John Michael Pasamonte

Finance

BSMA II-A

Basic

History of Money

Money can be defined as anything that people regularly use

to buy goods and services from other people. It can be anything
accepted as means of paying for goods or services or for paying
off debts. For Juan dela Cruz, money means what brings food to
the table. For Bill Gates, money means cash, asset or wealth.
Money is a recent invention in our history. Man in his present
form has a history dating 70,000 years. Yet the earliest signs of
the use of money as we know it was stamped metal bars
exchanged in the temples of Babylon around 3000 BC. The
earliest known coins date from the 7th Century. How did people
live without money? The answer is that communities were so
small that everything was shared out between them. They lived in
caves and their food came from hunting and fishing. This simple
way of life came to an end when some people began to specialize
in tool making and pottery and others farmed cattle or cultivated
crops. People began to live in large groups and to need goods
they could not make themselves. This led to the idea of swapping
goods or barter and finally to the idea of money.
The earliest country to use paper money was China, as long
ago as the 7th Century AD. At one time the paper money system
was so well-established in China that it was even an offense to
trade gold and silver. The Chinese has stumbled on the truth of
money that its value really rest in the wealth of a country and on
what money will buy in goods. Paper notes were not issued by
banks until the 17th century in Europe. At first the number of
banknotes issued was not controlled at all. Each bank produced
its own notes and there could be hundreds if different kinds of

banknotes are circulated by the central bank of each country and

their number is controlled by the government

The big difference between money today and in the past is

that very little of it now is exchangeable into gold and silver as if
used to be. Money is only valued for what it will buy. It will be
much easier now to recognize the true function of money as it has
evolved through ages. Money has three main uses: It serves as a
way of exchanging goods and services. It acts as a precise
measure of value and it represents a store of value in that
persons wealth that can be saved up and used at a later time.
Nowadays, most bank deposits and some forms of savings are
also regarded as money, because they are used in payments
without notes or coin changing hands.
Minting of coins When gold bullions were converted into coins,
coins were considered the first type of modern money. They were
not in standard form, which is why each transaction required
weighing and testing its quality. But because this method became
cumbersome and interfered with the smooth flow of business, the
goldsmiths, the kings and the bankers stamped the coins to
guarantee its integrity as to weight and fineness. This was how
standard coins came into use.
Today, the sole power of issuing notes and coins lays on the
government of a country. In the Philippines, we have our security
mint, which is managed by the Bangko Sentral ng Pilipinas that
mints and prints out notes and coins.

References:

Money, Credit and Banking by Rose Marie and Vincent Patrick

Laman
Money, Credit and Banking by Cristobal Pagoso