HISTORY OF MONEY Before the invention of money, the only way to trade goods was via barter. If you had a spare goat but wanted a big pile of wheat, you had to find someone in the reverse position. This would have been fine in a community where the only possessions were wheat and goats, but once you threw a few more items into the mix the limitations of the barter system became glaringly obvious. First, there was the problem of matching up desires. What if the person with the wheat was only interested in swapping it for hand axes? It could be a long time before the first man found an axe-rich individual in desperate need of a goat. In the meantime, he might starve. Second, what if the wheat man did want a goat, but not until his daughters wedding in three months time? Had they been able to read and write, the protagonists could have drawn up a contract, but at this stage there were no literate societies. Even if there had been, a system relying on written records of who owed what to whom would have become hopelessly unwieldy once there was a reasonable amount of trade going on. As it was, the parties to the deal would have had to rely on memory. This was open to abuse (What are you talking about? I never said Id give you a whole goat!) and still more liable to become overtaxed (If Ug owes Stig seven axes, Stig owes Rok four clubs and Rok owes Ug two goats, how many bear hides does Stig owe Yed?). And there was always the risk that the poor old goat might turn up its toes before the wedding day. One day, an anonymous Neolithic farmer came up with an ingenious solution. Why not settle on something that everyone agreed was worth having? This could then be used to buy goats, axes, clubs and all the rest of it. The dollar bill signs flashed in the proto-economists mind. Eventually his big idea would become known as money.
Posted on: Tue, 09 Dec 2014 12:19:57 +0000
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