Bartering was the earliest form of exchange, followed by the use of livestock, shells, and beads as a medium of exchange. The first coins were created in Lydia in 561 BC, and paper currency was first issued in China in 806 AD. Throughout history, various commodities served as money including wampum, gold, and "Continentals" issued during the Revolutionary War. The US established the dollar and a national bank system in the late 18th century.

1. History of
Money

2.  In the beginning, trading or bartering was
the way of life.
 Bartering predates the use of money. As a
matter of fact, money derived from bartering.
 Even today, individuals, governments, and
institutions use bartering as a form of
exchanging goods and services.
 The use of livestock, shells, and beads were
later used as money.

3.  Money is any commodity that satisfies the
following:
 Medium of exchange (item accepted for exchange)
 Store of value (value stored over time)
 Unit of Account (common measure of goods/services)

4.  Portability (easily transported)
 Durability (lasts when handled)
 Divisibility (divisible into smaller units)
 Limited Availability ( available in limited supply.

5.  Croesus, king of Lydia, created the first gold
and silver coins in 561 B.C.
 Charlemagne standardized Medieval coins
when he conquered most of Europe in 800 A.D.
 In 806 A.D., the Chinese started issuing paper
currency, but it led to inflation.

6.  Gunpowder, musket balls, corn, and hemp
served s commodity money. It was used to
settle debts and make purchases.
 Some colonies established fiat monies such as
wampum (shells used by Narragansett Native
Americans).

7.  In Europe during the 1600’s, goldsmiths’s
notes can be used as evidence of ability to pay.
It mark the first use of banknotes in England.

8.  A monetary standard where basic currency unit is equal to and
exchanged for a specific amount of gold.
 Advantages:
 People feel secure about their money
 Prevents government from printing too much paper currency
Disadvantages:
 Gold stock don’t grow fast enough to support economy
 Price of gold likely to change

9.  The colony of Massachusetts was the first
colony to issue paper currency in the US.
 When George Washington was president, the
Spanish peso was used. He assigned Benjamin
Franklin and Alexander Hamilton to establish a
money supply for the new country.
 During the Revolutionary War, congress issued
“Continentals”. Due to oversupply, they were
worthless.

10.  Continental Congress chartered a national
bank in 1781.
 Second Bank of the US charted in 1816.
 Design of U.S. currency made in 1863.
 “In God We Trust” first appeared on currency in
1955.
 Dollar bills redesigned to make counterfeiting
more difficult.

11.  http://www.pbs.org/newshour/on2/money/histor
 http://library.thinkquest.org/28718/history.html
 http://projects.exeter.ac.uk/RDavies/arian/llyfr.h
 http://www.wdfi.org/ymm/kids/history/default.as