the boots. Rather quickly though people found out that not all people one needed something from wanted their goods in return which lead to some people not getting very important things, because they simply couldn’t trade for it. So there had to be a better solution and there was.
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People declared certain goods like cattle, salt, shells or arrowheads as valuable and began to make them inside means of exchange, so kind of the first form of money. They were generally treasured, didn’t exist in massive amounts and most importantly didn’t rot that easily. Like this, goods didn’t have to be passed on immediately, but could be saved for a later point of time. Time after time gold and silver became more and more used for this kind of matter.
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But who thought of making coins for this purpose? The Lydian King Croesus who acknowledged the increasing exchange of goods and had the first ever coins minted. They should only be used as means of payment. In the ancient Greek and Rome this became more and more popular since all coins had the same weight and could easily be counted. At first, every coin had the exact value as the amount of gold or silver it existed of which is called a face-value coin. This however lead to the problem that people such as kings melted all their coins, diluted them with a bit of less valuable metal and reshaped them into their respective form which caused inflation and those humans to be even richer.
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In the Middle Ages in Europe this theory of face-value coins continued
and there were gold, silver and bronze coins in circulation. After the
advocacy of the document “golden bull” in 1356, many different
“currencies” such as Kreuzer, Schilling, Pfennig or Gulden were invented
which lead to not being able to buy things everywhere you want, since
some regions only allowed a certain coin. And with this interest for e
xchanging currencies was born.
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Since the 11th century paper money was used in China however at first
not meant as means of payment but as a kind of demand you could
convertto coins all the time. In Europe paper money came into cycle
when in theyear 1483 people were given paper for missing coins. At
first mankind wasrather careful with giving out these. Some banks tried
to always have theamount of money given out as paper notes stored in
coins, like the goldstandard today. However, managing this was very
difficult and it oftenhappened that inflation was caused by giving out too
many banknotes.
The first popular edition of paper money was accomplished in Great Britain in 1776 but only in the early nineteen hundreds it got more and more sustainable and the European states were able to establish a consistent currency based on banknotes. To this time also the gold standard was invented and introduced. It means that a country can only possess and with that print as much money as they have gold. In the graph you can see the timeline of money again.
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I hope you learnt something new with reading this and know now that paying wasn’t always as easy as today.
