Before the invention of money, the direct peaceful exchange of goods for goods between strangers took place through bartering, it is a simple method with advantages and problems, one of which was constituted by time constraints.
The solution of exchanging on credit, widely practiced between different tribes, presupposed consolidated relationships, usually not easy to establish or maintain. The simplest exchange required the immediate temporal contiguity of deliveries. But for this it was obviously necessary that both goods be available at the same time and in the same space, and this was not a small precondition. For example, a barter of oranges for wheat, given the different seasonal ripening times and therefore of availability, was impossible, or at least inadvisable.
Over time, from direct barter, therefore, we passed to mediated barter, through the use of a third commodity, of a guarentige nature, which could act as a "bridge value": commodity money. This allowed not only to be able to expand the possibility of exchange beyond the contemporaneity of retrieval, but also to carry out indirect exchanges, in which more than two subjects exchanged goods without each time whoever delivered a good obtained in exchange an asset of their own interest directly from who received his. This "third commodity" was soon identified in the Western world in well-defined processing of some metals, the best known of which is gold.
With gold, to make a concrete case, it was possible to sell any good at the most opportune moment, receiving coins in exchange. It was then possible to reuse the same gold to buy a perishable commodity, for example grain or vases, at the time when one wanted to do so or when it was available. For the grain, after the harvest, and for the pottery when it arrived at the market place.
Money was therefore introduced with the task of functioning as a bridging value, making all products first of all truly interchangeable and in particular to allow the exchange of goods available at different times of the year. As a conceptual secondary effect, but which became just as important, the introduction of money actually made it possible to vary the exchange rates between two goods: simply by changing the moment in which the first good was sold in exchange for money, and the moment in which the first good was sold in exchange for money. where the second good was bought in exchange for money, for example two cows could be exchanged for a different number of sheep by acting on the timing of the purchase and sale.
The first cases of money were objects that were useful for their intrinsic value. This was known as a bargaining chip and included any widely distributed product with its own value; examples were cattle, rare shells or whale teeth.
Even in developed countries, in the absence of other types of money, people have occasionally used commodities such as tobacco as money. The last time this happened on a large scale was immediately after World War II, with the common use of cigarettes as a bargaining chip.
Once a commodity is used as money, it acquires a value that is often slightly different from its intrinsic value. The fact that it can be used as money adds utility to the commodity, thus increasing its value. This additional utility depends on social aspects and is influenced by the use made of money in that society. Consequently, although the exchange commodities are real, their value is not fixed. A first example is given by gold, which has acquired a different value in different populations, but in none has it been valued as much as in those who have used it as money. Fluctuations in the value of a bargaining chip are highly dependent on current and estimated supply and demand: for example, approaching the depletion of a gold mine causes the value to rise in preparation for the next reduction in supply. .
Money can be anything that the parties consider exchangeable, but the practicality of commodities varies greatly. Desirable characteristics for money include being storable for long periods, having small volumes so that it can be easily transported, and being difficult to find, so that it cannot be found outside of commercial activities. Again, supply and demand play a key role in determining value. If a government prints more banknotes, it increases supply without a corresponding increase in value. Thus, the money is worth less than before the new banknotes were issued.
For these reasons, metals such as gold and silver have often been used as bargaining chips. However, to improve their mechanical characteristics and workability, these metals are often used in alloys with less valuable metals, making their value variable.
Black jasper, commonly called "touchstone", is one of the main crystalline forms of silica. The use of black jasper is what paved the way for metal as a bargaining chip and currency. On a touchstone, the purity of any soft metal can be verified by comparing the color of the traces that are formed by rubbing it, allowing you to quickly trace the precious metal content. Gold is a soft metal, which is also hard to find, dense and storable. For these reasons, gold as money quickly spread from Asia Minor, where it was initially used, to the whole world.
Using this system requires you to perform several steps and a few accounts. The touchstone allows you to estimate the amount of gold in an alloy, which must then be multiplied by the weight of the piece of metal to find the amount of precious metal contained.
To simplify this process, the concept of standard coinage was introduced. The title of the alloys was prefixed, like the weight of the minted coins, so that, knowing the origin of the coin, the use of touch stones was not required. Coins were typically minted by governments with strictly protected procedures and then marked with symbols that guaranteed the weight and value of the metal.
Although silver and gold were the metals commonly used to mint coins, there was also the use of other metals. At the beginning of the seventeenth century, Sweden found itself in a shortage of precious metals and thus produced "plates" which were large copper plates of about 50 cm per side, bearing an indication of their value. The poor handling of these plates undoubtedly contributed to Sweden being the first European country to issue banknotes in 1661.
Money then evolved into a convertible money system. That is, they have succeeded in obtaining that money itself can have an intrinsic value much lower than its exchange value, that is, it can be made to correspond to commodities that have a much higher value than gold and silver or metals. of which a coin is made, or in the same way of paper and ink and also of the working hours of the people and machinery with which the banknote that is adopted is made. The first system was a guarantee by a body deemed stable and third: Paper currencies and non-precious metal coins were covered by the promise of a government or a bank to transform it into a certain quantity of precious metal, such as silver. For example, the term "British Pound" derives from this type of system, which was initially a monetary unit guaranteed by a pound of silver at 92.5%, hence the currency "Pound Sterling".
For much of the 19th and 20th centuries, many currencies were based on convertible money through the use of the gold standard.
Legal tender money is that money not covered by reserves of other materials. Money is given a value thanks to the fact that there is an authority that acts as if it had any. If an organization large enough issues, uses and accepts something as payment for invoices or taxes, that something automatically gains value, since it is recognized as a medium of exchange.
Governments over time have sometimes switched to legal tender forms of money in times of need, suspending the service they offer to exchange money for gold, with effects on purchasing power generally lower than might have been expected. Similarly, a reduction in the exchange rate between money and gold also generally had less effect than expected on purchasing power. The United States finally switched to legal tender in 1971. Since other currencies were also referred to as the US dollar, there was automatically a multiplication of countries that found themselves adopting legal tender.
Credit money often exists in parallel with other forms of money, such as legal tender or commodities, and from the user's point of view it is indistinguishable from these. Much of the money in the Western world is credit money derived from legal tender national currencies. Money on credit tends to present itself as a byproduct of borrowing and borrowing money, as shown in the example below.
Let's imagine that you have deposited a certain amount of gold coins in a bank vault. The bank can lend the coins to a second person based on a promise to pay back the same coins with an extra on a certain date. The second person can meanwhile use the coins as money. This while we continue to own and use them, being able to pass ownership to a third person with a transfer request to the latter's account. In this example it is as if there were new money created during the loan, in such a way as to allow multiple parties to use the same coins at the same time. This can be extended to any number of new parties who can request and receive money on loan, but for each additional user there must be a promise to return the coins. The extra cost foreseen in the reimbursement, in addition to representing a margin for the financial operator, serves to give stability to the process, absorbing any unpaid credits. Another element of stability should be the ratio between deposits and loans, originally equivalent, nowadays fixed for each nation by the central bank on average with the unbalanced ratio of 1: 100.
Karl Marx supports what he calls the "subversive power of money", meaning its strength in the formation and transformation of social relations.
Georg Simmel's analysis, on the other hand, goes beyond the purely economic function of money, to focus on the sociological and psychological one, which would have led to the alienation of the individual and human values.
In the Florence of the fourteenth century, whose speech would later give rise to the Italian language, the term money did not have the current generic meaning but indicated a specific currency, with a value equal to the twelfth part of the penny and the two hundred and forty part of the lira. Previously the Carolingian coinage had instead provided for a single legal currency and "silver monometallism".
This means that money was minted, a currency that had neither multiples nor submultiples. The money was silver, and therefore in the system envisaged by the Carolingian coinage there were no other metals.
This monetary system regulated the minting in Europe for many centuries, until the French Revolution and the events connected to it led to the affirmation of the decimal system; a phenomenon that did not affect Great Britain until 1971. The pound sterling, the British monetary unit, was in fact divided into twenty sous, or shillings, each of which was worth twelve denarii. In many languages, the words that indicate money in general often derive from the name of specific monetary units: thus in Italian, soldi, soldi, but also svanziche, palanche, baiocchi, ghelli and quattrini.
