How did the money come to be?
Money - one of the greatest human inventions. The origin of money dates back to the 7th-8th millennium B.C., when primitive tribes had a surplus of some product that could be exchanged for other needed products. Historically, cattle, cigars, shells, stones, and pieces of metal were used - with varying success - as a means of facilitating exchange. But to serve as money, an object must gain general acceptance by both buyers and sellers as a medium of exchange. Money is determined by society itself; whatever society recognizes as circulation is money. Indeed, money is a commodity that acts as a universal equivalent, reflecting the value of all other commodities.
What are the main stages in the history of the development of money?
The first stage - the emergence of money with its functions performed by occasional commodities; second step - the consolidation of the role of gold as the universal equivalent (this stage was probably the longest); third phase - stage of transition to paper or credit money; and the last fourth step - the gradual displacement of cash from circulation, resulting in the emergence of electronic forms of payment.
Gold and silver as money
Most fully meet the above requirements gold and silver, thus, in the process of the evolution of commodity exchange stands out a special, absolutely liquid commodity used as a universal equivalent of the value of money. This commodity became gold and silver, the earliest form of metal money.
Gold and silver appeared as money already in XIII century B.C. in the form of various ingots with certain weight of metal. As a result of further development of market relations, coins are minted from the metal - monetary signs having the form and weight full money content established by law.
Coins made of a natural alloy of gold and silver (electrum) For the first time appeared in the state of Lydia in the VII century BC. In Russia minting coins began to be produced in the IX - X centuries. However, due to the lack of gold deposits in Kievan Rus mainly used foreign - Arab and Byzantine coins of gold and silver. Later, from about XI century silver and copper ingots were used in the inner circulation. The most common was a bar of silver weighing one pound (about 400 g), had the name "hryvnia". But the "hryvnia" had a rather high value, so it was cut in half, into two equal parts, which were called "ruble", or the "ruble hryvnia.
Commodity money
The early form of metal money was characterized by the coincidence of the commodity value of the metal contained in the coins and their face value, indicated on the face of the coin. Therein lies one of the disadvantages commodity money. If their value as a commodity exceeds their value as money, they will cease to function as money. Indeed, if, for example, a ruble coin had a silver (or gold, or some other) content worth, say, two rubles, it would be very profitable to melt the coin and sell it as bullion. Therefore, despite the illegality of such actions, ruble coins would begin to disappear from circulation.
In this regard, around the 15th century metal money begins to lose its commodity basis. Metal money begins to divide into full (the nominal value of which corresponds to the value of the metal they contain) and Incomplete (the face value is higher than the value of the contained metal). Currently, no country in the world has metal money in its entirety.
History of paper money
Particularly noteworthy is origin of paper money. Where did they come from? To answer this question, we must again turn to history.
Soon after gold began to be used in transactions, it became apparent that it was inconvenient and unsafe for buyers and traders alike to transport, weigh and verify the purity of gold each time a transaction was made. Therefore, a rule of thumb came into practice to give gold for safekeeping to goldsmithsThe goldsmith had special storerooms and was willing to provide them for a fee. Having received a gold deposit, the goldsmith would give the depositor Receipt.
Soon goods began to be exchanged for these receipts, which became an early form of paper money, and the goldsmiths themselves became prototypes of modern bankers. Because the gold stored by the goldsmiths in their storerooms was rarely in demand, that is, it was not in circulation, it can be said that the receipts were full moneyThe number of these was exactly the same as the amount of gold in the goldsmith's custody.
This was so until some ingenious goldsmith, seeing that the amount of incoming gold exceeded the amount withdrawn, began to put into circulation receipts not secured by gold, lending at interest to merchants, manufacturers and consumers. Thus was born partial reserve banking system. These receipts were no longer full-fledged money. It is believed that the ancestors of banks and paper money were English goldsmiths. Later the right to issue paper money passed from private hands to the state.
In our country paper money appeared in 1766 by order of Empress Catherine II. At present, paper money, as well as metal money in any country in the world do not have a commodity basis, that is, they are not exchanged for gold or other precious metals.