When – and Why – Did People First Start Using Money?
Sometimes you run across a grimy, tattered dollar bill that seems like it’s been around since the beginning of time. Assuredly it hasn’t, but the history of human beings using cash currency does go back a long time – 40,000 years.
Scientists have tracked exchange and trade through the archaeological record, starting in Upper Paleolithic when groups of hunters traded for the best flint weapons and other tools. First, people bartered, making direct deals between two parties of desirable objects.
Money came a bit later. Its form has evolved over the millennia – from natural objects to coins to paper to digital versions. But whatever the format, human beings have long used currency as a means of exchange , a method of payment, a standard of value, a store of wealth and a unit of account.
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Egyptian Old Kingdom market scene: Two of the customers are seen carrying little boxes on their shoulders, suspected to have contained pieces of metal used as payment. ( Public Domain )
As an anthropologist who’s made discoveries of ancient currency in the field, I’m interested in how money evolved in human civilization – and what these archaeological finds can tell us about trade and interaction between far-flung groups.
Why Do People Need Currency?
There are many theories about the origin of money, in part because money has many functions: It facilitates exchange as a measure of value; it brings diverse societies together by enabling gift-giving and reciprocity; it perpetuates social hierarchies; and finally, it is a medium of state power. It’s hard to accurately date interactions involving currency of various kinds, but evidence suggests they emerged from gift exchanges and debt repayments.
Objects that occurred rarely in nature and whose circulation could be efficiently controlled emerged as units of value for interactions and exchange. These included shells such as mother-of-pearl that were widely circulated in the Americas and cowry shells that were used in Africa, Europe, Asia, and Australia. Native copper, meteorites or native iron, obsidian, amber, beads, copper, gold, silver and lead ingots have variously served as currency . People even used live animals such as cows until relatively recent times as a form of currency .
Chinese shell money from 3,000 years ago. (PHGCOM/ CC BY-SA )
The Mesopotamian shekel – the first known form of currency – emerged nearly 5,000 years ago. The earliest known mints date to 650 and 600 BC in Asia Minor , where the elites of Lydia and Ionia used stamped silver and gold coins to pay armies.
The discovery of hordes of coins of lead, copper, silver, and gold all over the globe suggests that coinage – especially in Europe, Asia, and North Africa – was recognized as a medium of commodity money at the beginning of the first millennium A.D. The wide circulation of Roman , Islamic, Indian and Chinese coins points to premodern commerce (1250 BC - AD 1450) .
Silver shekel issued by King Darius I of Persia ca. 500–490 BC, obverse: the king of Persia firing his bow. ( CC BY SA 2.5 / Jastrow )
Coinage as commodity money owes its success largely to its portability, durability, transportability, and inherent value. Additionally, political leaders could control the production of coins – from mining, smelting, minting - as well as their circulation and use. Other forms of wealth and money, such as cows, successfully served pastoral societies, but weren’t easy to transport – and of course were susceptible to ecological disasters.
Money soon became an instrument of political control. Taxes could be extracted to support the elite and armies could be raised. However, money could also act as a stabilizing force that fostered nonviolent exchanges of goods, information and services within and between groups.
Throughout history money has acted as a record , a memory of transactions and interactions. For instance, medieval Europeans widely used tally sticks as evidence for remembering debt .
Medieval English tally sticks recorded transactions and monetary debts. (Winchester City Council Museums/ CC BY-SA )
Follow the Money to See the Trade Routes
In the past, as today, no society was completely self-sustaining, and money allowed people to interact with other groups. People used different forms of currency to mobilize resources, reduce risks, and create alliances and friendships in response to specific social and political conditions. The abundance and nearly universal evidence of movement of exotic goods over diverse regions inhabited by people who were independent of each other – from hunter-gatherers to pastoralists, to farmers and city dwellers – points to the significance of currency as a uniting principle. It’s like a common language everyone could speak.