Martin Jenkins - The History of Money: From Bartering to Banking

IN the Yap Islands in the South Pacific, it can be a huge stone with a hole in the middle. In Sweden 350 years ago, it was great copper slabs that you needed a donkey to carry. It can be a string of shells or a bundle of special cloth. Nowadays its likely to be a row of ones and zeroes in a computer somewhere. Some people have tons of it more than most of us could possibly imagine. An awful lot of people have none at all, or so little that it makes no difference. We all know where it goes, but its really hard to figure out where it comes from. Some people think its the most wonderful thing; others think its really, really bad. But we all seem to agree that one way or another, its pretty important.

So what is it?

Its money, of course. The stuff that makes the world go around. That doesnt grow on trees. That cant buy you love, apparently.

Once upon a time there wasnt any. And its safe to assume that people then got along fine without it, just as some people in some parts of the world manage perfectly well without it today. So why would anyone have gone to the trouble of inventing it? And when?

WE know from archaeology that for a long, long time, humans have had tools, clothes, and ornaments, and we can be sure that they had these things long before they had money, or any need for money.

We think that very early in human history, people lived in family groups, hunting and gathering food and moving from place to place. The things they used would have been made from materials that they could get hold of quite easily: tools from stones and bits of bone, clothes from animal skins or bark. If anyone needed anything, they were usually able to make it themselves or borrow it from someone else in the group. Its possible that the head of the group decided who needed what and when and handed things around accordingly.

At some point, things changed. It might have gone something like this. Suppose you were living in one of those groups, and you found you were especially good at something useful making javelins out of yew wood, perhaps. Soon everyone in the group would want one of your special yew-wood javelins. At first you might just give them away after all, what was yours was everyones, in your group at least, and youd be rather proud of the fact that you could make better javelins than anyone elses. But perhaps youd find that you were so busy making them that you didnt have enough time to go out and collect your own food. So people in your group would start to give you food in return for a new javelin.

It might not just be objects, such as javelins, that people could offer others. One person might be able to use herbs to cure people when they were sick; another might be an expert at setting broken bones. People would ask for their help when they needed their skills and give them something in return.

Your group might also get in the habit of exchanging things with other groups. Some of this exchanging would have been a way of showing friendship the way we give presents to people today. And some of it may have been because it was useful for both groups: you might have some extra wolf-fur cloaks that you could swap for a load of dried fish from a group that had had a good fishing season both really useful things for getting through the winter. That would be the start of what we call barter: swapping something you have that another person wants for something they have that you want.

That being said, we dont actually know for sure that barter was an important part of peoples lives tens of thousands of years ago. Possibly not after all, people always moving from place to place wouldnt have needed or wanted much stuff one good fur cloak and perhaps a couple of javelins would do you nicely. Why would you carry more than that around with you?

BUT then, around the end of the last Ice Age, people started to do something that would change the world forever. Instead of moving around and gathering wild plants and hunting animals, they began to grow plants and keep animals. Strangely, they seem to have started doing this in different parts of the world at roughly the same time. But as far as we know, the first place it happened, more than 11,000 years ago, was in the Middle East, in a region known as the Fertile Crescent. And its here that the story of money really takes off.

Once people started growing plants in fields, they started staying in the same place for long stretches of time, perhaps permanently. And once they were living in one place, they could begin to collect stuff lots of stuff. And we can be sure they would start caring about who owned what. This new way of doing things was quite hard work clearing land, tilling it, sowing seeds, looking after the growing plants, and harvesting the crop; or finding good pasture for your flocks, protecting them from wild animals, and keeping them sheltered during the winter. You wouldnt want to do all that and then have someone else come along and help themselves to the best parts of your crop or your finest young lambs.

Rather than a single person owning land or flocks of sheep, it was probably families or whole clans, who would have a way of sharing things among themselves. As time went on, the clans who had gotten hold of the best parcels of land would be able to harvest more crops or breed more sheep and goats than they needed to get through to the next harvest. These clans would be in a good position to barter for other things. It might be horses, or clothes, or furniture now that they were living in one place they might well have a house to live in and furnish. Or they might swap a lamb or two for some help in building a new grain store, or for a slave, or for another wife for the head of the clan.

WE know that some goods were carried long distances in the Fertile Crescent because things like shells have been found in ancient settlements a long way from where they are found in nature. We cant be certain, but were pretty sure that these shells were traded. And theres another really good clue that trade of some sort was taking place. Around 10,000 years ago, people began to make lots of little objects out of clay, mostly simple shapes like balls or cones, but also tiny models of animals and tools. These shapes often had small holes in them, as if they were meant to be strung together. We think these objects were a way of keeping track of things that you owned.