The History of Money and Currency
The history of money ranges from the barter system to our modern use of paper money, promissory notes, and cryptocurrency. Today, money has become almost an abstract concept, derived of numbers on a computer server that logs and measures our current wealth. In this article, we will look at the history of money based on a timeline of the evolution of notable currency through the ages.
HISTORY OF MONEY AND CURRENCY TIMELINE
B.C. (Before Christ)
- 9000 B.C. — Bartering starts in Egypt
- 1200 B.C. — Cowrie shells are used as money
- 1100 B.C. — Rounded coins are used in China
- 600 B.C. — The first official currency is minted in Lydia
A.D. (Anno Domini)
- 1100 — The tally stick is used in England to cover taxes
- 1190 — Paper money is introduced in Europe based on a Chinese invention
- 1250 — The Florin from Florence is used for international commerce
- 1650 — The Wampum becomes the official currency in Massachusetts Bay Colony
- 1661 — The first banknotes are issued
- 1792 — The US dollar is issued
- 1848 — The gold rush begins and leads to the Gold Standard Act
- 1860 — Western Union starts electronic fund transfer via telegram
- 1861 — Civil war money is issued
- 1913 — The Federal Reserve is created
- 1929 — The Great Depression begins
- 1946 — The first charge card is invented.
- 1971 — The gold standard is abolished.
- 1999 — Mobile banking and online banking begins
- 2002 — The euro is issued
- 2008 — Contactless payment cards are issued, and Bitcoin starts cryptocurrency
A history of money timeline can be confusing because of our Western calendar. Essentially, we have two different types of calendars: one before the birth of Christ and one after his birth. We have a descending series of dates of the years before the birth of Christ as B.C., but since there is no year labeled as zero, the year Christ was born is called, “Anno Domini” Latin for “in the year of our Lord.” This new calendar begins an ascending series of dates starting at 1 A.D.
History of Money in the Era Before Christ (B.C.)
Bartering is first recorded as occurring in ancient Egypt, around 9000 B.C. People bartered goods they had in surplus for goods they needed. Usually, they bartered basic commodities like vegetables and grains or cattle and sheep.
In 1200 B.C. there is evidence that cowrie shells were used as money. Coastal regions around the Indian Ocean and the Mediterranean regions used cowrie shells in lieu of money to keep track of trades, as it was more convenient than bartering.
1100 B.C. brought the use of rounded coins in China. The Chinese first used goods made from bronze as money and later used rounded coins. In 600 B.C. the first official currency was created by King Alyattes in Lydia, now known as Turkey.
History Money in the Era after Christ (Anno Domini—A.D.)
In 1190, paper money was introduced in Europe based on a Chinese invention. When Marco Polo visited China, he was amazed by the splendor and sophistication and science of China. In the Travels of Marco Polo, he shares his discovery about the use of paper money issued by the government of Kublai Khan to manage the economy. When he shared his ideas back in Europe, the idea of paper was adopted to handle payments and debt obligations.
By the year 1250, the Florin from Florence was used for international commerce. The Italian Florin, the “fiorino d’oro,” was a gold coin used by the Republic of Florence. Until 1533, it remained popular as the coin money of international trade because it replaced bulky silver bars when it came to large-scale business transactions.
In the “New World” in America, the wampum became the official currency in Massachusetts Bay Colony in 1650. The history of money in America could be said to have started with the wampum. The wampum were tiny beads made from shells that were strung together and worn as decorative clothing. They became the official currency of the Massachusetts Bay Colony, and based on the official exchange rate, the purple beads were worth twice the value of the white ones.
In 1661, the first banknotes were issued. Today we tend to think of bills as money and silver bars as commodities to invest in, but in the 17th century, people would often think of precious metal bars as cash itself. Although the idea of paper money was introduced to Europe by Marco Polo, the history of paper money gained wider recognition when Sweden printed out the first banknotes. European merchants appreciated how this worked far better for business because it was easy to mass produce without the need to trade with precious metals like gold and silver.
The United States Congress created the U.S. dollar as the nation’s national currency on April 2, 1792, predating the Gold Standard by over 50 years. In 1848, the gold rush began, after the precious metal was discovered in abundance at Sutter’s Ranch. By 1861, the enthusiasm for gold had unified the western part of America. The Gold Standard Act set $20.67 an ounce as the value of gold and established that gold was the only precious metal that could be redeemed for U.S. legal tender.
In 1860, the first electronic fund transfer occurred when Western Union legally transferred funds through a telegram. This important event was overshadowed by the Civil War, however. In 1861, civil war money was issued, and the history of American paper money started with the “greenbacks.” The United States issued the greenbacks, a form of paper currency that was printed in green ink on its back, during the time of the American Civil War to help finance the war effort. Demand Notes were issued from 1861 to 1862, then United State Notes were issued from 1862 to 1865.
History of Money in the Modern Era
In 1913, the Federal Reserve was created. The Federal Reserve Act was created to alleviate the stresses on the money supply disturbed by the various financial crisis. It added a central authority to control the monetary system. The Federal Reserve managed to stabilize the value of the currency based on the gold standard, which was seen as a necessary step to control inflation.
In 1929, the infamous Great Depression began. The Great Depression occurred from 1929 to 1939, after the stock market crashed in October 1929. Wall Street panicked, and millions of investors lost all their money. This was the worst economic disaster in the history of the modern world.
An early version of the credit card emerged in 1946. The first credit card, named “Charg-It,” was invented by John Biggins. The notion that products and services could be purchased easily and paid off later quickly became popular throughout the entire world.
In 1971, the gold standard was abolished. It was a historic moment. Since 1879, it had been possible for an American to redeem dollars for gold, securing an ounce of gold for $20.67. But by 1971, the U.S. could no longer meet this obligation. The gold standard was officially terminated on August 15th, 1971 by Richard Nixon. Fiat currency now made it possible for any government to increase their money supply by printing out as much money as they needed to meet their expenses since the value of money was no longer tied to the worth of gold. The value of money was simply based on the government declaring it had value. The value of money was no derived from its relationship with a physical commodity like gold. Today, all societies use national fiat currencies and have no limit to how many bills they can put in circulation.
With the advent of the internet, mobile banking and online banking was first launched in 1999. European banks also started to offer their customers the option to do their banking through early smartphones. PayPal is often credited with initiating online banking and making it possible to make online purchases. This was the first type of online and electronic person-to-person payment system.
The European Central Bank issued the first series of the euro in 2002. This new European currency replaced national currencies, and today about 19 out of 28 members of the European Union use this currency.
In 2008, two significant changes occurred in 2008. The first was the use of contactless payment cards, a way of making payments using radio frequency or near field communications (NFC) with credit, debit, or smart cards, as well as mobile devices. The second big change was the release of Bitcoin in October 2008. This led to the development of the blockchain and cryptocurrencies because Bitcoin was released as an open-source software Today, many smart investors buy cryptocurrencies as part of a long-term currency investment.
The History of Money
We have come a long way from using cowrie shells as currency. Money is now a complex medium of exchange. What’s more, the history of money continues to evolve in our times. In recent years, for instance, only as far back as 2014, Barclaycard introduced the idea of wearable contactless wristbands. During the same year, iPhone users were given a new digital option called Apple Pay which worked like a virtual wallet to allow them to buy things directly with their mobile phone. No doubt many more innovations, ranging from apps to devices to new forms of money, will occur before the end of this second decade of the 21st century.
Interestingly enough, there appears to be a new monetary trend: Money is now becoming a more abstract medium of exchange, digital cash is slowly beginning to replace our reliance on paper money and metal coin. Of course, people will still continue to invest in precious metals but they won’t need to physically possession any tangible assets. A digital record that they own particular assets will be more than enough to establish ownership. In these modern times, we enjoy speedy transactions and convenience, and these traits will only improve over time. As we move into the future, we must make sure we don’t sacrifice our financial security in the process.