The History of Money: Early money
Explore the development of money from exchange of goods and services to the use of objects as a type of IOU.
© Open University (A Britannica Publishing Partner)
-
© Open University (A Britannica Publishing Partner)Learn about the history of money.
-
Encyclopædia Britannica, Inc.Inflation drives up the cost of everyday goods, affecting what you pay for items both large and small.
-
© Open University (A Britannica Publishing Partner)An overview of how money has come under the control of banks and private lenders.
-
© Open University (A Britannica Publishing Partner)Explore the development and use of paper money as a common currency.
Transcript
SPEAKER: "The History of Money in 10 Minutes."
Number one, Early Money. Long before money was invented, people were quite happy making, doing, and growing things for one another. In small communities, they could largely remember the payments and receipts of what was exchanged. Keeping tabs or tallies of these exchanges helped with a key requirement, which was to record who'd been paid and who was still owed. But as communities grew, so the exchanges became more and more numerous. And as people created things for the common good and rulers began to impose taxes, so the accounting was increasingly hard to keep track of.
IOU notes might've been a neat solution. But unless you knew the individual issuer personally, they were hard to enforce or verify. So instead, people started to use objects, such as whales teeth, as a kind of IOU. This intermediate step in the exchange process meant that people were free to trade with anyone. And they could even store up purchasing power for later use with their retradable IOU tokens. So at the same time that humans invented money, they'd also invented debt.
Number one, Early Money. Long before money was invented, people were quite happy making, doing, and growing things for one another. In small communities, they could largely remember the payments and receipts of what was exchanged. Keeping tabs or tallies of these exchanges helped with a key requirement, which was to record who'd been paid and who was still owed. But as communities grew, so the exchanges became more and more numerous. And as people created things for the common good and rulers began to impose taxes, so the accounting was increasingly hard to keep track of.
IOU notes might've been a neat solution. But unless you knew the individual issuer personally, they were hard to enforce or verify. So instead, people started to use objects, such as whales teeth, as a kind of IOU. This intermediate step in the exchange process meant that people were free to trade with anyone. And they could even store up purchasing power for later use with their retradable IOU tokens. So at the same time that humans invented money, they'd also invented debt.