History of money | Sunday Observer


The history of money, which has become an integral part of life, dates back to the beginning of human civilization. Money is one of the ways to show wealth today and it’s safe to say that banknotes and coins have long been associated with the term ‘money’. There are many interpretations given to money from time to time. Simply put, money is the intermediate medium of exchange for goods and services.

At the beginning of human civilization, man was accustomed to exchanging the surplus material he possessed to obtain what he needed. This process of exchanging goods for goods is known as the barter method. Historians, however, say that man abandoned the barter system around 10,000 years ago due to the need to use a common means to overcome the weaknesses of barter.

As a result, man has resorted to using an easily measured medium instead of exchanging incompatible materials such as animals, grains, and minerals. Cattle and goats were used as currency in the beginning and with the development of agriculture grain began to be used as currency in the regions around Mesopotamia. The Sumerian kings in power at the time built huge granaries in their kingdoms and introduced complex accounting systems to maintain fair exchange rates between farmers and governing bodies.

Agricultural production

Meanwhile, other companies that weren’t as obsessed with agricultural products began to use various tokens that would be similar to coins. The purpose of using tokens was to remind you of traded items.

Subsequently, developing civilizations around western and central Asia began to use metal coins such as gold, copper, and tin as a medium of exchange. It developed rapidly, and Egypt and Mesopotamia began to use gold nuggets of the right size. But less developed societies in East Asia and Africa had already used stones, clubs, beads, animal skins and knives as a common medium of exchange. Until the recent introduction of the coin, their medium of exchange was limited to these substances.

Historians believe that the world’s first coin was introduced by the ancient kingdom of Lydia (present-day Turkey). They made the coins using a mixture of gold and silver called “Electrom”. Coins that were not as round as today’s coins were often different shapes and sizes. But it is even possible to see the names of their kings inscribed in ancient Lydian letters on ancient Lydian coins. Coin production which began in Lydia quickly spread to Greek cities in Anatolia (a region bounded on the north by the Black Sea, on the west by the Aegean Sea and on the south by the Mediterranean Sea), and gradually to Greece.

At the time when Lydia and Greece used the currencies they discovered, China, which was at the tip of Asia, also developed its own coinage. Early Chinese coins took the microscopic shape of tools such as knives, agricultural tools, and axes, and later the Chinese began to produce round-shaped coins.

China also has the honor of being the first to use banknotes. Around 100 CE, the Chinese had begun to make paper from flax, bamboo, mulberry bark and hemp. It was around this time that they began to write letters of credit on paper and deer hides. As a result, banknotes came into use in the 7th century during the Tang dynasty, which developed along the Yellow River valley. Banknotes, a successful substitute for thousands of heavier coins, quickly became popular with merchants. As a result, during the Song dynasty in 960 AD, the Chinese government had incorporated the use of banknotes.

Banknote tradition

The tradition of Chinese banknotes was brought to Europe by explorers such as Marco Polo and Guillaume de Rubrouck. However, the use of banknotes was not as popular in Europe at that time because there was no paper production. The first paper mills in Europe were founded in 1150 AD by Muslims who ruled parts of Spain at the time.

So, during the early Renaissance, Europeans also realized that money was less secure, and merchants and governments began to use handwritten promissory notes. The end result was the emergence of banking institutions around 1500 AD. As a result, banknotes (checks and bills of exchange) became popular in Europe faster than banknotes because they were more secure than banknotes.

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