Money: From Barter to online Banking

By Janet Merza

Money is so vital to us it is almost impossible to imagine a way of life that doesn't include it, yet for most of human history there was no such thing as money and even when it appeared, it rarely crossed the paths of ordinary people. Bartering surpluses can only get a society so far; if it is to become complex, productive and diverse it needs to take the next step and choose an item - perhaps fish-hooks, perhaps flint - to use as a 'medium of exchange' whose value is agreed and lasting over time and distance. Many different items were used in this way but metal ones quickly become the mostly widely used and widely copied - becoming the coins we know today.
This book traces the development of money from the earliest days of barter and gifting to the current situation when most money, for most of the time, is completely invisible to us. It shows how money influenced the ways societies developed and how that development in turn led to new financial initiatives and inventions, which in turn made new economic models possible.
It is not a book for economics experts or those with a specialised interest in coins - it is a book for the general reader who is interested in how the evolution of money and financial practices have shaped social history.

• Language: English
• Publisher: Janet Merza
• Release date: May 18, 2015
• ISBN: 9780957229426

Janet Merza

I am interested in so many different things, it's hard to know where to start....my books reflect that diversity as each one is completely unrelated to any others....try them and see...

Book preview

Money:

from Barter to Online Banking

Janet Merza

ISBN 978-0-9572294-2-6

Smashwords edition

Published by: Squirrelstore Publishing

Copyright: Janet Merza 2015

www.squirrelstore.co.uk

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Table of contents:

1. Introduction

2. 2500 - 500 BCE: Asia Minor

3. 500 BCE - 500 CE: A small town in southern Greece

4. 500 - 1000: A small town in eastern England

5. 1000 -1400: Genoa, Italy

6. 1400 - 1600: Venice, Italy

7. 1600 - 1700: Pennsylvania, North America

8. 1700 - 1800: Birmingham, England

9. 1800 - 1900: Burton-On-Trent, England

10. 1900 - Present day: Coventry, England

11. Bibliography

12. Other books by the author

Introduction

If money suddenly ceased to exist, our entire way of life would have to change - it is how we value our time, our skills, our possessions, the roof over our head, the food we eat, the ground we walk on - yet what is it?

For most of us, apart from the cash we keep in our purses, it doesn’t even have a physical presence....it is hiding behind a string of numbers on a computer screen or, even more astonishingly, lurks invisibly within a plastic card. It is almost impossible to imagine how we would organise ourselves and our societies without it, but this level of dependency is very recent in human history - for most of our time, we have managed to live very complex and organised lives without it, so how have we come to depend on it so much?

In fact, when you think about it, the whole idea of ‘money’ is extraordinary. Although many creatures on this planet have a sense of self, we seem to be unique in having a sense of possession, of having something, an object or a skill, that another ‘self’ desires. Not only can two people agree on its value but they make one more, completely surreal, leap. They both agree that another something, perhaps a piece of paper or a string of shells also has an agreed value and this something will be used as the ‘medium of exchange’, the money, to trade possessions, skills and knowledge across time and space.

This book traces the development of this strange concept ‘money’ from our early history before it existed and people bartered - exchanged goods of equal value - up to the present day when money has become so surreal and esoteric that most of it only ever exists as an idea and a string of numbers held in a computer’s memory.

The way money was used at different times in our past reflected the way society was organised at that time, but the sheer fact of that money’s existence also shaped that society, creating a feedback loop where it is hard to disentangle cause and effect. By looking at people’s lives at specific points in our past we can better understand what life was like at that time and how money, or its absence, affected the way we lived.

Throughout this book I have tended to use modern names like ‘France’ for geographic areas to keep the story simpler, but readers must remember that these rarely have any relation to the national boundaries that existed at the time. In the same way, dates are either BCE, in which they are marked as such, or the reader can assume they are CE.

2, 500 - 500 BCE Asia Minor:

It was a longer walk, but worth it. The other women made their pots from the clay found in the creek close to their homes, where they felt safe and only had a short walk to the traditional potting ground where they shaped and baked the clay. She did as her mother had done and walked a long way up river to where the mud was a deeper red. She couldn’t carry much of this heavier mud back with her so she made fewer pots than the other women, but hers were stronger and lasted longer. A pot from her was a gift to be treasured and she wanted this one to be very special – to repay her friend for the beautifully prepared skin she had been given. She would also bring back enough mud to make a second pot and this one she would give to the mother of Ban. He was a very lucky hunter and perhaps her gift would be remembered when he next made a kill. The father of her children had been badly hurt in an earlier hunt and they hadn’t tasted meat now for a long time.

In the close-knit, early human societies of extended families, each small group of hunter-gatherers could meet most of their needs amongst themselves by a mixture of exchanging and gift-giving. Gift-giving happened both within the group and between neighbouring groups and was customary long before the more calculating two-way exchange of bartering evolved. Giving gifts proclaimed status, signalled friendly intentions or acknowledged the superiority of the other person and wove a web of mutual obligations that glued these early societies together. Gift-giving was the antithesis of ‘money’ as we understand it because the gift was valued as much for extrinsic reasons, such as the status of the giver as on the item’s intrinsic worth. Families that gave more than they received were valued accordingly and gained status within the group. Their generosity not only gave them authority but also created a network of obligations that could be called on when needed. As one native peoples say – ‘the best place to store surplus food is in the stomachs of your neighbours’.

The status of the group as a whole would often depend on the skills of one or two key members who excelled at something, such as arrow making. The gifts given by these exceptionally skilled members would be highly valued by everyone around and would enhance the status of the entire community. They became important people within their own group and naturally many children would be encouraged to emulate such a respected person. Gradually the group would become famous for its arrows – there would be perhaps three or four arrow-makers there who exceeded the skills of anyone in any other local group. Such a community would still give many other things as gifts to other communities, but the most valued gift and the one that reflected most highly on the receiver would be a gift of arrows.

When these early nomadic hunter-gatherers settled down and became small agricultural communities, a whole new world of possessions opened up for them. Not only did they no longer need to carry everything from place to place, but their way of life now required all sorts of tools and equipment previously unimagined. The scope for gift giving increased enormously, both within the growing group and between settlements whose members met more regularly than had been the case when both were constantly travelling. Gradually gift-giving evolved into two distinct strands – a ceremonial presentation of gifts to demonstrate respect, fealty or gratitude and the more commercial bartering of surpluses.

For bartering to work, there had to be agreed values for the different goods, so that people could exchange things that were generally held to have equal worth. This was difficult as there were a lot of variables to take into account: many products would fluctuate in value depending on the season and, if they were craft goods, the quality would vary depending on who had made them.

People needed some ‘thing’, some product whose value remained as constant as possible over time and on which everyone could agree the worth. Going back to the example of the arrows, since many surrounding communities were agreed on the value of these from that particular group, they could be used as a benchmark against which other gifts and goods would be measured. They became a ‘measure of value’ so that other goods would be valued as equivalent to ‘two arrows’ or ‘half an arrow’. This made an exchange between, for example, someone with a surplus of eggs and someone with surplus honeycombs so much easier when they defined everything in terms of how many arrows it equalled.

The need for an agreed, abstract measure of value became even more important when communities grew so large that many of the exchanges of goods took place between strangers. Up to this point, most exchanges would have been between people who either knew each other, or knew someone who could vouch for them. Once bartering happened between strangers, it was essential to have an agreed measure of value that both parties knew and trusted.

Once a scale of values was developed, other items - including people - could be measured against it. Now it was possible to measure the value a parent put on their daughter who was going to join another family, or the value a community put on a man killed by a neighbouring tribe. Much later, Anglo-Saxons knew this as Wergeld and it began literally with a payment - ‘geld’ - as compensation for the life of a man –‘wer’ – but the idea was extended downwards to cover lesser injuries and even damage to property. It also escalated upwards if the victim was of a higher social status or there were other circumstances that made it a more heinous offence. Wergeld was eventually extended to include bride prices and the buying and selling of slaves.

Having a measure of value helped people and groups to barter their goods but it still required both parties to be in the same place at the same time. Once the next step was taken and the arrowhead, for example, also became a medium of exchange, or ‘money’, the constraints of time and space were removed. The seasoned wood could be sold for three arrowheads and at some point in the future and at some other place, those same arrowheads could be used to buy some woven cloth. Now it was no longer necessary for two people to want things at the same time and trade could be lengthened over time as well as space - arrowheads could be stored against a future need.

All the time trading was limited to direct bartering, living standards improved very slowly because people tended to produce what they needed and were very self-sufficient, albeit at a basic level. Bartering relied on a coincidence of wants and if the only way to get rid of your own surplus in something was by acquiring someone else’s surplus in something else, there and then, there would always be a limit on what you wanted to possess. Nor was it practical to travel very far with your surplus, searching for someone with something more desirable.

However, once a society evolved to the point of having money, albeit not in a form we would recognise, and people had the opportunity to acquire wealth, the whole concept of commerce was born. This was truly revolutionary and meant the medium of exchange became something more than itself – the arrowheads had a value and role in society completely beyond their actual physical reason for existence.

To be a good medium of exchange, an item needed to be small enough to be readily stored, light enough to be easily transported and durable enough to last for a number of exchanges. Different societies evolved different commodities as mediums of exchange, or money, although all the chosen items had certain characteristics in common. They tended to be things that were always in steady demand, were durable and retained their quality or were precious in some way. Ancient Britons used flint, which was vital for making fire and weapons, while across Europe traders travelled far and wide with amber from the Baltic and shells from the Atlantic coasts.

Such small portable goods as flint or shells may not seem much like money to us, but they share its key characteristics: they were passed from hand to hand in payment for commodities and services, they were taken with the intention of offering them in payment to others, rather than to be kept as a gift and they were accepted without reference to the personal credit of the one offering them.

Societies chose as their ‘money’ items that could be measured by length, such as strings of beads, or by volume, such as grain, or by weight, such as metal. Some of these items had obvious practical value, others relied on the fact they were considered highly desirable. For example cowrie shells began circulating as money on the islands in the Pacific and their use spread outwards like ripples on a pond, to countries on the Pacific Rim such as India and China. They were used for thousands of years and travelled the trade routes as far west as the Middle East and Africa. They have been found in the ruins of the Babylonian city of Ninevah, where they were one of a number of items used in payments including gold, silver, honey, wool, leather and paper.

As societies became wealthier they