What's your favorite time of year? For many kids, the answer is Christmas. It's the time of year when good little boys and girls receive presents they've been wanting all year long.
But why wait until Christmas? If you want that new bike, skateboard, doll, or tablet computer, why don't you just buy it? If you're like most kids, the answer probably has something to do with a little thing we call money.
Before we take a closer look at where money came from, let's first figure out exactly what money is. Of course, when you think of money, you probably think of dollar bills and coins, such as nickels, dimes, and quarters. But is that all money is?
Economists define money as anything commonly accepted by people for the exchange of goods and services. Although every country has its own system of coins and paper money, other things can also often be used as money.
For example, farmers may barter with each other, trading a certain number of animals for certain products or services. In that case, animals would be used as money!
In fact, bartering was the way people exchanged goods and services from the earliest days of human beings on Earth. If you grew rice, for example, you could trade bags of rice for the other goods and services you needed.
Over time, though, bartering wasn't always possible. Sometimes people couldn't agree on what goods were worth in exchanges. In other situations, people simply might not want to trade for what you had available. These situations led to the development of commodity money.
Commodities are basic items used by almost everyone. In the past, popular commodities included salt, tea, cattle, and seeds. Using these items of money alleviated some of the problems of bartering. However, using commodities raised other problems. Commodities weren't always easy to transport and often they were perishable or difficult to store.
These issues with commodities led people to create coins out of precious metals to use as money. No one knows for sure who first invented such money, but historians believe metal objects were first used as money as early as 5,000 B.C.
Around 700 B.C., the Lydians became the first Western culture to make coins. Other countries and civilizations soon began to mint their own coins with specific values. Using coins with set values made it easier to compare values and trade money for goods and services.
Eventually, societies moved away from using precious metals to make money. Known as representative money, the new paper bills and coins made of non-precious metals represented certain values that everyone in those societies could agree upon. Governments or banks would promise to exchange representative money for a specific amount of silver or gold.
Today, most modern currency is not backed by silver or gold. Instead, today's money is known as fiat money. Fiat is a Latin word that means “let it be done." Money has a certain value today because it was given that value by government fiat or decree. Legal tender laws now make it illegal to refuse legal currency in favor of some other form of payment.
The first paper money issued in the United States occurred on March 10, 1862. The $5, $10, and $20 bills issued were made legal tender by an act of Congress on March 17, 1862.
FAQs
No one knows for sure who first invented such money, but historians believe metal objects were first used as money as early as 5,000 B.C. Around 700 B.C., the Lydians became the first Western culture to make coins. Other countries and civilizations soon began to mint their own coins with specific values.
Who first invented money? ›
Historians generally agree that the Lydians were the first to make coins. However, in recent years, Chinese archaeologists have uncovered evidence of a coin production mint located in China's Henan Province thought to date to 640 B.C. In 600 B.C., Lydia began minting coins widely used for trading.
Who introduced the concept of money? ›
The first usage of the term came from Mesopotamia circa 3000 BC. Societies in the Americas, Asia, Africa and Australia used shell money—often, the shells of the cowry (Cypraea moneta L. or C. annulus L.). According to Herodotus, the Lydians were the first people to introduce the use of gold and silver coins.
Who invented paper money in the US? ›
The Continental Congress, the union of former colonies in rebellion against the British monarchy, introduced the first American national paper money in 1775, trying to meet military expenditures.
Whose idea was money? ›
We don't know because the concept has been around so long that it predated current known documentation. The true answer is that humans invented money – money is one of the first concepts that we as a species collectively invented and set to use.
What is the oldest bill in the world? ›
The oldest surviving banknotes are examples of the "Da Ming tongxing baochao" (Great Ming Circulating Treasure Note), which were first printed during the reign of the Hongwu Emperor (1368–1398) – probably no earlier than 1375.
When did humans start money? ›
Money has been part of human history for at least the past 5,000 years in some form or another. Historians generally agree that a system of bartering was likely used before this time. Bartering involves the direct trade of goods and services.
What is the oldest money in the world? ›
The British pound is the world's oldest currency still in use at around 1,200 years old. Dating back to Anglo-Saxon times, the pound has gone through many changes before evolving into the currency we recognise today.
Who is the father of modern money? ›
Adam Smith was an 18th-century Scottish philosopher. He is considered the father of modern economics. Smith is most famous for his 1776 book, The Wealth of Nations.
Who created new money? ›
In most modern economies, money is created by both central banks and commercial banks. Money issued by central banks is a liability, typically called reserve deposits, and is only available for use by central bank account holders, which are generally large commercial banks and foreign central banks.
Although $2 bills are rare to find, if you own one, there's a chance it has a high value. Based on specific factors, some versions of the currency may be worth up to $5,000, per the US Currency Price Guide. FOX 13 Tampa reported that these bills were discontinued by 1966 but brought back 10 years later.
What is a $100 bill called? ›
"C-note" is used less frequently in contemporary slang, and it has been replaced by "Benjamin." This term comes from Benjamin Franklin, one of the founding fathers of the U.S., whose portrait is on the front of the $100 banknote. Other slang terms for a $100 bill are, therefore, "Franklins" and "Bens."
Who designed the dollar bill? ›
Who Designs the Bills? Bills are designed at the Bureau of Engraving and Printing, which is a part of the U.S. Treasury. The Bureau of Engraving and Printing is in charge of designing and printing the bills we all use every day. Artists at the Bureau of Engraving and Printing work together to create every bill.
Who started the idea of money? ›
The earliest evidence of money comes from around 3,000 BC in ancient Mesopotamia (modern-day Middle East). Citizens would draw agricultural symbols on clay tablets to represent debts.
How did money first start? ›
Cowrie shells and other items from nature
Some of the earliest currencies were objects from nature. A notable example is cowrie shells, first used as money about 1200 BCE. Although they may seem a pretty random choice, the shells had a number of advantages: they were similar in size, small, and durable.
What did people use before money? ›
Before the creation of money, exchange took place in the form of barter, where people traded to get the goods and services they wanted. Two people, each having something the other wanted, would agree to trade one another. In economics, we call this a double coincidence of wants.
Who made money for the first time? ›
No one knows for sure who first invented such money, but historians believe metal objects were first used as money as early as 5,000 B.C. Around 700 B.C., the Lydians became the first Western culture to make coins. Other countries and civilizations soon began to mint their own coins with specific values.
Who is the owner of money? ›
Since property is an enjoyment protected by law, it is as such the enjoyment of two goods: the good which is an object of law and the law itself which satisfies the need of legal certainty. This means that a person is not only the owner of money but he has also the right to claim it.
Who designed the one dollar bill? ›
An image of the first U.S. president (1789–1797), George Washington, based on the Athenaeum Portrait, a 1796 painting by Gilbert Stuart, is currently featured on the obverse, and the Great Seal of the United States is featured on the reverse.
