How Did The Money Come About

Table of contents:

How Did The Money Come About
How Did The Money Come About

Video: How Did The Money Come About

Video: How Did The Money Come About
Video: The History of Paper Money - Origins of Exchange - Extra History - #1 2024, March
Anonim

Money arose as a result of an evolutionary process at the stage of commodity production. In essence, they represent a product of a special kind, which stood out from the sphere of other goods and began to play the role of a universal equivalent.

How did the money come about
How did the money come about

Reasons for the appearance of money

As a result of the second major division of labor, there was a separation of handicrafts from agriculture. This created the basis for the emergence of commodity production, from that moment on the exchange between owners began to be regular. However, before the advent of money, exchange was difficult, since barter is possible only if there is a demand for a product that is offered by other sellers for exchange.

Gradually, as a result of the long development of commodity relations, a special kind of product emerged, which began to play the role of an equivalent. Initially, this role was assigned to gold and silver. Precious metals had all the necessary properties for this: uniformity, portability, divisibility, and even aesthetic appeal.

Thus, historically, money has a commodity nature. The use of money made it possible to divide the process of exchanging goods into two stages. The first stage is the sale of your manufactured goods, and the second is the acquisition of the necessary goods from another manufacturer.

Evolution of forms and types of money

Before the advent of money, their functions were performed by some goods. For example, on the islands of Oceania and among some Indian South American tribes, shells and pearls served as money. In Kievan Rus, animal skins and furs were often used as money.

Gradually, precious metals began to play the role of money. At first, they were used in circulation in the form of ingots. But this form was inconvenient. Therefore, in the 7th century BC. e. coins first appeared in circulation. The widespread use of coins led to the completion of the process of the formation of high-grade money. The use of this form had undeniable advantages. High-grade money had its own intrinsic value, so their amount in circulation was regulated in accordance with the needs of circulation. At the same time, it was not always convenient to use this form of money in circulation.

Gradually, in connection with the development of commodity-money relations, prerequisites for the transition to a new form of money began to appear. Defective money arose in the middle of the 19th century. The peculiarity of this form of money lies in the fact that their nominal value exceeds the real or commodity value.

Defective money is divided into two types:

  • cash (paper);
  • non-cash (credit).

Paper money is issued by the state; it does not have an independent value, but is endowed with a compulsory denomination. They cannot fulfill the function of a treasure and go out of circulation on their own. Paper money overflows the circulation channels and gradually depreciates. Credit money arose during the period of capitalism to ensure trade in new conditions. These primarily include bills of exchange, banknotes and checks. This type of money began to be used not only to display the relationship between goods, but also to ensure the movement of capital between borrowers and lenders.

Recommended: