Before Paper Money
Before paper money, there was another form of trade exchange used by man it was called trade by batter. Today, we are so used to spending paper money: in some economies coins are even becoming obsolete (but that is a story for another day), some of us don't even spend paper money anymore instead our plastic cards are now a more convenient way to pay for goods. Having said this, in general terms the last few centuries has centered on paper money as a means of trade exchange in world economies.
I was thinking about how it all started, that is the use of paper money, and I started doing some initial research, the more I dug into the history of paper money the more excited I became, and why? Because I was now revisiting concepts and facts I had learned as a kid but never thought about it for at least the last 30 odd years!
Trade by batter! That was a concept I learnt many years ago. All civilizations it seems started out with trade by batter, that is, exchanging goods you do not need with those that you do need. This exchange method had it's flaws and soon people had to find other means of exchange, these included commodity goods, coins, paper money and ultimately electronic money.
Since trade by batter left you with perishable goods that you could not finish, or other goods you sometimes had no need for it became important to set aside some commonly popular goods such as salt, gold, cattle, tobacco , seeds and tea, as a means of exchange for goods. This had its own challenges as the value of these goods often fluctuated and so in the Greek era around 700BC it is believed that the first coins in the western civilization were made to exchange for goods.
Coins were used in most economies for a long while, even earlier than the Greeks, since 5000BC, yet these came with their own special set of challenges yet again. When a merchant got very rich and his trade dealings grew, it became quite cumbersome to say the least, carrying bags of strings of heavy coins around on long journeys. They became targets for thieves. Sometimes the metals for making the coins themselves were not readily available, or it could be a battle here, a war there that prevented the movement of the coins from one place to another. A solution had to be found somehow.
Thus the concept of paper money came into existence, first as a form of promissory note, whereby the coin equivalent will be paid at a later date. Where did this usage of paper money first emerge and when? Find out tomorrow.