The Five Stages Of Money: The Evolution Of Money

Among every community one popular topic that we all discuss is money. Money is used every day for the buying or selling of goods, services, or repayment of debts. Money controls almost all of the things that we do or want to do. It is an influential object that installs buying capability, or the shortage of. It can alter certain choices that may be made in life. Both the creation of money, and how the value of the money is determined effects everyone. The evolution of money has gone through five stages. The first stage is barter. Barter is one of the first monetary systems, and it simply consists of trading a product or service for other products and services. The second stage was the use of commodities to speed up the process of

Gold and silver are till the international standard accepted as money. The third stage of money is called receipt money. In order for the wealthy to keep their gems and precious metals safe, they turned them over to people they trusted and were given a receipt for those items. This practice was the actual start of the use of banks. The use of receipt money allowed the speed and safety of business to improve. Fractional reserve receipt money is the fourth stage of money. Because the bankers’ vaults were filling up with the commodities of gold, silver and gems, they understood that their customers really didn’t have any use for the actual commodities themselves; and the receipts were more convenient for the business because they were safer, lighter and easier to carry. As a way to make more money, bankers began lending wealth instead of storing wealth. When a customer came into the bank and wanted to borrow money, the bankers issued another receipt with interest.

Coins from different European countries were used and circulated. These coins were scarce, so much of the trade was done by bartering and commodities. The Continental Congress issued the first unified currency declared to be redeemable in gold or silver during the Revolutionary War. After the war, more currency was printed than the precious metal reserved by the government so it became almost worthless. By 1792, the growth in population and commerce in the US caused the new government to look for ways to issue a strong, stable, central monetary policy. Congress was given the power to create and establish that system and passed the Coinage Act that made the dollar the primary monetary unit. The act was based on the use of gold and silver as backing for the dollar, but due to the scarcity of those commodities at that time there were many adjustments to the value of the dollar. (The United States Monetary