A.D. Christ drives the money changers out of the Temple in Jerusalem.

Barter

A long time ago, there was no money. People didn’t need any. They grew, gathered or hunted for their food. They built their own houses and made their own clothing. Sometimes people had things that others wanted.

The first people didn't buy goods from other people with money. They used barter.

Barter is the exchange of personal possessions of value for other goods that you want.

This kind of exchange started at the beginning of humankind and is still used today. But sometimes people couldn’t agree about what was fair. They started to trade objects that had value to everyone.

Salt, grains, feathers, shells, beads and even fish hooks were used like money.

Livestock and plant products come to be used as money in many different societies at different periods.

Cattle are probably the oldest of all forms of money, as domestication of animals tended to precede the cultivation of crops.

с.9000 - 6000 BC Domestication of cattle and cultivation of crops.

2. What is Money?

We normally think of currency when we think of money.

However, more generally speaking, money is any commodity which satisfies the following:

ü Unit of account

ü Store of Value

ü Medium of exchange

Various Types of Money:

ü Commodity Money

ü Convertible Paper

ü Fiat Money

ü Demand Deposits

ü Electronic Money

Commodity Money

Commodity money is a good that has an alternative use beside that of being money. It is accepted because the holder knows he can exchange it later.

Useful characteristics of commodity money:

ü Durable

ü Malleable

ü Scarce

Until around 3000 BC, commodities such as livestock and grain were used as money for many societies.

At about 1200 B.C. in China, cowry shells became the first medium of exchange, or money. The cowry has served as money throughout history even to the middle of this century.

China, in 1,000 B.C., produced mock cowry shells at the end of the Stone Age. They can be thought of as the original development of metal currency. In addition, tools made of metal, like knives and spades, were also used in China as money.

Examples of Commodity Money:

ü Precious Metals (gold, silver, etc.)

ü Barley (ancient Mesopotamia)

ü Salt (Salarium – Salary)

ü Tobacco leaves (Colonial Virginia)

ü Cigarettes (prisons)

ü Wheat Flour (rural USA)

ü Large Stones (Isle of Yap)

Uniform weights are a useful in dealing with commodity monies.

The names of many currencies and measures of value derive from weight measures.

q Talent – amount of weight a worker could be expected to carry on his back or about 60 lbs.

q Lira - Unit of currency originally issued by Charlemagne and based on a pound (libra) of silver.

q Pound Sterling - Saxon coin minted in 775 with 240 sterlings weighing a pound. Originally large payments were made in "pounds of sterling."

The First True Coins:640 - 630 B.C. The first true coins produced in Lydia.

The earliest coins made in Lydia, Asia Minor, consisted of electrum, a naturally occurring amalgam of gold and silver.

14.1 grams of electrum was one stater (meaning "standard"). A stater was about one month's pay for a soldier.

600 - 570 BC Use of coins spreads rapidly from Lydia to Greece. Aegina (c. 595 BC), Athens (c. 575 BC), Corinth (c. 570 BC) start to mint their own coins. Athenians used iron nails as money before.

550 BC Lydians produce separate gold and silver coins (World's first bimetallic coinage).

336 - 323 B.C. Reign of Alexander the Great:

Ø Cost of Alexander's army reaches half a ton of silver a day

Ø Later enormous quantities of Persian bullion are captured.

Ø The coining of Persian gold and payments to Alexander's soldiers give an enormous stimulus to trade throughout his empire.

Ø Alexander also simplifies the exchange rate between silver and gold by fixing it at 10 units of silver equals one of gold.

30 B.C. - 14 A.D. Reign of Augustus Caesar:Issues new, almost pure gold and silver coins, and new brass and copper ones.

Introduces three new taxes: a general sales tax, a land tax, and a flat-rate poll tax.

A.D. Christ drives the money changers out of the Temple in Jerusalem.

ü Jesus overturns the money changers' tables (Matthew 21.12).

ü To gentiles the practice of money changers would have seemed commonplace.

ü The Greek bankers or trapezitai derived their name from their tables

ü English word bank comes from the Italian banca for bench or counter.

306 – 337 Constantine secures control over the West then the whole Empire. Constantine issues a new gold coin, the Solidus, to be produced in the Eastern Roman Empire unchanged in weight or purity for the next 700 years.

Date: 2016-03-03; view: 635