History of Money
Money is basically an agreement between people. It is an agreement that this much of some kind of metal (usually gold, silver, or bronze) or paper will be worth this much bread, and this much cheese, and this many slaves.
The earliest metal coins came from China, where people used small pieces of bronze to trade things starting around 1500 BC.
Coins with guarantees were invented around 650 BC. This kind of coin is marked with a promise by somebody (often a government) that this coin is worth what it says it is worth. So you don't have to weigh each coin before you accept it (if you trust that government). The first coins of this kind were from Lydia, in West Asia. They were used to pay mercenary soldiers. But many people preferred to keep on trading one thing for another (bartering) instead.
A Lydian gold coin
Soon other people learned to use coins, and gradually coins became common all over Europe, Asia, and Africa ( except for central Africa and South Africa). The governments that minted these coins figured out that if they didn't have enough money, they could mix the gold with more silver to make it go further, or mix the silver with more bronze. That way they could make more coins with the same amount of metal, and have more money to pay their soldiers with. The Romans did this in the 200's AD.
Roman silver coins from the 200's AD
But of course people soon figured out that these coins weren't really worth what the government said they were worth, and then they didn't want to take those coins in stores. Or they demanded more of the coins, so it would be the same amount of gold or silver as before.
More about money (page two)
To find out more about money, check out these books from Amazon.com or from your library:
Eyewitness: Money, by Joe Cribb (2000). Not the best in the series, but still a good introduction to exchange systems for kids.
The History of Money: From Sandstone to Cyberspace, by Jack Weatherford (1998). Great on what money is, and how it has changed over time - some conclusions are controversial.
More about money (page two)
Back to main economy page
Kidipede - History for Kids home
Tell a friend about this page
Did Kidipede answer your question?
Yes, thanks! / No, can you help me?
