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Origin of Currency

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The origin of currency
Conor Starling
ITT-tech

Thesis:
Most large projects today, including Building a business, involves spending large amounts of money

The Origin of Currency
From food to water and shelter to accessories everything purchased today is purchased with a form of currency. In fact many large projects today, including building a business, involve spending large amounts of money. How did all this money come to be? Did it just appear from thin air? Well that’s highly unlikely; the first types of trade couldn’t have been pure money or valuable metals but more like pieces of meat from skinned animals to help with purchasing and building things. This form of trade is called bartering and that’s how everything begun. Bartering was used before the use of money to make exchanges of goods and services. One of the first documents of this was the trade of a sharpened rock tied to a stick given to a man for the help of killing a mammoth. Evidence was found on a cave wall and marks the earliest documented trade. It is easy to imagine how many different types of trades happened like this and it also allowed people to begin building wealth. Once the process started it grew from there and soon people had enough goods and tools to start building decent shelter to protect them from unforgiving weather and were able to craft more tools that can be used for trade. However, this form of trade soon proved to be inefficient due to unfair trading practices. This was made apparent by Adam Smith (the father of modern economics) and because of his findings the first physical dollar was created as a fair system of currency. Adam Smith argued that money was not a creation of the government but by the “division of labor.” People who specialized in crafts had to depend on others for goods. For example, someone like a blacksmith would perform a service and be paid in meat or basic goods from farmers or ranchers. The farmers grow the foods and then pay for services with those goods.
After the Bartering system the labor note was introduced, these labor notes were based on the time spent performing a service and then you could use the notes as trade for goods or services. This currency eliminated price value between different markets, and arose when paper currency was an innovation. This would stop profit taking though a middle man; all exchanged products would be priced only in terms of the labor and was represented in the maximum ‘cost the limit of price. Labor notes of trade became the basis of exchange in London, and in America and were extremely short lived.
Coinage was introduced began to be used and is in fact still in use today, making it the longest use of currency. Around 1000 B.C metal in the shape of knives and spades made from bronze was used in the Zhou dynasty. The first actual rounded coin was created almost simultaneously in both India and China in cities around the Aegean Sea around 700 and 500 B.C. Most Aegean coins had stamps on them which were made from heating and hammering it with the insignia, while Indian coins were punched with metal disk. The Chinese coins sometimes had holes in the center of them to be strung together by string. The more valuable coins came a bit later in the role of coinage; these coins consisted of silver and gold and were manufactured on a larger scale in Lydia (on the coast of what now is turkey). Metal coins have the added plus of carrying the actual value within the coin themselves. Unfortunately this presented a slight disadvantage as people were able chip off small pieces and collect them until they had enough to make a coin for themselves so this form soon was eradicated. Paper currency or bank notes was created as an IOU circulated by the bank which is a promise to pay and not actually a payment. The move toward this type of currency happened during the mid-17th century. The goldsmith-bankers of London gave out receipts as payable to the bearer of the note other than the depositor, this causes the bill to be used as a form of currency based on the deposit with the gold smith. Nowadays most banknotes are made from cotton paper and are issued here in the United States in segments of 1, 5, 10, 20, 50, and 100’s. These notes come equipped with a water marks to make it harder to counter fit. These banknotes can be used anywhere today and are the same amount when you go to one place or another so the value stays the same no matter what. As a side note bartering is still done worldwide today as well.

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