The Story Of Our Money System (1958)

How do we buy the things we want? With money, of course. Money is a convenient means of exchange we all use for obtaining the things we want. It measures the worth of things we buy or sell and the work we do, the services we perform. As you know, the coins and paper currency we use are of various denominations or values. Because of that, we can easily make change. The size, the shape, and the weight of money allow us to carry it and use it with ease. But where did the idea of money come from? How did people get things they wanted before there was money? What is the story of our money system? Long ago, before there was money, a man could not buy the things he wanted. Then people simply exchanged or bartered their goods. A man with a fish net to trade might want the dates his neighbor had. But if his neighbor did not want the fish net, he would not trade it for the dates. He would trade his dates with someone who did have something he wanted. And so, barter did not always work well. As time passed in Greece and in many other ancient countries, men found a better way of trading. One man might exchange his goods for a sheep. Although he may not have wanted the sheep, he knew he would eventually be able to trade it for something he did want, since the sheep was a very desirable animal. Because the ox was used to do work, it was the most valued animal and became the basis for determining the value of other things. And so, useful animals became a medium of exchange. That is, they became a kind of money. But this kind of money was not convenient to use. An animal could not be carried, and the whole animal had to be traded in exchange for goods. A medium of exchange would be more useful if it could be divided into parts. Eventually, in ancient Greece, an easily divisible medium of exchange was developed. The value of a knife, for example, could be measured by a certain number of bags of salt, which was a substance highly valued by ancient people. Salt was a more convenient kind of money than an animal, because a person could make small bundles of it that could be carried. And with salt, men could buy goods of large or small value. But bags of salt were bulky and awkward to handle. Men found many disadvantages in using salt. A material that seemed to be more practical was metal, which was also useful and highly valued, but more durable than salt. So, the ancient Greeks eventually began to use small pieces of metal for money. Nuggets of a precious metal such as silver were convenient for use in trade. Metals could be divided into many small units and became widely used as money. The worth of a vase, for instance, could be measured by a certain weight of metal. The metal could be weighed on scales, which the earlier Babylonians, Egyptians, and Assyrians had developed. But it was important for the metal used to be pure. So, merchants began to mark the pieces of metal to guarantee that they were pure. Years later, the Greeks learned in trading with their Asian neighbors how to use metal in the form of coins as a very practical medium of exchange. This Greek coin was typical of metal coins of the period. Its standardized value was determined by its weight and was guaranteed by a stamped mark of authority. The metal coin, then, became the most convenient medium of exchange that had been developed. Coins of various denominations were also made, divided into different units according to weight. A larger coin which weighed three times as much as a smaller coin would be worth three times as much. The coins of different weights made up a money system that provided a convenient means of exchanging goods. Later on, the Roman Empire modeled its money and money system after the system of the Greeks. The basis of the Roman money system was the denarius. Its value was determined by the weight of its metal. The use of the denarius spread with the Roman Empire throughout Europe. Later, in the 8th century, in a province in England, another kind of money system was established by King Offa. A pound of solid silver became the basic money unit. Each pound of silver was divided into 240 equal parts, each called a penny. The penny was the primary medium of exchange used in England during the Middle Ages. Its use helped set a convenient standard for other coin money, and helped to create a permanent money system for Englishmen to use in the trading of services and goods. English colonists in America at first bartered with the Indians and with each other. Later, tobacco and other goods were used as money, but were not as convenient to use as coined money. The colonists of Massachusetts were the first to make coins and use them. This coin, known as the pine tree shilling, was used throughout New England. When metal became scarce, Massachusetts followed an earlier practice used in England and issued paper promises that came to be regarded as money. They were issued in higher denominations than coins were. Eventually, the other colonies issued different types of money, either in coin or paper currency. Money from England, Portugal, and Spain was also used in the colonies. But the kinds of money in circulation did not have the same value in all the colonies, so trade was difficult. Until the colonies became the United States and adopted a unified money system in 1792. For the citizens of the new nation, this system conveniently measured the worth of work done and goods bought. The basic unit of value for this money system was called a dollar. The value of this silver dollar was determined by an established weight of metals and guaranteed by an official mark of the new nation. Gold coins of larger denomination than $1 were also issued. Coins which represented parts of a dollar were issued, too. The money system was based on the number 10, as is our number system. And so, our United States money system began. Today, coins are made by the mints of the United States Treasury. By a stamp mark of authority, our government guarantees that the coins are not counterfeit and great care is used in manufacturing the money. For convenience, money worth $1 or more is issued as paper currency. And so, this money is made available for use in our country. It is a part of our modern money system which has developed over the centuries. It began in times when men only bartered. It developed from early kinds of money, such as useful animals that were not divisible into parts. And from salt, which could be divided but was awkward to handle. Then metals were used, leading to the first coins and money systems. And eventually to the coins and money system that were developed and adopted by our country. And so today we have a useful money system. Using money with a guaranteed value. We have paper money and coins of large and small value in sizes and weights that make them easy to use. Money is the most convenient means we have for measuring the value of the work we do and the things we buy.