History of money

 Trading without money

Trading without money is called barter system. Barter system is a process where people exchange there goods and services for other goods and services in return.This method of exchanging was used before invention of money for many centuries.

             

Exchanges with money

If we use money,for the exchange of goods,there will be no problem in exchanging commodities . Then, a person who has something in excess will not have to necessarily find another person who needs it and has something also to give in return. Money acts an intermediary or something because it can be used further. Money can be exchanged for goods because it's acceptable to all. Those who wish to sell something will accept money as payment and similarly will only offer money. One can also borrow money and pay back in form of money.

          

             

disadvantages by barter system

Under the barter system , to make exchange possible , it is necessary to determine the value of a commodity in terms of another. 

        For example , commodities like vegetables should be exchanged immediately , because they are perishable.

This problem is solved when commodities are sold by money 💰 . Also holding of commodities like cattle , sheep or bags of grains requires a lot of place and maintainence and you need carts and trucks to carry your goods for exchange to the markets.However money doesn't require any

space it's portable . 

            

Evolution of money

People all over world practised barter system and also encountered many problems with this system. When trading become more widespread , more goods where sold and bought. Over time , people preferred scarce and invented attractive 

metals as medium of exchange . Since they were scarce . As copper , bronze ,silver and gold were more durable there were used as currency . New problems raised such for every exchange they have to check weight and have to check as it is pure or not. 

               This provided an opportunity for various rulers of the kingdoms to come up with a system that was suitable for them. This led to minting of coins with standard size , weight and purity from royal mint . In Roman period' besant' -  a gold coin was standard currency and in Mauryan period pana - a silver coin was standard currency for them. Coins became acceptable for all people and traders .  

 

               

    

Paper money and emergence of banks    

People who had to buy and sell in large quantities had to carry large amounts of gold or silver coins for their transactions. So they started looking for safe places to keep them. They went to Goldsmiths , where their money would be protected . The Goldsmiths charged fees for keeping their valuable safe and making them available whenever they wanted . This practice became popular and trust in some of Goldsmiths or shroffs grow .

             These Goldsmiths would also give loans and had many branches in many cities, leading to new system of paper money

Early bankers of India

The early bankers in India such as Jagaseths of Bengal , Shahs of Patna , Arunji nathji of Surat, Chettiars of Madras. 

Famous bankers of world

       In 1606, Amsterdam was a major trading centre in Europe . Here there were 846 types of gold and silver recongnised . The merchants of Amsterdam got together and solved the problem of purity of coins . They created a banke owned by city. A merchant would take his coins from bank would weigh and find out the amount of pure metal in the coins and give him a recoept for this , open a account and deposit coins . 

         The bank operated honestly and it was trusted by all traders . They would ask reciepts of bank or it to their  account , instead of coins . The traders knew that they would give pure coins which  are in demand.

Deposits of bank became new form of money . The business became successful and worked for two centuries . The operation of bank deposits as money had evolved.