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How Money Developed
In the early days of man’s
history, when money was unknown,
a man who wanted some article bought it by
offering, something
else in exchange for it.
For example, a man who had a goatskin and who wanted an axe
would go to
another man who was clever at making weapons
and offer him the skin in
return for an axe.
This method of buying things is called barter.
It is still sometimes used today,
as when a schoolboy ‘swops’
some possession for something that somebody else owns. As
communities developed and man’s needs grew, people found it
impossible
to get all the things they needed by barter.
A craftsman who made pots and
pans and who needed shoes
might find that the shoemakers had all the pots and pans
they
needed.
Similarly, a person might want a pan but might have only a pig
to offer in
exchange.The pig was more valuable than the
pan
and he had no way of getting
change.
Because of situations like these, men to think of something that
could be
accepted by all as a token of payment and that could
be divided into
smaller units. Many odd things were used
as
tokens for buying and selling goods before money as we know
it came into use.
The change over from barter to the
use of money was not
sudden. At first, valuable goods that were
in short supply
were used as tokens for payment.
The earliest and most
commonly-used medium of exchange was
cattle. A man’s
wealth in primitive society was measured by
the number of
cattle he owned. Other goods that served as money in various
parts of the world included beads, cacao beans,
furs, salt,
shells, teeth, and tea.
Gradually, the people of ancient communities
began to use
precious metals, particularly gold and silver, as
a standard
of Valuee (something by which the value
of goods can be
measured). People began to say that an article for
sale was
worth so much gold or so much silver.
Then, because men
used metals as a standard of value, they began to cut precious
metals into
pieces of fixed weights. In this way, coins came into
existence.
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