The history of money is very interesting. The first money arose in ancient times, and has survived to this day, but in a completely different form. Wars, revolutions, changes of governments and overthrow of kings occurred because of money. Are they the engine of history? Or is their role limited only to purchasing power? To answer these questions, we will learn the history of the emergence of money, the path of its evolution and the history of its spread throughout the world.

Ancient times

History of money originates from the time of the existence of ancient tribes. But the money of those times was significantly different from the money of today. It was more likely not money, but a means of exchange. So, for example, in pastoral tribes money was cattle, in Pomeranian settlements money was fish, which was exchanged for bread and meat so necessary for the tribe. It is known that different peoples had their own objects that served them as money:

In Mexico, cocoa beans were money;

In Canada, Alaska and Siberia, ancient ancestors used the skins of valuable animals as money;

Among some tribes of South America and on the islands of Oceania, seashells or pearls were money;

The tribes of New Zealand used stones with a hole in the middle instead of money.

In some places grain or salt served as money. The use of commodity money made it possible to exchange it with other tribes or use it for its intended purpose in one’s own household. But they were extremely inconvenient to use. Therefore, there was a need for another, more practical form of payment.

Cowries. Photo from shells-of-aquarius.com

The Afars, a warlike tribe inhabiting the Danakil Desert in northeastern Ethiopia, have a legend that their land was once extremely rich in gold. The Afars, basking in luxury, became arrogant and angered God. All their gold turned to salt, and the tribe instantly became poor. To this day it lives from hand to mouth, wandering with its skinny cattle through the meager pastures of Danakil. But the Afars believe that sooner or later they will atone for their guilt and God will turn salt into gold again.

However, salt turned out to be not much worse than gold: everyone needs it and is always in price, that is, it is liquid; can be stored for as long as desired without losing essential properties; easily divided (exchanged). So for the Afars, for a whole millennium (until the twentieth century), salt became the main means of exchange. For example, an Afar who raises sheep wants to buy milk from his neighbor who raises cows. However, the sheep have not yet had time to grow wool, so barter is impossible. He exchanges the milk for salt and is all the more pleased that, unlike milk, it will not turn sour and he can put it aside in reserve.

Salt is not a conventional commodity, unlike money, but a consumed one, so it is not yet a monetary system in the classical sense. But this is no longer a completely natural exchange, since merchants can accept salt not only as a product, but also to preserve wealth (vegetables will rot, meat will rot, but nothing will happen to the salt), and for subsequent use as a means of payment.

Gold has two important advantages over salt, both stemming from its rarity. First, it delivers the same value in a much smaller package, making it much more portable. Secondly, the risk that a new huge source of gold will be discovered (deposit or import) and its value will sharply decrease is much lower.

Food as currency

In the ancient agricultural societies of Mesopotamia, three millennia BC, barley was the most important commodity. The smallest "unit of change" was shekel- 180 barley grains (usually about 11 grams). Shekels of barley could express the value of any good or service.

Over time, the shekel became a universal measure of weight; it was used, in particular, to measure silver. In the laws of the Babylonian king Hammurabi (circa 18th century BC), the oldest surviving set of written laws, fines were specified in shekels of silver. The value of barley was highly dependent on the harvest, so silver was a much more stable "currency".

In feudal Japan until the 19th century, the main, so to speak, unit of wealth was koku- the amount of rice that can feed an adult for a year (about 278 liters, or about 150 kilograms). If a landowner was said to have 30 thousand koku, this did not mean that he had that much rice. It was the total value of all his assets - productive land, livestock, labor, reduced to the most understandable unit of measurement. Koku measured the wealth of even those estates where rice was not grown at all.

Among the nomads of the Eurasian steppes, cattle played the role of a universal equivalent: with its help they paid taxes and penalties, bought brides, and exchanged bread, tar, high-quality weapons and other necessary goods with sedentary neighbors.

All of these “natural currencies” had a common problem: they were extremely volatile, that is, their value relative to other goods fluctuated greatly throughout the year and depended on many natural factors (crop could be destroyed by rain or drought, livestock could die). In this sense, minerals were much more reliable. Gold and silver turned out to be ideal: they are quite common and at the same time quite rare, they do not corrode, do not oxidize, and are easy to recognize. For small transactions, copper was most often used: it is also quite chemically stable and widespread on all continents. From the use of metals as “natural currencies” by weight (in the form of sand or bars) there was one step left to coinage.

Slaves and shells

But the most famous example of commodity money is, of course, cowrie shells. They had two important advantages. Firstly, they are almost impossible to fake. Secondly, huge margins were provided by simply moving shells from point A to point B: say, in the Niger Delta, the most important trading hub of West Africa, they cost a thousand (!) times more than in the Maldives, where they were most mined.

Cowries were the most durable of the “natural currencies”: the first evidence of their use as a means of payment dates back to the middle of the 2nd millennium BC, and they were forced out of circulation only at the beginning of the 20th century. They were used as a means of payment throughout Africa, India, Indochina, the Pacific Islands and among North American Indians from the Pacific coast to the Great Lakes. And in China, at one time, coins were even banned (to stop counterfeiting), and cowries were the main means of payment. Even the traditional Chinese character for "money" originated from a stylized image of a seashell.

From the 16th to the 19th centuries, cowries were a key element of the slave trade system. Europeans bought them in the same Maldives for gold, for rice (which was brought from India) or for some other goods. Shells were transported to Portuguese, Spanish, and Dutch ports in thousands of tons. Ships going to slave markets in the Niger Delta or Zanzibar often carried no cargo other than cowries. Slaves were driven mainly from the interior regions of Africa (Uganda, Congo, Zaire), where cowries were the most common “currency” and, of course, were much more expensive than on the coast.

The growing cotton and sugar cane plantations in the New World required more and more slaves. Accordingly, Europeans brought more and more cowries to Africa. The natural result of this was inflation. In the second half of the 19th century, so many shells became needed to purchase a shipment of slaves in the interior of Africa that the profit from resale of slaves to planters no longer covered the cost of transporting cowries. Thus began the decline of the slave trade, and with it the “shell economy.”

About five hundred years ago you could buy a slave for a dozen cowrie shell beads in Zanzibar. Nowadays, in Zanzibar, a string of such beads can be bought as a souvenir for a dollar or a dollar and a half.

Eternal values

Commodity money as a simple and reliable means of payment arises almost inevitably in any society where there is no established banking system. A textbook example is the Soviet economy during the period of collapse, when “normal” money was rapidly becoming cheaper and there was nothing to buy with it, and people willingly used vodka, cigarettes and similar enduring values ​​in mutual transactions. In prison, where money is simply prohibited, cigarettes usually play their role. Anyone who has read Jack London should remember that the heroes of his stories about Alaska almost never pay in dollars, preferring gold dust. The founding father of economics, Adam Smith, a Scotsman by birth, wrote in the 18th century that in his homeland, peasants often pay each other with nails: “ordinary” money still doesn’t have much to spend on, but they always nail something somewhere necessary.

Money made of metal

Gradually money becomes metallic. And in the seventh century BC, minted coins appeared. They are quickly spreading throughout the world. This is easy to explain, because... coins are convenient to store, transport, split and combine. They have high cost with low volume and weight.

In most countries, silver, copper or bronze were used as the metal for minting coins. And only in Egypt and Assyria was gold used as money two millennia BC. With the growth of commodity-production relations, it became necessary to increase the value of the exchange equivalent. From this moment on, gold and silver become the main money.

Paper money

History of money received a new round of development with the advent of paper money. They appeared in 910 in China. And in Russia, the first paper money was introduced under Catherine II in 1769.

With the advent of banks, they became the custodians of money and basic values. When depositing money, a person received a certificate from the bank. It indicated how much money the banker had in custody, and the bearer of this certificate was supposed to receive a certain amount of money from the bank. This made it possible to pay not with coins, but with these certificates. A little time passed, and the certificates themselves began to be equated to real money. This is the history of the appearance of paper money. And the word “banknote” itself originates from the English words “bank note” and translated means “bank record”.

And if earlier the economic essence of paper money was the obligation to issue real money, now the banknotes themselves are the same money.

AUSTRALIA - DOLLAR

BHUTAN - NGULTRUM

JAPAN - YEN

The emergence of public central banks

The first such bank appeared in Sweden in 1661. The main tasks of the state central bank were control over banking operations in the country and responsibility for the state of the national currency, including its production.

Other countries were slow to follow Sweden's lead. For example, the central bank in France was founded 140 years later, and in the Russian Empire the State Bank appeared in 1860. It was only in 1913 that the Federal Reserve System was founded in the United States. Before its introduction, dollar bills were issued by individual American banks, and differed from each other in design and size.

The beginning of globalization

In 1944, the Bretton Woods International Conference was held, at which an agreement was adopted to link the dollar exchange rate to the gold rate and this continued until 1971. It was the dollar that became the international currency on which international trade was based. At the conference, it was decided to create the World Bank and the International Monetary Fund. It was from the Bretton Woods Conference that the modern process of globalization of the whole world began.

Bank cards

In 1950, the world's first Diners Club credit card was issued to pay for restaurant visits. And in 1952, the American bank Franklin National Bank issued the first bank credit card.

Nowadays, bank cards won’t surprise anyone. History of money continues and gains new momentum. According to statistics, the average American currently has about ten plastic cards for various purposes.

Computers at the service of financiers

The year 1972 marked the involvement of computers in the financial sector. Thus, in the USA, a centralized electronic network is being created to record bank checks. And in 1973, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) was created. The creators of this system were 239 banks representing 15 countries. For the first time, the teletype was no longer used for interbank money transfers.

Beginning in 1977, personal computers became available for retail sale, heralding the computerization of various sectors of the economy and life, the creation of new forms of money, and the advent of the Internet.

Ministry of Education of the Republic of Belarus

Belarusian National Technical University

Faculty of Marketing, Management, Entrepreneurship

Department of Marketing

in the discipline “Money. Loans. Banks"

Topic: “Paper money: characteristics

and history of use"

Performed by: FMMP student, 3rd year, group 105128

Putitskaya A.S.

Checked by: teacher

Kozel K.P.

Minsk, 2010

INTRODUCTION 3

CHAPTER 1 THE ARISE OF PAPER MONEY 4

The history of paper money 4

History of the use of paper money 4

CHAPTER 2 CHARACTERISTICS OF PAPER MONEY 8

CONCLUSION 10

LIST OF SOURCES USED 11

INTRODUCTION

The essay is devoted to the topic “Paper money”. It includes two chapters: Chapter 1 “The Emergence of Paper Money,” which consists of two subchapters (the history of the emergence of paper money and the history of the use of paper money) and Chapter 2 “Characteristics of paper money.”

The first chapter will talk about the history of paper money: how and when they first appeared, which countries were the first to issue them.

Paper money appeared as a substitute for gold coins in circulation. The right to issue paper money belongs to the state. The difference between the nominal value of the issued money and the cost of its issue forms the treasury's share premium, which is an essential element of government revenues. Excessive issuance of money to cover the budget deficit leads to its depreciation. Paper money performs two functions: a medium of circulation and a means of payment. They are usually irredeemable for gold and are endowed with a forced exchange rate by the state.

The second chapter provides a description of paper money, namely: the concept of paper money: paper money is non-redeemable tokens that are issued by the state to cover its (budget) expenses and are endowed with a forced rate, recognized by law as mandatory for acceptance in all types of payments. The reasons for their occurrence and the conditions for their creation in different countries (France, Great Britain, Russia, etc.) are indicated. The defining features of paper money are described: their release to cover the budget deficit, irredeemability in gold, forced introduction into circulation, exchange rate instability and inevitable depreciation; as well as their two main functions, such as: medium of exchange and means of payment.

And in the end, a conclusion was drawn about the role of paper money in the development of not only each individual state, but also all of humanity as a whole.

1 THE ARISE OF PAPER MONEY

The history of paper money

Money in its natural form as an independent value has been known since time immemorial.

The first paper money, like paper itself, appeared in China in the 8th century. They were described in detail by the famous Italian traveler Marco Polo, who visited China at the end of the 13th century and lived there for 17 years. During the reign of the Yuan Dynasty (1271 - 1368), they were printed in large quantities and were the main means of currency circulation in China.

The earliest type of paper money in China was a special receipt, issued either for valuables deposited in special shops, or as evidence of taxes paid, stored in accounts in provincial centers rather than in the capital.

Paper money made a great impression on travelers visiting China in the 7th – 8th centuries. Marco Polo wrote that issuing paper money is a new way to achieve the goal that alchemists have been striving for so long ago. In the 13th century, the government of Genghis Khan freely exchanged paper banknotes for gold, so counterfeiting paper money brought in large profits and was considered a terrible crime. By 1500, the Chinese government was forced to stop issuing paper money due to difficulties associated with over-issuance and inflation, but the private banks that already existed in China continued to issue paper money.

The world's earliest banknote issues took place in Stockholm in 1661. In Russia, the first paper money (assignats) were introduced under Catherine II (1769).

History of the use of paper money

More than two hundred years ago, the governments of Western European countries followed the example of banks and also began issuing paper money, and in the 19th century, the issue (issue) of paper money almost everywhere became a state monopoly and only the main state issuing bank had the right to engage in it.

In order to maintain a stable value of paper money, many governments maintained the free exchange of paper money for gold or silver. This was true in the 18th century and even at the beginning of the 20th century. On Russian money from the time of Nicholas II it is said that “The State Bank exchanges credit notes for gold coins without limiting the amount.” A Japanese banknote from the same era states that “The State Bank of Japan promises to pay the bearer of this bill one yen in silver.”

However, such free exchange was not practiced everywhere, because statesmen often believed that they could print beautiful pieces of paper, write on them, for example, “50 soles,” and buy real goods on the market for them (wheat, wood for ships, copper for guns, gunpowder and other things needed by the state), without promising the sellers any real values ​​in exchange. The authorities were especially active in printing such pieces of paper during wars and revolutions, which always require large expenses.

For example, after the French Revolution in 1793, the revolutionary government of France issued paper "assignats". But very soon everyone drew attention to a strange circumstance: paper money, unlike gold and silver, tended to quickly depreciate. If in November Parisian merchants sold a bag of grain for 100 soles in assignats, then a month later they demanded 500 soles for it. Moreover, if the buyer paid for grain with old silver coins, then the price for the month did not change at all.

The reason for this phenomenon lies in the fact that gold and silver are real goods that have real value, just like bread, shoes or a house. And paper money is actually a substitute for money, and if you print more such pieces of paper than necessary, they will inevitably depreciate. By 1796, so many assignats had been printed that they were no longer accepted as payment at all. Then the revolutionary experiment was completed, the machines were broken, and the remaining assignats were burned.

The process by which too many money substitutes are released into the market and become devalued is called inflation. Not only paper money, but also any other substitute for real money is subject to inflation when there is too much of it. In Russia, during the reign of Alexei Mikhailovich (1645-1676), in the hope of filling the state treasury, the authorities began to issue copper coins and pay with them at the price of silver ones. However, very soon copper money began to sharply become cheaper, and prices rose, which led to the impoverishment of service people, townspeople, and merchants. The people could not stand it, and a “copper riot” broke out in Moscow in 1662. He was brutally suppressed, and the treasury was never filled.

Gold and silver money are generally not subject to inflation. The fact is that the production of precious metals is an expensive process, and all attempts by medieval alchemists to obtain cheap gold ended in failure. True, there was a period in history when gold fell sharply in price. In the 16th century, the Spaniards and Portuguese explored South America and exported huge amounts of gold taken from the Indians to Europe. At the same time, the quantity of other goods on the European markets remained the same, so the prices of goods expressed in gold coins increased significantly.

An interesting feature of inflation is that excess money on the market is not immediately apparent. Therefore, inflation benefits, firstly, the one who makes money, and, secondly, the one who first puts it into circulation. For example, until medieval Europe felt that there was too much gold on the market and the prices of goods rose, years and even decades passed. During this time, Spain and Portugal have already become fabulously rich.

This feature is often used by modern governments, which issue apparently excess paper money, knowing full well that prices will soon rise and the money will depreciate. After all, this will happen later, after the government pays pensions to pensioners, salaries to teachers, doctors, military personnel and fulfills its other monetary obligations. And the government will be able to tell the citizens: we are not to blame, we paid everything, but the traders who inflate prices are to blame, so hit them.

Inflation can be obvious or hidden. For example, in the Soviet Union in the early 90s, almost all stores were state-owned, prices for goods were set by the state, and the state issued paper money, more than was required for normal monetary circulation. As a result, it became increasingly difficult to buy good goods in stores. Store employees bought them themselves at government prices, and then sold them under the counter on the black market.

In an attempt to streamline trade, the government issued “coupons” - documents giving the right to purchase in a store at a state price. There were coupons for sugar, vodka, tobacco products and others. When purchasing, they had to be given back in the store along with the money. But this did not solve the problem, and the commodity shortage became more and more acute.

In the end, in 1992, prices had to be released so that the market itself could restore the balance between the money and commodity supply. And prices went up sharply. The result can be seen in the example of the price of a Moscow metro ticket. In 1961-1990 it cost 5 kopecks, in 1991 - 15 kopecks, in 1994 - 50 rubles, in 1997 - 2 thousand rubles, and now - 5 rubles, that is, without taking into account the denomination of 1997, - 5 thousand rubles As we can see, over the past 10 years, the ruble, measured through metro services, has fallen in price by 100 thousand times.

When inflation causes paper money to have too many zeros to make calculations difficult, the government often redenominates, or removes a few zeros. In Russia, in 1997, 3 zeros were removed, and the 100,000 ruble bill turned into a hundred ruble note. And in Brazil, 10 cruzeiros turned into 1 centavo, that is, the denomination was reduced by 1,000 times, simply by overprinting the old money. But this is not done everywhere. For example, in Italy, 2,000 liras have long been worth approximately one dollar, but they are not going to carry out denomination there.

From time to time, the government decides not only to remove the extra zeros, but also to change the entire appearance of money. In many countries, including the Soviet Union, such reform was carried out in the second half of the 1940s to draw a line after the enormous inflation and collapse of financial systems during World War II. In 1996, the issue of carrying out such a reform was again discussed in Russia. It was proposed, for example, that famous poets should be depicted on 100 rubles, scientists on 25 rubles, and athletes on 1 ruble.

During revolutions and other social upheavals, it happens that the next government prints its money, but when it is printed, that government no longer exists. But the new government also needs money and it uses the money it has to put its own stamp on it.

2 CHARACTERISTICS OF PAPER MONEY

Paper money is a sign of value that replaces full-fledged money in circulation. Paper money is not backed by precious metals and is not convertible into them, has a forced exchange rate and is issued by the state for use in cash circulation and to cover its expenses. Paper money has several meanings:

Legal means of payment are banknotes (credit money) issued for lending to the economy, the state and to increase state gold and foreign exchange reserves;

The means for covering government expenses, the main solution for the budget deficit, are treasury notes, issued, as a rule, by the treasury; - banknotes and any securities that can be used as money, such as checks, bills of exchange (even if they are not legal tender).

Paper money performs the following functions:

Appeals;

Payment;

Savings;

Savings during periods of relative stability.

Paper money has no intrinsic value; it acquires a representative value during the circulation process. The state, by establishing a forced exchange rate for paper money, gives it social significance. The real value of paper money is determined by the law of value and the laws of monetary circulation. When paper money circulates, it depreciates, which is expressed in a decrease in the purchasing power of money in relation to goods, services, gold and foreign currency. Paper money arose in the process of circulation of real money (gold and silver coins) as the denomination indicated on the coins was separated from the actual weight of the metal contained in them. In fact, the state can issue an unlimited amount of paper money in any denominations. However, the issue of paper money is subject to objective economic laws. According to the law of monetary circulation, the amount of money in circulation is directly proportional to the sum of commodity prices and inversely proportional to the speed of circulation of money. Its violation causes each currency note to “shrink” and represent a smaller amount of value.

After the introduction of paper money into circulation, trust in it can be maintained for a certain time by the state using economic policy methods. In a market economy, the state belongs to the most powerful and most active subject of economic, including monetary, relations. It has broad tax ties with all subjects of monetary circulation and is one of the largest producers of goods and their seller on the market, as well as one of the most active subjects in the securities market. In all these cases, the state receives money in large quantities from other subjects of circulation, and if it agrees to receive payments in paper money, then other subjects of circulation accept them in payment and among themselves.

Here there is a factor of trust in the most powerful partner from an economic point of view, which significantly influences the behavior of all other subjects, as a result of which they perceive paper tokens as full-fledged money. This action is based not on a subjective, but on an objective economic basis. As long as entities in the sphere of circulation are able to purchase goods or services with their paper tokens, they will have faith in the creditworthiness of the government and will accept paper money as payment for their goods and services.

The defining features of paper money are:

Release them to cover the budget deficit;

Unchangeable for gold;

Forced introduction into circulation;

Exchange rate instability and inevitable depreciation.

These features are inherent primarily in money that is issued directly by the government represented by the Ministry of Finance. They are usually called treasury notes, obligations, etc. But these characteristics can also be acquired by money issued by banks, in particular by the central bank, if their emission is used to finance the budget deficit. This is convincingly evidenced by the experience of Ukraine in 1991-1993, when the credit issue of the National Bank turned into a key source of financing budget expenditures. As a result, Ukrainian money depreciated by 100 times in 1993.

CONCLUSION

Paper money is the most important discovery of humanity. The method of producing paper money combined both of these discoveries. The first paper money appeared in China back in the 800s AD. Metal coins were very difficult to transport over long distances, so the government began to think about creating paper money. It began to pay merchants not in coins, but in special certificates, which were easily exchanged for “hard” money. These certificates depicted people, trees, and officials put their signatures and seals. Paper money was most likely brought to the West by travelers returning from China. They appeared in Russia in 1769.

Paper money is very convenient to use. Compared to coins, they are easier to store and convenient for payments. The state is responsible for issuing this money. Paper money is protected by special marks, such as watermarks, various color schemes, etc. This is done to protect public money. It is very difficult to counterfeit this kind of money.

Paper money performs two functions: a medium of circulation and a means of payment. They cannot be exchanged for gold, so they do not go out of circulation. Sometimes, the state, experiencing a lack of funds, issues more and more paper money. But this can be dangerous if you do not take into account the trade turnover in the country. As a result of this, paper money gets stuck in circulation and depreciates.

So, the essence of paper money is that it is issued by the state, is not exchangeable for gold, and has a certain exchange rate.

LIST OF SOURCES USED

Remote access resources:

1. Electronic library Bibliotekar.ru [Electronic resource] / Economics. – Minsk, 2006. – Access mode: http://www.bibliotekar.ru/biznes-64/34.htm. – Access date: 09/26/2010.

2. Internet portal about mortgage lending, money circulation and commercial credit [Electronic resource] / Paper money, functions of money. - Access mode: http://kredithelper.ru/funkcii-deneg7.html. – Access date: 09/27/2010.

3. Paper money [Electronic resource] / Financial library. - Access mode: http://www.mabico.ru/lib/227.html. – Access date: 09/26/2010.

Money has not always been what we are used to seeing it. Once upon a time, money did not exist at all. In primitive times, there was an exchange in kind, when, for example, a bag of turnips could be exchanged for a bag of beets. But this is not very convenient, as some goods turn out to be more valuable than others. For a more accurate and fair exchange, some kind of scale for measuring value is necessary. How many meters of fabric or metal products are required for a bag of wheat? If you calculate the value of all goods in one specific unit, exchange will be greatly simplified.

The beginning of market relations is attributed to approximately the 7th-8th millennium BC. The first money in pastoral tribes was cattle, in coastal areas - fish. They tried to use salt, grains, and honey as a monetary unit. In Mexico, the first money was cocoa beans, in Oceania - shells and pearls, in Brazil - flamingo feathers, in New Zealand they used special stones with a hole in the middle. In Siberia, for a long time, the main currency was the fluffy skins of valuable animals (mink, arctic fox, etc.).

Gradually, humanity began to choose metal objects as a monetary unit, since they do not deteriorate and do not change shape or weight. Nails, arrowheads, rods and some other products made of copper, iron, bronze or silver became currency. Of this variety, metal plates or bars turned out to be more convenient.

In the 7th century BC e. In Lydia they came up with the idea of ​​minting coins from metal, the advantages of which over other currencies are obvious. In different countries, special mints appear, whose task is to produce coins of the same type.

Paper money appeared much later and was not in demand among the population for a long time, since it is easier to counterfeit and its value is not as obvious compared to gold or silver coins. The first country to issue paper money was China in 910 AD. e. In Russia, this trend appeared only in 1769 under Catherine II. The issue of paper money is economically more profitable for the state, since the costs of their production are reduced. On the other hand, the first question arose to what extent these simple securities were backed by the country’s bank.

These days, most monetary exchanges take place using fiat money, i.e. conditional money, money-symbols. Instead of gold plates, we use bank-guaranteed paper or electronic money.

Option 2

It is impossible to imagine our life without money. But has it always been like this, and has money always been like it is today? This question can be answered by studying the history of money. Thus, the history of money is continuously connected with the evolution of society and the development of its commodity-money relations.

In ancient times, humanity did not use money, and exchange was carried out through barter, that is, people exchanged a certain amount of goods for other goods (for example, skins for hunting tools and vice versa). Nevertheless, the first money can be called the goods most in demand in a particular area (for example, cocoa beans in Mexico, shells in South America, or specially shaped stones).

Metal money - coins

With the development of human society, production and economy, money began to be produced from non-ferrous metals - silver and gold. According to archaeological finds, silver money was used in Mesopotamia three and a half thousand years ago.

Minting money appeared a little later - in the first millennium BC, and remained the most popular method of producing money until the New Time. Round money was made mainly from bronze and silver, and to a lesser extent from gold. Such coins were relatively easy to transport and store. A distinctive feature of such money subsequently became the application of a bust of the ruler of the state in which they were minted, and various inscriptions and identification marks.

Paper money

The next milestone in the development of money is its production in paper form. Thus, the first paper money appeared in China back in the nine hundred years of our era. Producing such money is much more profitable for the state. In Europe, the appearance of paper money was associated with the development of the banking system, and the prototype of modern paper money was bank certificates, the purpose of which was to show how much money was kept in the bank by the owner of such a certificate. Subsequently, this practice began to be used by states, and paper money appeared. A distinctive feature of paper money was that the government was obliged to issue a certain amount of gold in exchange for paper tokens, this practice was called the “gold standard.” The gold standard was abolished due to the fact that as the quantity of money grew, it became impossible to back it all with gold.

Electronic money

The final stage in the history of money is its transition to electronic form. With the development of information technology and the advent of bank cards, a person no longer has to carry banknotes and coins with him, because he can have money in electronic form (that is, in a special bank account that is linked to his bank card). Using money has become much more convenient. At the same time, banks switched to electronic fund transfers.

Thus, throughout its history, money has evolved from stones and shells in ancient society to the notes and coins we use, as well as electronic money.

Post History of Money

Some people, passionate about a mystical view of the world, consider money to be energy; thinkers consider it a sign system. There are many ways to understand money, but one way or another, we are talking about a phenomenon that has occupied a central position in social relations for thousands of years.

As the famous commander says, “a donkey loaded with gold is capable of taking any city.” It's about the power of money to convert people to different views and change their own minds. Money in general has enormous power if you look at the phenomenon in this way, but where did it come from?

Money also belongs to some extent to primitive societies; archaic cultures that still survive, for example, island aborigines, used shells and other objects to simplify natural exchange. However, money, in all its splendor and functionality, is, of course, part not of tribal culture, but of civilizations.

The first civilizations (3-3.5 thousand years BC) such as Mesopotamian and Sumerian, knew money. For example, in Mesopotamia they used clay tablets, which were a kind of promissory note, and after payment such tablets were broken. The Sumerians used silver and gold, which were compared to grain units to determine value.

Many people consider the credit system to be a relatively new invention, but in reality, the first civilizations also had a credit system. Over time, people begin to mint precious coins, and here, too, the most developed civilizations choose their main activity. The Roman Empire in particular is known for creating gold coins with the image of the current ruler.

In the Middle Ages, with the development of knightly orders, a modern banking system began to develop. Knightly orders that had branches in different cities gave merchants receipts that allowed them to exchange these receipts for gold deposited. Thus, merchants did not need to carry money or even goods with them; they could use receipts.

In a similar way, the first government banknotes appeared, which were initially tied to the country’s gold reserves, but in the previous century the main currency, the dollar, was freed from being tied to gold. Now money is becoming an even more ephemeral construct, as it can simply be a set of numbers in a bank account or a virtual code of a cryptocurrency.

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Now it is very difficult to imagine modern society without banknotes and a lot in the world depends on them. Wars occur, huge skyscrapers are built, people die and new life is born. Much in the world is tied to money. But not everyone knows which one. Let's try to lift this veil.

In the old days, for many centuries, humanity did not buy goods, but exchanged them. That is, barter was the main process in trade relations between different cultures and peoples of the world.

Of course, ordinary robbery was very often practiced as a means of taking possession of necessary goods, but then they were very seriously punished for this, even with the death penalty.

In some cases, the natural exchange of products and goods was very difficult to carry out, because each of the owners did not want to give away their goods for cheap, and on this basis constant disputes arose, which often resulted in assault and the use of weapons.

Something had to be decided about this, so the first type of convertible currency appeared. They became grains and livestock, since these goods were needed everywhere. Everything seemed fine, but their number greatly depended on the harvest in a given year and on the loss of livestock. Therefore, such a system, after a short existence, fell into oblivion.

The history of the appearance of the first metal money

The appearance of the first gold coins in ancient Europe dates back to 687 BC, and they were first produced in Lydia. And after about half a century, this innovation spread everywhere.

But historians say that even earlier than in Europe, the first metal money appeared in Ancient China. They were minted from copper, and their difference from European ones was the presence of a hole in the center, which was used for their transfer and transportation. This method of minting in China lasted until the 20th century AD, and even today many such coins can be found.

As stated in historical sources, society needed the first paper money before paper was invented. The development of the world economy occurred at an accelerated pace, and the issue of metallic money did not cover the needs of commodity-money relations. Commodity money, which was used in primitive society, became problematic in terms of storage and transportation, and trade gained momentum.

Paper 50 rubles of Tsarist Russia, 1899

It was unprofitable to transport carts with metal coins or “currency” in clothing form, and this complicated economic relations between countries. The emergence of paper money became inevitable.

In the early Middle Ages, European civilization did not yet exist. But there was a more developed Chinese culture, the colorful features of which were captured by Marco Polo in his memoirs. As a man who was an adviser and close friend of Kublai Khan for 17 years, this traveler brought to Europe knowledge of many household items that seemed fictitious to Europeans, as well as information about paper money.

The prototype of banknotes in China has long been teak tree bark.

This is how the first Chinese paper banknotes were ironed

Before it, there was the skin of a white deer, but the issue of such “money” was carried out only for noble persons, and the number of white deer was low. Therefore, pieces of teak bark were more accessible. They were marked with a special seal and served as cash.

History says that soon cotton paper appeared, which remained a medium for the sign of money for a long time. As we can see, the monetary form changed depending on the availability and convenience of the material. Despite the progress in the development of monetary media, what we call money in medieval China was not yet money.

Various variants of Chinese paper money

In the XIII century. banknotes were debt obligations secured on a medium rather than money in the conventional sense. Banknotes had no independent value. They were written evidence that the buyer had a certain amount of money, and by presenting the document to the issuing bank, he could cash it out.

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Why was such paper money needed? The fact is that the state treasury did not always have enough metals to issue coins. The treasury of the state, exhausted by wars, could not afford to issue such a number of coins that would correspond to the volume of trade. In return, paper debt obligations appeared, which indicated solvency.

Real paper money

Debt money circulated throughout the world until the 16th century. Receipts were still issued and exchanged for coins. But there were not enough coins, and distrust in paper money grew, and conflicts arose. As a result, the local authorities of the colonies of North America found a solution to the problems with debt notes.

It was decided to begin issuing real printed paper money, which could equally replace coins and did not need to be exchanged for them. These were pieces of paper in the form of small rectangles, on which the denomination was indicated. That is, we are talking about the first printed paper money, which could really support the economy.

When did money appear in Europe?

The first paper money appeared in Sweden. In Europe, debt notes, which are commonly called money, appeared a little later - in the 17th century, except for the unsuccessful attempt to replace metal coins with leather ones.

This is what a Swedish 100 daller banknote from 1666 looks like

This attempt took place in Leiden, in the Netherlands. Perhaps the implementation of this idea would have led Europe to paper money, but the city came under siege by Spanish troops.

Food supplies dried up, and therefore leather coins and even book covers made of similar material began to be used as food. Leather and parchment money were practically not used for their intended purpose; they turned into food.

The emergence of paper money in Stockholm was caused by the machinations of local authorities. The main monetary unit in Sweden, and indeed in Europe, was a copper coin, the value of which was lower than its face value. The low quality, as well as the low price and heaviness of the coins made them an unprofitable means of circulation.

It is unknown how much longer the coins would be used. But the Swedish authorities needed to borrow a substantial amount of money from the Stockholm Bank, and instead of copper coins, the bank chose to issue credit papers in 1661.

Bank credit notes were called "banknotes". It was still possible to collect the required amount, but when the bank director wanted to get the loan back, the loan papers were not returned to him. Instead, they proposed issuing new papers. The result is strong inflation, depreciation of money and criminal prosecution of the bank director.

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Despite the negative first experience of introducing paper currency, European countries reformed their monetary circulation system in favor of banknotes.

The first banknotes of Tsarist Russia

Monetary reforms did not come to Russia soon. More than 100 years had passed since the first banknotes were issued in Europe before there was an attempt to transfer settlement and commodity relations from coins to banknotes in Russia.
Paper money of Tsarist Russia appeared under Catherine II.

Unlike European "banknotes", they were called assignats (or payment orders). In Rus', coins were made of pure silver and gold, and the supply of these metals in the royal treasury was drying up. Therefore, by order of the Empress, special banks were established that exchanged notes in denominations of 25, 50, 75 and 100 rubles for an equivalent amount in silver. Thus, the history of the emergence of money in Tsarist Russia began in 1769.

Were the people willing to exchange their familiar, durable pieces of silver for fragile pink or blue pieces of paper? Yes. It was easier and more pleasant to pay with new money. Endless queues of people wishing to exchange coins for banknotes crowded outside banks.
What did the most valuable and very first paper money in Russia look like? These were rectangles made of paper.

Appearance of the first paper money issued in 1769

They were characterized by the following attributes:

1. A watermark protecting the banknote from being tampered with.
2. Real signatures of officials.
3. Three-dimensional images inside two ovals at the top of the bill.
4. Banknote number.

The cost of such a banknote today is not very high, ranging from 2-10 to 175-300 dollars, depending on the circulation, condition and age of the banknotes. Although the history of the emergence of paper banknotes in Russia is quite complex, the first of them are not so primitive.

Modern banknotes, the collection value of which is much lower, contain almost the same details as the royal banknotes!

Tsar's banknote for 25 rubles, 1812

Until our time, they have changed only their appearance, denomination and value.