Initially, during the course of civilization, money didn’t exist. People who lived during the early ages, had to make exchange for items or goods they did not have. They engaged in trade by barter, which is the exchange of an item for another item and these items weren’t of the same value. So if a fisher man caught more fish that he could use, he exchanged them with a livestock farmer or farmer who had grains, like wheat. This form of trade still exists today in some parts of the world. This exchange, however, is not free from difficulties, since there isn’t a common measure of value among the items bartered or exchanged.
Some items became more valuable than others and more sought after. These items assumed the role of currency or money. These items were referred to as commodity money. Items like cattle, spices, milk, cowry shells, were used as commodity money, due to the fact that these items were scarce. Later, these commodities became inconvenient for commercial trades, due to changes in their values, the fact of being indivisible and easily perishable, therefore checking the accumulation of wealth.
As soon as metal was discovered, it was used to make utensils and weapons which were previously made of stone. For its advantages, like being durable and divisible, metal became the main standard of value. It was initially used in its natural state, then in the forms of ingots and objects like rings to bracelets. The metal traded with were weighed and assessed of its purity at each transaction. Later, metal money gained definite form and weight, receiving a mark indicating its value and the person who issued it. They came to be valued commodities. The increased value of these objects led to its use as money and the circulation as money of small scale replicas of metal objects.
Coins were first minted in Lydia during the 7th century B.C, which is present day Turkey. The first metals used in coinage were gold and silver. Minting of gold and silver coins was common for many centuries and pieces were guaranteed by their intrinsic value or importance.Then a coin made with twenty grams of gold was exchanged for goods of even value. Gold were used for higher valued coins, while silver and copper coins were used for lesser value. Later cupronickel and other metallic alloys were used as coins and these coins came to circulate for their extrinsic or face value and not their metallic content. With the appearance of paper money, minting of metal coins was restricted to lower values, necessary as change. In this new role, durability became the most requested quality for coins.
In the next write up we will conclude our story on the evolution of money.