Megan Liston
Savannah Liston
Essay #4
November 5th 2014
Have you ever wondered what the first form of money was? Or perhaps you have wondered what ancient civilizations used as a form of payment. In the this essay I will explain and show a little of the things that people used to use as currency.
First, however, I will start by saying that ‘money’ does not only mean ‘dollars’, but it is a universal medium of exchange such as the US dollar, or the British pound, etc. It is important to remember this because we might be tempted to say that the US dollar is the only real money, but on the contrary, money has been around ever since the first people created a medium of exchange, a common form of ‘bartering’.
Now, I will go into depth on the different things that formed the early money and how exactly it started. Early American Indians used something called Wampum, a certain almost rare bead that they kept on a string about their necks. They realized even back then that in order to have a stable currency, it had to be something rare, something of value. The Europeans adopted this idea, but because of their more efficient production of Wampum, it became inflated and did not last long for them. Wampum are purple and white beads that were made from the quahog and whelk shells collected along the beach. They were then made into beads and used to trade for things. It was everything that money needed to be. It was easy to carry, scarce, and very valuable. The Indians were very smart people and their community worked well together.
Although the British pound seems to have come only from Britain, it was also highly used in continental Europe. Its value originally equated to the price of a pound of silver. Anglo-Saxon King Offa is credited with the introduction of currency to the Northern and central England in the 8th century when he oversaw the minting of the earliest English silver pennies. They varied greatly in size and weight, but it was only the beginning. It didn’t start only with him, however. The forming of money and currency does not begin with the government, but with the individuals.
The US dollar became famous when George Washington first minted it. But, it was only because he realized that they needed something that everyone valued and respected and something that was somewhat rare. Back then it was much more difficult to mint these coins so it was much more rare than it is now. But, after a time when it became easier and they got the system down, inflation suddenly set in. It took decades and decades before it reached the level of the famous Great Depression.
I think it is important to remember that the government is not able to force a certain currency on us. If the people do not value and respect the ‘money’ then it is not able to be used as a medium of exchange. Why would a store owner want to sell his things for something that he doesn’t even want? Of course he might still sell his things for something he didn’t want just so that he could trade it off to someone else, but still, that person might not want it either. There has to be a certain amount of respect and value put on something in order for it to work. Someone has to want that currency. In a society there is likely to be one or two goods which are commonly accepted. These are called a common medium of exchange. Even if some people don’t personally value the good, they will sometimes accept it in a trade in order to trade it for something more valuable. But you see, this is all based on the wants and values of the people. They will not act if they do not want to. Some people think that the government is the one that makes the currency, but I really do not think that it is humanly possible to make people value something, and since currency is such an important thing in an economy, it is very important to have something that everyone values. We have come very close sometimes to losing the value of our money and are, in fact, at this very moment drawing closer to a very inflated economy.
So end things a little, it is very important to realize that in order to have a smoothly running economy we must have currency that people value. Some things that a currency must have are, divisibility, portability, fungibility, high value per unit, and it must be naturally scarce. These things aren’t exactly necessary, but they have been found in the past currencies that have been used for a long time. Another important thing to remember is, no one invented money, it emerged from the cooperation in the market. F.A.Hayek termed this ‘spontaneous order’. This is a very exciting concept, we do not know where the road will lead, and we don’t know where we will be years from now. But as is pointed out in the term above, it is ‘order’ that is derived from this individualistic idea, not chaos. It is when the government comes into the picture and tries to change the way people think and their value scales, that things become chaotic and even tumultuous. The government isn’t the only one who can change the world, as Nelson Mandela once said, “Education is the most powerful weapon which you can use to change the world”. We don’t have to be great, just educated. The best economy is one ruled by the people.
“Remember, the change you want to see in the world, and in your school, begins with you.”
― Joseph Clementi
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