A Brief History of Money

• What if I asked you, “what does money mean to you?”

• You might tell me about penny's, nickels, dimes, dollars that you have in a jar, piggy bank or a savings account at the bank

• You might think about what you get paid from your parents to keep your room clean or the chores that you do around your home

• Money has not always been what it is today.

• Lets learn a little about how money has changed through history

▪By definition, it’s something that has a value▪Over history, the material form of money changed considerably▪Sometimes money was salt, cattle, feathers, stones, blankets, tobacco, hides, paper and shells to ▪Today we have even have electronic currency →▪Lets take a look at the history of money

What is this thing we use and call money?

• Bartering is the exchange of one resource or service for another (and probably began in a cave, where a guy traded a mastodon tusk for a spear)

• Or maybe a woman traded a handful of blueberries for sandals

• In colonial America. there wasn't much money, so the people did most of their business by bartering

How we began: Bartering

• In colonial America. there wasn't much money, so people did most of their business by bartering

• They used wheat, musket balls, wampum, or “bucks.” These "bucks" were not the dollar bills we use today. They were the skins of real bucks, or male deer

• In the early years of Oxford and Harvard, those schools allowed students to pay for tuition with goods like lumber, food, and livestock.

• Today at lunch you might trade a sandwich for a cookie – that’s bartering

Bartering

Early Forms of Money

▪Until around 3000 BC, resources such as livestock and grain were used as money for many societies

▪They were assigned a value

China - 1200 BC• The early Chinese used

cowrie shells as money• They had to use their mineral

resources for other purposes and picked cowine shells as currency

• Money needs to be portable, durable,

divisible and recognizable, and most important, difficult to counterfeit.

• It is not difficult to see why cowries were chosen as a medium of exchange.

Island of Yap ▪A most unusual form of money were stones used by primitive peoples on the island of Yap in the South Pacific until the early 20th century

▪Their money, called the fei, consisted of large stone wheels ranging in size from 1 to 12 feet (0.3-3.6 meters) in diameter, with a hole in the center

▪The larger the stone the greater its value

▪ Since many of these stones were massive and difficult to move, they remained at a given location, although their ownership changed hands

▪How would you like to get you allowance given to you in stones?

Roman Empire

▪ Salt was another type of money. In fact, salt was often used to pay for part of the salary of Roman soldiers

▪ This is the same salt you might put on your food

▪ Salt was precious because there were no refrigerators. This is how we preserved and flavored food

▪ The Latin word -- sal -- gives us the words salt and salary

Brick of Salt

• The Lydian King Croesus created the first true coin in Lydia, Asia Minor

• It consisted of electrum, a naturally occurring amalgam of gold and silver

• 14.1 grams of electrum was one stater (meaning "standard"). A stater was about one month's pay for a soldier

The First True Coins produced were in Lydia 640 – 630 BC

Chinese Paper Currency (ca.806 AD)

▪ There was a severe shortage of copper in early china which was their form of money after they stopped using cowrie shells

▪ So they started issuing paper money because of ease of making it and because of the resources they had to make paper

Middle Ages (800–1500 AD)

• Medieval coinage was standardized by King Charlemagne when he conquered most of Europe around 800 AD

Charlemagne

British Tally Sticks (1100 AD) ▪King Henry issued the first Tally Sticks in 1100 AD▪Why Tally sticks---- In the not-so-distant past, store-

keepers, who often could not read or write, used “cuts” on sticks to keep track of customer's debts

▪EX.: A baker would make cuts across a stick of wood equal to the number of loaves in the shopper's basket. This stick was then split lengthwise, with the baker and customer keeping half each, so that both could remember how many loaves were owed and neither of them could cheat

West Africa: Kissi

▪ Kissi  was used in the west African region that is now the nations of Liberia, Sierra Leone, and Guinea

▪ Kissi money was ‘minted’ in the 1880s by native blacksmiths who used iron smelted from the rich ore in the region

▪ Kissi as money was gradually replaced by western currencies in the 20th century, and is now used only in ritual ceremonies, sacrifices, and to decorate graves

Paper Money in Europe

▪In the 1660’s goldsmith notes were accepted as evidence of ability to pay debts that you owed

▪These notes mark the first use of Banknotes in England

▪If you could make your own money what would it look like?

Wampum becomes legal tender in Massachusetts in 1637

• Wampum was a type of shell, belt or a bead used by the Native Americans as currency and adopted by the settlers

• It was carried and traded as the Indians moved from tribe to tribe or among the early settlers

The First U.S. Dollar

• To finance the Revolutionary War in 1776, the U.S. Congress issued “Continentals”

• This was America’s first attempt at issuing a form of money

The First Bank of the U.S.

• The First bank of the U.S. was chartered in 1789 by Alexander Hamilton

• They issued a common looking bank note – but it was easy to counterfeit

Electronic MoneyToday and in the Future

• In our digital age, economic transactions regularly take place electronically, without the exchange

of digital currency• Digital cash in the form of bits and bytes will most likely continue to be the currency of the future. • Debit cards are money. They serve

as a means of exchange for money you have in the bank

• It makes it easier than carrying around a back pack full of money

Conclusion

What is money? By definition, it’s something of value. But over the last 10,000 years, the material form that money has taken has changed considerably—from cattle and cowrie shells to today’s electronic currency