The History of Money: Where Did it Come From?

The history of money, meaning cash, is an interesting journey that traces its roots back to the earliest days of trading and exchanging in a primitive form of barter system. The origins of money itself began with precious metals being traded as a form of currency. Coins were birthed during ancient times followed by a revolutionary invention of what is now paper currency: in other words, cash. 

It’s really quite fascinating how it all began. Picture a time where no digital technology existed. There were no forms of modern communication, no banks, no Wall Street or Stock Market, or any of the institutions commonly associated with money nowadays. In fact, there wasn’t even any America or United States for that matter!

The transformation from pieces of precious metals and rudimentary paper into the current digital age of currency and knowing the history of it can provide insight into where money came from and why it is used today. After all, money is something that everyone in modern society wants and needs, and usually wants more of! But have you ever stopped to think about how it all started? 

Long before the dawn of shiny coins and paper bills, people bartered. What that means is they exchanged goods for services and vice versa. Often traders would arrive in a foreign port offering their wares for something they needed. If, for example, you were in need a wheel for your wagon and your neighbor was a skilled craftsman, you would offer something he needed or wanted in exchange, such as vegetables from your farm. You get your wagon fixed, and your neighbor feeds his family. That’s an old fashioned win-win!

As simple as this sounds, this system was not without flaw or challenges for those incorporating it in their regular business practices. Sometimes offering someone what they needed in exchange for your needs simply didn’t match up. Or you were limited in what you could offer and could not make a fair trade to get what you needed. Another factor was the lack of a standardized system, which oftentimes made for great difficulty in determining what constituted a fair exchange. 

So, what happened next changed things quite a bit. This is where precious metals entered the equation, and the use of metals began to take over the common barter system. Gold and silver where the top choices and seemed to be the answer the barter system was in need of. After all, they were easy to transport, durable, identifiable and held a genuine value that could be fairly easily determined. Suddenly swapping Bessie the cow for some loaves of bread quickly became outdated since you could now offer some nuggets of gold or silver instead! 

Throughout history in ancient times, gold and silver became the prominent forms of exchange. Starting with Ancient Egypt and Mesopotamia, these shimmering pieces of metal became the lifeline of the earliest economic systems. 

From there they morphed into shaped coins and minted bars, making handling and trading much more efficient. So, if you were a chariot driver back in the early Roman days in need of a new chariot for your horse to pull you in, you’d need to pull some of those gold or silver coins from your purse in order to acquire it.

It was actually the ancient Greeks who debuted the first circular pieces that later became like the coins we know today. They revolutionized the ability to carry currency easily, rather than tote heavy bars which were bulky to transport. This idea of coins gained quickly in popularity and later were stamped with distinct designs which guaranteed their authenticity and ensured their value. Suddenly ancient Athenians could enjoy that warm pita or a theater performance by presenting a small handful of coins.

Each state began to design their own unique coin impressions to differentiate from the others. Athenians had an imposing owl while Corinthians were recognized by a bold lion. These were symbols of their respective cities and different coins were minted to represent different places and values. 

Upon conquering the Greeks, the Romans got on board and adopted the coin currency for themselves. As their empire grew, so did the value and reach of the coins that represented it. Roman coins were unmistakable with their markings and impressed faces of power of the authoritative emperors. If you were fortunate enough to have a pocketful of Romans coins, you were privy to such events as gladiator games at the Colosseum and other experiences and goods. 

So, that’s where it all began. From a simple trade system of barter to precious metals formed into coins. But where did paper come in? The simple answer is China, which was always ahead of the rest of the world in the invention of paper money way before anyone else even thought it could be possible. 

While the exact date is up for debate, it’s thought to have begun during the Tang Dynasty (618-907 AD). The thinking was, who wants to carry around a bag of heavy coins when you can use pieces of paper which are much lighter and more compact. The concept of paper bills was underway from then on, which revolutionized the way transactions were conducted from that time forward. It slowly began to take hold around the world, as more countries adapted to a new form of currency which became a new modern convenience. After all, who wants to walk around with a load of coins weighing them down, when paper is far less cumbersome?

Europe adapted this form of modern currency with the advent of banking institutions during the Middle Ages, where knights and jesters kept your money away from thieves! From there, the banks we know today were born and each country adapted to the concept with their own system of value and unique design of the various bills themselves. 

So, the paper you hold in your hand today represents a long history dating back to times when America was only a place told of in Viking tales around the campfire! Think about that the next time you make a purchase with cash!