THE FIRST PAPER MONEY

The first paper money was probably made in China. The Italian explorer Marco Polo had seen it being used there in the late A.D 1200s. These Chinese bills were large and were printed on paper made from Mulberry Bark. Though they had little intrinsic value these bills could be exchanged for valuable metals.

The paper money used today developed from a custom that existed in England during the 1600s. People would store their gold in the vaults of goldsmiths, who gave written receipts for the gold. These receipts circulated as money and businessmen accepted these receipts.

After 1650, with the rise of the national banks, the use of paper money increased greatly. The banks would issue notes to people who deposited money with them.
Paper money appeared in North America in 1685. Such money consisted of playing cards used in Canadian colonies. Each card was marked with a certain value and signed by Colonia Governor. These cards were widely accepted and used for nearly 70 years.
The use of paper money and bank notes received an impetus in the late 18th and early 19th centuries as private companies and even individuals issued fiduciary money, based on a promise to pay specified amounts in gold or silver. Eventually the government stepped in and began to issue fiat money, whose value was guaranteed by the State. In times of crises, when governments suspended payment of gold for bank notes, paper money became devalued. This occurred in Britain during the Napoleonic Wars (1801-1815) and in the United States during the Civil war (1861-1865).

After World War 1, Germany over issued paper money and therefore, its monetary system collapsed. Essentially the same thing happened in Hungary after World War 2 when the “pengo” became worthless. It was also in the 1930s that the old established international gold standard collapsed and was finally abandoned.

Production of various goods for consumption increased with the industrial development of the world and thereby money became an absolute necessity for people to exchange these goods. in this scenario different countries had their own monetary unit to carry out transitions and the control of money was the responsibility of the Central Bank, Government Treasury or a Monetary Authority. With the world economic development international transactions increased substantially, especially in the developed countries resulting in the wide use of British Pound, French Franc, German Mark and the American Dollar.

THE FIRST COINS

The evolution from metal to true coins first took place in Western Turkey . The sea-going Greek merchants brought these coins home to Greece, where coin-minting had developed into a fine art by thea early Greeks. These coins were called its stamp to certify the coins weight. Around 500 B.C similar coins were being used in every area where the Greeks had set up colonies.

The Romans started making coins during the 300 B.C period. They issued the first "denarius" and these were made avaliable in all the countries they conquered.

ANCIENT FORMS OF MONEY

One of the most ususual forms of money was the stone used until the early 20th Century by Primitive people on the island of Yap in South Pacific. Their money called the "FEI" consisted of large stone wheels ranging size from 1 foot to 12 feet (0.3-3.6 meters) in diameter with a hole in the greater was its value. Since many of the stones were large and difficult to move. they remained at a ginven location, although their ownership changed hands.

The early Phoenician and Babylonian traders in the Mediterranean area used metal as money. In 2500 B.C. the Egyptians used metal rings as money. Around the same time the Babylonians started a system that some have referred to as fourerunner of paper money. Pieces of gold were used in Sri Lanka in ancient times and these were called "Kahapanas" ("Kahavanas").


With time, most exchanges were with bullion - gold or silver bars whose weight had to be certified. Later these bullion bars carried the stamp of the various merchants who processed them, the weight of the vars also being included on the stamp. Such stamped metal was used in CHINA around 2000 B.C.

THE FIRST MONEY

To avoid some of the problems of barter, people began to accept certain object in exchange for any product. They agreed on objects that everyone valued, and these served as the first money. Primitve societies used stone, beads and sea shells as money. While none of these was ideal each serced as money as long as it was accepted by the entire community.

HISTORY OF MONEY

During early human history, no one needed money to obtain what they wanted for themselves. People hunted or grew their own food. They made their own clothing and shelter. As time went on, some persons found that thery could do a particular job better than their neighbours. So thery spent their time doing that job, and exchanged the goods thery produced for other goods they needed but did not make themselves.

A man who liked to fish and was a good fisherman spent his time fishing. He would trade the fish for other things he needed, like corn and clothing that his neighbour made. This method of trading or exchanging goods is called "barter". When people do not use a wide variety of goods and when waatever is produced is in demand the "barter" system works well.

But people later had problems using the barter system. For example a man who reared cattle may have found that the only person who wanted cattle was a fisherman. If the herdsman traded one cow for one hunred fish he would then have had to hurriedly barter the fish he could not use, before they got spoilt. He may have often not been able to find people who wanted the fish in exchange for other goods he needed. So he was the poorer by the value of the unused fish.