No society ever ran on barter, and money is named after a goddess
The textbook tale says people swapped goats for grain until coins came along. Yet no society has been found that relied mainly on barter. Communities without money ran on gifts and debts, and outright swapping mostly happened between strangers or potential enemies. The word money, meanwhile, traces back to a Roman temple of Juno.
Rome's mint stood beside the temple of Juno Moneta on the Capitoline Hill, and moneta came to mean coin, passing through French monnaie into English. Long before Rome, Mesopotamians around 3000 BC used the shekel, a weight equal to about 160 grains of barley. Cowry shells served as currency across the Americas, Asia, Africa and Australia. Herodotus credited the Lydians with the first gold and silver coins, which scholars date to about 650 to 600 BC.
Paper came next. Song dynasty China issued banknotes called jiaozi, grown out of promissory notes used since the 7th century. Marco Polo was so struck by Mongol paper currency that he devoted a chapter to how the Great Khan made tree bark pass for money. Europe's first banknotes came from Stockholms Banco in 1661. Most countries eventually tied their notes to fixed amounts of gold, and after the Second World War many pegged to the dollar, which was itself linked to gold, until the United States suspended that link in 1971. Nearly all money today is fiat, valuable because governments declare it legal tender and people accept it.
In 1875 William Stanley Jevons listed four jobs money does, later squeezed into the rhyme a medium, a measure, a standard, a store. Modern textbooks usually keep three: a way to pay, a yardstick for prices and a way to save. There is tension between them, since saving means holding money while paying means spending it. To work, money has to be interchangeable, portable, widely accepted and limited in supply.
Perhaps the most surprising part is where money comes from. Coins and notes are only a small share. In developed economies most money is bank money, created electronically when commercial banks issue loans and record them as deposits. Contrary to a common belief, banks do not simply lend out savers' deposits.
Source: Money
