When did people first use money?

          Money has always fascinated mankind from the time of Aristotle to the present day. Aristotle observed that man is a social being and establishes certain norms and regulations for their social interaction. Men employed money as a mode of exchange to facilitate such social dealings from their economical aspect.

          In the primitive societies, when people wanted to buy anything they had to give something else in exchange for it. For example, if a potter wanted to buy rice from a farmer, he offered him earthenware pots in exchange. The farmer would accept them because he needed pots. This was called the barter system which involved goods in exchange of goods. During those times goods served the purpose of money. But with the development of trade, the barter system could not meet the growing demands of a convenient exchange system for buying and selling. People started using token or symbolic goods in exchange all over the world. American Indians used beads of shells, Fijians used whale’s teeth and North Americans used tobacco in their exchange system. The Roman army men were provided salt for their services. But the topic of our interest is: when was coin first used as money? 

 

          The precise origin of money in the form of coins is not clearly known. As per the available sources, the earliest coins date back to about 700 B.C. when stamped pieces of metal were used as a medium of exchange by Lydians who lived in Asia. Some believe that the Chinese used coins even earlier than that. Coins were preferred because they were easy-to-carry and durable. The early coins were of irregular shape and were stamped with rough designs. The money value of coins depended on the value of the metal that the coins were made of. Coins were mostly made of gold, silver or copper because they were precious and durable.

          The use of paper currency was known in China as early as the 9th century but it did not develop in Europe until the 17th century. The government of different countries favoured the use of paper currencies and coins to simplify the monetary dealings as what mattered were the money value printed or stamped on them and not their real value. This is because the printed value on the currencies denotes their purchasing power as assured by the government. People accept a coin or currency in payment not because they value the coin itself but because they have confidence in the authority that issued them. As coins are heavy and bulky so larger payments are made in paper money issued by the proper legal authority.