History and Origin of Money
Money serves three purposes:
Medium of Exchange
People accept money in trade for goods and services.
Standard of Value
The value of a good or service can be measured with money. For example, a car with a price of $2,000 is worth twice as much as a car with a price of $1,000.
Store of Value
Money can be saved and used in the future.
Most early cultures traded precious metals. In 2500 BC the Egyptians produced metal rings for use as money. By 700 BC, a group of seafaring people called the Lydians became the first in the Western world to make coins. They used coins to expand a vast trading empire. The Greeks & Romans continued coining and passed it on to later Western civilizations. Coins were appealing since they were durable, easy to carry and contained valuable metals.
Money replaced BARTER as a system of trade
During the 18th century, coins became popular throughout Europe. One of the most widely used coins was the Spanish 8-reale. It was often split into pieces or bits to make change. Half a coin was 4 bits, a quarter was 2 bits, a term still used today. Coins containing precious metals are an example of "commodity money." The item was traded because it held value. The value of the coin depended upon the amount of gold and silver it contained.
The Chinese were the first to use paper money, beginning in the T'ang Dynasty (618-907 A.D.). During the Ming Dynasty in 1300 AD, the Chinese placed the emperor's seal and signatures of the treasurers on a crude paper made from mulberry bark.
Representative money is tokens or pieces of paper that are not intrinsically valuable themselves, but can be exchanged for a specific commodity, such as gold or silver. In 1715 Maryland, North Carolina and Virginia issued a "tobacco note" which could be converted to a certain amount of tobacco. This type of money was easier to make large payments and carry than coin or tobacco leaves. In the late 1800s, the U.S. government issued gold and silver certificates
2. History of Money
Lydian Coin
700-637 B.C.
Chinese Note
1368-1399
Reserve Note
1968
Greek Coin
400-344 B.C.
New York Note
1776
Silver Certificate
1886
3. The Origin of the $ Sign
P S
S P
+ $
= =
The word dollaris derived from the Spanish word dolar.
4. Our Money
Making Money
Federal Reserve Notes or โdollar billsโ
are printed by the
US Bureau of Engraving and Printing
in Washington DC and Dallas, TX
9. Our Money โ Security Features
Watermark
Security
Thread
Color Ink
10. Our Money โ Security Features
Micro-
printing
Low Vision
Feature
Federal
Reserve
Indicators
11. Our Money โ Security Features
Serial
Numbers
Symbols of
Freedom
Portrait
12. QUIZ โ Our Money
Money Unit Review Questions Answer the following questions.
1. Whose signature is on each Federal Reserve note?
2. Whose portrait is on the $20 bill?
3. Name two ways the United States protects its currency
from counterfeiting.
4. Who should you contact if you suspect you have been
given counterfeit currency?
5. True or False: The U.S. government plans to recall all
currency and replace it with the
newly designed currency.
13. QUIZ โ Our Money
Money Unit Review Questions Answer the following questions.
6. True or False: The Federal Reserve System prints all the
money in the United States.
7. What's the difference between representative money
and fiat money?
8. What are the three functions of money?
9. Who is credited with making the first paper money?
10. What were some of the commodities people used as
money and why?
11. Money replaced what system of trade?
14. QUIZ โ Our Money
Money Unit Review Questions ANSWERS
1. The signatures of the Secretary of the Treasury and the U.S. Treasurer appear on each Federal Reserve note.
2. Andrew Jackson is on the $20 bill.
3. The U.S. protects its currency by:
โข Micro Printing
โข Watermark
โข Using a special โheavyโ type of paper.
โข Weaving small red and blue threads in the bill.
โข Weaving a polyester thread with the letters USA and the bill's denomination inside the bill.
โข Color Ink
โข Serial Numbers
4. You should contact the Secret Service or local police if you suspect you have a counterfeit bill.
5. False, old currency won't be recalled to put new currency into circulation.
6. False, the Bureau of Engraving and Printing is responsible for printing money.
7. Representative money can be redeemed for commodities such as gold or silver โ fiat money cannot.
8. The three functions of money are:
โข medium of exchange
โข standard of value
โข store of value
9. The Chinese were the first to use paper money.
10. Pewter, gold silver, gems, furs, etc. were all used as money. They were used because they were scarce and valuable.
11. The system of money replaced barter.
16. NOTES
โข The following slides are to be used when
printing the presentation for use on
transparency.
โข They should replace slides 5 & 6 so you
do not give away the answers.
โข ๏
