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There are numerous myths about the origins of money. The concept of money is often confused with coinage. Coins are a relatively modern form of money. Their first appearance was probably among the Lydians, in Asia Minor in the 7th century BC. And whether these coins were used as money in the modern sense has also been questioned.

To determine the earliest use of money, we need to define what we mean by money. We will return to this issue shortly. But with any reasonable definition the first use of money is as old as human civilization. The early Persians deposited their grain in state or church grainaries. The receipts of deposit were then used as methods of payment in the economies. Thus, banks were invented before coins. Ancient Egypt had a similar system, but instead of receipts they used orders of withdrawal - thus making their system very close to that of modern checks. In fact, during Alexander the great’s period, the grainaries were linked together, making checks in the 3rd century BC more convenient than British checks in the 1980s. The Egyptians had in fact invented the first giro system.

However, money is older than written history. Recent anthropological and linguistic research indicates that not only is money very old, but it’s origin has little to do with trading, thus contradicting another common myth. Rather, money was first used in a social setting. Probably at first as a method of punishment. Dowries were probably also an early use. These early origins have left their traces in our language - as in “pay one’s dues”.

Early stone age man began the use of precious metals as money. Until the invention of coins, metals were weighed to determine their value. Counting is of course more practical, the first standardized ingots appeared around 2200 BC. Other commonplace objects were subsequently used in the abstract sense, for example miniature axes, nails, swords, etc.

Full standardization arrived with coins, approximately 700 BC. The first printed money appeared in China, around 800 AD. The first severe inflation was in the 11th century AD. The Mongols adapted the bank note system in the 13th century, which Marco Polo wrote about. The Mongol bank notes were “legal tender”, I.e. it was a capital offense to refuse them as payment. By the late 1400s, centuries of inflation found eliminated printed bank notes in China. They were reinvented in Europe in the wake 17th century.

The lower image is of the Greek Drachma, which had a constant value from the 6th century BC to the 2nd century BC, and became standard coinage in much of Asia and Europe.