Evolution of Money

In ancient times, a great variety of commodities and cattle were used as money in valorous countries. Salt and cattle, for example, were used as money in ancient Rome, tobacco was used in the early American colonies and pigs were used is some South Sea Islands. All kinds of commodities, ranging from grain to animal skins, have been used as money. However, in due course of time most of the countries found that metallic coins, such as iron, copper, silver, gold etc., were more suited to serve as money. Iron and copper originally predominated. However, as major increases in their supplies occurred, they became so plentiful as to reduce their scarcity-value to the point at which coins would have been excessively bulky and heavy. Silver was considerably more scare and became a popular form of money. Until two or three hundred years ago, gold was so scarce that it did not serve effectively; the units were too small. However, the world-wide gold discoveries of the nineteenth century sufficiently increase world-gold supplies to permit throughout the major portion of recorded history. They served well because they possessed the desirable characteristics of money. They were easy to carry, they could be easily divided into smaller values, and they could be easily recognized. They were just as valuable in their commodity usage as in their monetary usage. These qualities led to the use of metallic coins as money. In modern times, money is mostly non-commodity money such as paper money and credit money.

Definition of Money

Money is defined by different economists in different ways. Some definitions are too extensive while others are too narrow. While economists like Prof. Walker have defined it in terms of its functions, other like Robertson and Seligman have laid emphasis on its basic characteristic, namely, general acceptability.

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