Who Invented Money?

Money has always been around us in one form or another. Although it is true that the ancients didn’t have printed notes like we have but the fact is undeniable that they were involved in commerce. In other words, they had a sense of money. Moreover, because trading among humans is so old that it would be impossible to find out the person who could have proposed the concept of money. It is more likely that the concept originated at different times (or simultaneously) at different places out of necessity.

The ancients, the evidence suggests, used to bargain things, that is, if person A is giving person B a cow in exchange for three pigs then the ‘cow’ is money for person A and the ‘pigs’ are the money for person B. Bargaining was good as long as the societies were not complex and the needs were simple. However, with time, societies became complex and the need for a standard was felt. We can again take the same example, but this time person A wants only 2 pigs. It would be impossible to trade off two-thirds of a cow! This was the main cause behind the evolution of standard money—notes and coins etc.

MoneyThe Chinese, one of the oldest civilizations, were the first to introduce paper money similar to our bank notes back in the 7th century. They called their bank notes ‘jaozi’. Jaozi didn’t immediately replace bartering but they were used alongside other commodities. Coins of gold and silver were used before this event but they were more like commodity money (like cows, pigs etc.) and less like the money of today in essence. The royal stamps on the coins ensured purity of the coins.

Banknotes were first issued in Europe by Stockholms Banco, Sweden in 1661. This was the beginning because soon each bank was issuing its own notes. The situation got quite out of hand and complex until the British gave only the Bank of England the rights to issue notes in 1694. This set an example and other countries soon followed and today, almost every country has only one bank which issues notes and coins (currency) and they are normally the public sector banks.

Category: History, Government & Society

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