Currency Transcends the Ages

You have likely noticed that the U.S. Treasury has been redesigning our paper money over the past few years . Though the colors and images have changed to thwart counterfeiting, the size, shape and paper has remained the same. But paper money issued by the United States and other countries didn't always look or feel like it does today.

The exchange of goods and services for something of value, or money, has always occurred between trading partners. This practice continues today; however, the forms of money used have evolved.

Commodity money was the earliest type of money and came into use around 9000 - 6000 BC. Cattle is thought to have been the earliest form of commodity money, but plant products such as grains and precious metals were used as well.

Early commodity money served its purpose in business. However, the sheer size, limited lifespan, and availability of these products hindered repeated transactions. In addition, the value of the commodity money was subjective to the traders.

Eventually, other forms of money evolved. From 2250 - 2150 BC, silver ingots became widely accepted as money. Later, China adopted cowrie shells, which were later replaced by tool currencies such as spades, hoes, and knives. These items had the advantage of being easier to transport and carried uniform social value.

As time progressed, money was made more convenient as round pieces of metal, called coins, emerged in the western Asia Minor country of Lydia in 687 BC. "True" coins consisted of electrum, an amalgam of gold and silver. Later, the Lydians produced separate gold and silver coins that led to the world's first bimetallic coinage. Metal-based coins had the advantage of carrying intrinsic value. But, they induced unscrupulous manipulations. For example, silver coatings were layered over inferior bronze coins, and the precious metals from coins were clipped for recycling.

Then, in 806-821 AD, a severe shortage of copper used for making coins caused Chinese Emperor Hien Tsung to issue paper money notes. This sparked the development of paper money, but more than 600 years later, the Chinese abandoned paper money due to numerous problems of over supply and hyperinflation.

Commodities, coins, and paper monies remain global, standard forms of currency. But, advancements in technology over the last 60 years have changed the very concept of money. Charge or credit cards arrived in 1950 with issuance of the first Diners Club card. By 1995, more than 90% of all money transactions in the United States were made electronically.

Throughout the ages, money forms have evolved from large, cumbersome items to convenient, digital products. It's hard to say whether new forms of money will emerge in the future. We only know it will always be needed.

Find out more about money on the Web:

• The Money Factory - Learn about the latest designs in U.S. currency, anti-counterfeiting measures, and money facts.
• The United States Mint