MONEY

As trade and economies increased, barter—the exchange of goods or services in return for other goods or services—was replaced by money. Money is a convenient social invention used to facilitate the exchange of goods and services. Contemporary money takes the form of paper or coins made from durable metals such as nickel, copper, silver, or gold. The first uses of money, however, took a slightly different form. Early items used as money include shells, stones, cattle, and cigarettes.

What is accepted as money from one time to another may vary according to what the society accepts as its medium of exchange. Ancient agricultural societies may have placed more value in cattle than copper, and thus cattle could become accepted as payment for goods or services. Most modern societies use paper and metal coins as their medium of exchange. At the birth of the United States, when the new nation was governed under the Articles of Confederation, the issuing and printing of money was not centrally controlled. Each state printed its own money and there was no guarantee that money from early Virginia would be accepted in Massachusetts. This created problems in the early republic as the states engaged in interstate commerce. The production of money in the United States was eventually centralized under the federal government.

Internationally, nations use different monetary currencies. As in the early days of the United States, the different currencies affect trade. Rather than convert the world to one monetary system exchange rates are established, for example, to convert U.S. dollars to British pounds. This allows nations engaged in international trade to easily purchase goods and services worldwide.

At the end of the twentieth century money was not just paper and coin. Money was plastic and consumers could charge items to a credit account, which they then paid for through another form of money, a check. In addition, the advent of computers and electronic communication allowed banks to begin electronic transfers of money, making it possible to move money from a bank account in Los Angeles, California, to a bank account in Zurich, Switzerland, within a matter of hours—all without the hand-to-hand exchange of paper or coin.