A miser once buried a box of gold coins in a hole in is garden. Every now and then, he would dig up his treasure, count the coins then bury them again. One night, his neighbor saw him doing it. When the miser went to town, he stole the gold coins. The miser was heartbroken. One of his good friends consoled him. “Take a pile of stones tomorrow and bury them in the garden. Pretend that they are your gold coins. After all, when you had them, you never used them.”

This fable illustrates very clearly the real nature of money. Dollar notes and coins are almost worthless in themselves. They are only valuable because they can help us acquire things. Nowadays, money is only symbolically valuable. Long ago the transfer of wealth involved the transfer of concrete objects like land, houses, animals or precious metals. Nowadays, it has largely become a simple movement of paper. Most of us receive our income by cheque which we deposit in the bank. We then used credit cards or cheques to pay for our other purchases. Some countries like Japan are moving rapidly towards becoming a ‘cashless’ society. All transactions are completed without the individual even laying eyes on a single yen of cold cash!

Until the seventh or eighth century B.C., money did not exist. Trade was built on the barter system. A blacksmith for example, might trade a knife for a supply of wheat or milk. But the barter trade was not always convenient. To start with, there must be a double coincidence. The man who wanted the knife had to have the grain which the smith wanted. Barter trade must have been very time-consuming. It was also not possible to split some goods, for example, it is not possible for a tailor to sell a half a coat. Before long people long realized they would have to find something which everybody recognized and which could be used to barter instead of the actual product. Mediums of exchange soon began to appear. Leather was commonly used in the beginning because unlike grain or meat, leather could be kept indefinitely. Other items which have served for a time as legal tender are tobacco, gunpowder, and glass beads. In Western cultures, cattle became a favored standard of exchange at a very early date. The words capital and chattel come from head of cattle. But the use of cattle presented its own problems. Cattle needed to be fed and housed. Besides, not all cows are equal in size and appearance. It was only a matter of time before people realized they would have to look for mediums which needed less upkeep, were less bulky and at the same time, durable. The use of metals such as silver and gold offered certain advantages. They were easy to upkeep and store. Precious metals were valuable for decorative use. Gold and silver had been used for a long time for jewelry and other ornaments. People were happy to keep them. The supply of these metals, while large enough to serve its purpose, was not so large that the metals became worthless.

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