Question

Trace a evolution of money

Answer 1

Evolution of Money:-

Money is the most important invention of modern times. It has undergone a large process of historical evolution.

BARTER:-

Human beings passed through a stage where money was not in use and goods were exchanged directly for one another. Such exchanges were called as Barter System. Goods used in Barter system are generally in their natural state, in line with environment conditions and activities developed by the group, corresponding to elementary needs of the group's members. This exchange, however, is not free from difficulties, since there is not a common measure of value among the items bartered.

Then, a person catching more fish than the necessary for himself and his group, exchanged his excess fishes for the surplus of another person, who for instance,had planted and harvested more corn that what he could need.

COMMODITY MONEY:-

Some commodities, for their utility, came to be more sought than others. Accepted by all, they assumed the role of currency, circulating as an element of exchange for other products and used to assess their value. This was the commodity money.

If we study history of money we shall find that all sorts of commodities like pearls, precious stones,tea, tobacco, cow, leather, clothes, wine, salt, seashells etc. have been used as a medium of exchange (i.e. money). Salt was commodity money, difficult to obtain, mainly in the interior parts of continents, also used as a preservative for food. Both cattle and salt left the marks in the Portuguese language of their function as an exchange instrument, The word salario (salary, compensation, normally in money, due by an employer for the services of an employee) originates from the use of salt, in Rome, for payment of services rendered.

Later on, commodities became inconvenientfor commercial trades, due to changes in their values, the factof being indivisible and easily perishable, therefore, checking the accumulation of wealth.

METAL

As soon as man discovered metal, it was used to made utensils and weapons previously made of stone. For its advantages, as the possibility of treasuring, divisibility, easy of transportation and beauty, metal became the main standard of value. It was exchanges under different forms. At the beginning, metal was used in its natural state, and later under the form of ingots and, still, transformed into objects, from rings to bracelets.

The metal so traded required weight assessment and assaying of its purity at each transaction. Later, metal money gained definite form and weight, receiving a mark indicating its value, indicating also the person responsible for its issue. This measure made transactions faster, as it saved the trouble of weighing it and enabled prompt identification of the quantity of metal offered for sale.

ANCIENT COINS:-

In the 7th century B.C. the first coins resembling current ones appeared: they were small metal pieces, with fixed weight and value and bearing an official seal, that is the mark of who has minted them and also a guaranty of their value. Gold and silver coins are minted in Greece, and small oval ingots are used in Lydia, made of gold and silver alloy called electrum. For many centuries, countries minted their most highly valued coins in gold, using silver and copper for lesser value coins.

Ancient coins reflect the perosnality and mentality of people and their time. One may find cultural, political, economic, technological, aspects in coins. Probably, the first historic character to have the effigy registered in a coin was Alexander the Great, of Macedonia, around the year 330 B.C.

With the appearance of paper money, minting of metal coins was restricted to lower values, necessary as change.In this new role, durability became the most requested quality of coins.

PAPER MONEY

In the Middel ages, the keeping of values with goldsmiths, persons trading with gold and silver items, was common. The goldsmith, as a guarantee, delivered a receipt. WIth time, these receipts came to be used to make payments, circulating from hand to hand, giving origin to paper money. In Brazil, the first bank notes, precursors of the current notes, were issued by Banco do Brasil in 1810. They had its value written by hand, as we today do with our cheques. WIth the time, in the same form it happened to coins, the government came to conduct the issue of notes, controlling counterfeits and securing the power to pay.

Currently, all banks have their Central Banks in charge of issuing coins and notes. Today the printing notes uses especially prepared paper an dseveral printing processes, which are complementary to each other, assuring to the final product a great margin of security and durability conditions. The set of coins and notes used by a country form its monetary system. This system is regulated by appropriate legislation and organized from a monetary unit, its base value. Currently, all countries have use a monetary system of centesimal basis, in which the coinage dividing the unit represents one hunderedth of its value.