Barter: A long time ago, people traded for what they wanted. Perhaps one person had a wonderful spear made of stone and wood. Another person had a beautiful necklace made of stones and shells. Each wanted what the other had. To solve this, they traded. This is called barter.
Different Kinds of Money: Sometimes, it was hard for people to put a barter price on things. Instead of barter, people began to use money as a form of payment. For a definition of money, visit Word Central for Kids.
In the beginning, things were not very consistent.
The Aztecs used small doll figures made of solid gold to buy things.
The ancient Egyptians used ring money. Ring money was an actual ring made of bronze, copper, or gold. In ancient Egypt, people like to wear their wealth. When it came time to pay their bills, they simply pulled off a ring or two to use as payment.
The Celts in ancient Ireland also used ring money, plus bracelet money. The Celts also liked to wear their wealth.
The ancient Africans invented knife money.
In other places in the world, people tried to use rice, or bread, or chocolate as money. But that did not work very well. The food went bad, or it was eaten.
People soon learned that although many things would work as money, to be useful, the item or items they chose to use as money had to follow a few simple rules:
It had to be accepted as money by others
It had to have an assigned value or worth
It had to be easy to carry
It had to be made of a strong material, something that could be handed from person to person.
Ancient Turkey: About 2,700 years ago, somebody came up with the idea of using metal coins as money. The first coins appeared in ancient Turkey. Everybody loved this new idea. The amount that each coin was worth was stamped right on it. The coins were round and flat and made of gold and silver. They were small and easy to carry. They could be decorated with pictures and designs. The use of coins made trade simple.
The clever people who invented the first coins from the kingdom of Lydia, which was a little coastal kingdom on the Aegean Sea, in ancient Turkey. Like most coastal civilizations, these early people needed something to use to trade with visiting merchants who came by sea. Coins were the answer.
Ancient Greece: The idea of metal coinage spread on rapidly. By 2,500 years ago, each Greek city-state had developed its own coinage. Each Greek city-state had banks where visiting traders could exchange their coins for Greek coins, coins they would then use to buy and sell in the great Greek marketplaces.
Coins were not only used as money. In ancient Greece, coins were also believed to have magical powers. The Greeks designed their coins with pictures of their gods and goddesses. The Greeks were the first civilization to use pictures of real people on their coins. The first was Alexander the Great, back around 325 BCE. As time went on, the Greeks created bigger coins, each designed to commemorate a special event.
Ancient Rome: The ancient Romans thought the use of coins was really clever. They copied it. At first, the Romans put pictures of gods and goddesses on their coins, an idea they borrowed from the ancient Greeks. Pretty soon, they began to put pictures of buildings on their coins. They were the first to add symbols like stars and eagles on their coins. Some of their coins pictured current emperors. These coins were supposed to help make an emperor popular.
Ancient India: In ancient India, people used money trees to store their coins. A money tree was a flat piece of metal, shaped like a tree, with metal branches. At the end of each branch was a round disk with a hole in the center. Each of these disks was an ancient Indian coin. When you needed money, you simply broke off a coin from your money tree. The ancient Indians often used pictures of dragons and other make-believe animals on their coins.
Ancient China: Ancient Chinese coins also had holes in the center. To keep their safe, and to be able to carry their wealth easily, coins were strung together on a string or rope. This was called a string of cash. Like the ancient Indians, the ancient Chinese also decorated their coins with pictures of mythical and magical creatures as well as designs. They believed coins were lucky. Coins were a popular present because they provided two gifts - the gift of wealth and the gift of luck.
Ancient Counterfeit Coins: In ancient times, there were crooks who chipped away at the edges of coins to get extra metal. If you were caught "chipping" coins in ancient times, the punishment was usually death. In spite of the risks, one gang who lived in ancient England distributed over 1600 fake coins to the Roman legionnaires who invaded their country!
When coins began to made by machines, counterfeiting dropped off considerably. It was much more difficult to copy the machine made coins. Besides, paper money had started to be an important form of money.
Paper Money: The ancient Chinese invented paper. Once paper was invented, the invention of paper money was predicable. It was light in weight, and could be colorfully decorated.