Origins of Money

Scientists estimate that the earliest type of money took the form of cattle and crops offered in exchange for goods and services dating back to about 9000 BCE. The only form of exchange older than this was barter, the system of offering something of value to get something back that was considered equally valuable – the earliest form of "let's make a deal."

The problem with barter is that is was so subjective. A person dying of thirst would be willing to trade just about anything for a glass of water. Someone living next to a river would be less interested. At least with cattle and crops, they had the constant value of being able to provide meat (or milk) and a good meal.

Primitive Forms

It appears that money developed independently in just about every early human civilization except for the Incas. Once money had advanced beyond the bulky forms of food, it took the form of seashells in many places, specifically the Cowrie shells found throughout the Pacific and Indian oceans in about 1200 BCE. These shells are the longest existing form of currency, having been used in some places until the middle of the 20th century. Even "wampum," currency used by American Indians, were shells.

Other early forms of currency were bright, shiny ornamental items. Manillas were ornamental items worn as jewelry in West Africa, as was wampum. Whale teeth were used in the Fiji islands. Metal coins that imitated the Cowrie shells appeared in China about 1000 BCE and coins made from precious metals came into usage about 700 BCE. By this time, money was taking the form of objects that were rare or in short supply.

Religion

In these early days of money, temples and churches became places where the bulky items could be stored. Priests and holy men also demanded tributes to the gods. In some ways, it could be said that religious sites were the first banks. The first banks developed in Mesopotamia between 3000 and 2000 BCE about the same time writing was first developed, it is thought as a means of keeping accounts.

Governments grew to control the money out of this tradition of using temples and palaces to store currency. Once paper money began being used, it was valued because governments agreed to back the worthless paper with the promise of an equal amount of a precious metal, such as gold.