Money as an unconditional value has been known to mankind since ancient times. They became the apple of discord or the cause of peace, both between individuals and entire states. Money has come a long way. At the earliest stages of ancient civilizations, their counterparts were popular products that were most significant in a particular area. The first money is commodity money, which was a universal product, interesting for all participants in the transaction.
Universal product
The appearance of means of payment, or real money, is associated with the development of productive forces and commodity relations. With the start of subsistence farming between tribes and communities, a certain specialization begins to take shape. Some tribes were engaged in livestock breeding, others grew crops, some hunted or made tools. The specialization of labor has led to the need for exchange.
Gradually, the process of commodity exchange has become more complicated. And if at first it was random, one product was exchanged for another, then as production developed and new goods appeared, the market began to provide participants with an increasingly diverse choice. Now you can compare the value of one product of labor with the value of many others. As a result, the equivalent product was determined among the delivered goods, in which the cost of other goods began to be expressed. Universal goods become an intermediary and in exchange.
Thus, commodity money is a universally recognized exchange tool that is both a commodity and a means of payment.
Commodity money forms
The first money for the most part was food, since it was a daily need for a person, mainly it was grain and cattle. They are defined in that way - “bestial” money. Gradually, along with essential goods, luxury goods began to appear on the market . The market has expanded significantly. The following goods were identified that most often participated in the transactions concluded: furs, crops, fish, salt, tools, jewelry, metal, and in some places people.
So, commodity money had four forms of embodiment:
- Animalistic (from the Latin word animal - animal). These include goods of animal origin - livestock, hides, furs.
- Vegetabilistic (from Latin vegetabilis - plant). They are related to products of plant origin - grain, fruits, various plants.
- Hiloistic (from Latin hyle - substance). They were a product of natural origin - metal, stones, salt.
- Homologous. A commodity unit was a man - a slave.
It should be noted that not all of these goods could sustain the status of commodity money for a long time, since they could not be stored for a long time. First of all, this concerned rapidly deteriorating plants, fruits.
Bestial money
For most peoples, livestock was the most popular commodity money. One cattle head replaced a monetary unit. A good illustration of this is given by the poems of the ancient Greek poet Homer, which tells of the times when prices were determined by bulls.
Persians, Arabs, Celts actively used cattle as money. The ancient Germans in determining the value of the goods also turned to artiodactyl animals. Interestingly, in the Old German language, the word "capital" meant the number of livestock accumulated. In the Hungarian language, the expression "golden cattle" has been preserved, indicating that once their money went on four legs.
The demand for livestock as a means of payment was fully justified for several reasons:
- meat;
- source of dairy products;
- vehicle;
- work force;
- the skin served as a material for sewing clothes and shoes.
As you can see, bestial commodity money was a win-win for most cases of trade transactions, because for some time they were a priority among different nationalities.
The first money in Russia
Even before the formation of the Old Russian state, Slavic tribes used commodity money as a medium of exchange. In the southern Slavs, cattle acted as money. Therefore, a little later, their first metal money was called “cattle”, and the princely treasury was called the “cowgirl”. The northern tribes mainly hunted, and the fur of valuable animals served as commodity money. The marten was very much appreciated, or, as they said, "kuna". Later, metal coins got this name.
But as historians say, in ancient Russia, cattle did not become the universal equivalent, in which the value of the remaining goods would be expressed. For a while he, along with furs, played the role of money, but then he was supplanted. The fur had a number of advantages over cattle: it is the best transportability, greater safety and divisibility. This commodity money was the most convenient to handle, which defeated cattle.
Skulls, cod and feathers of parrots
Goods that were used as means of payment often impress with their form and content. For example, in Melanesia, the function of money was performed by the teeth of dogs, dolphins and kangaroos, as well as pig tails and parrot feathers. On Barneo Island, goods were paid for with skulls of cows. And on the Solomon Islands they took a step further - the money was represented by human skulls. Of course, this form of money was a rare exception, because commodity money itself, as a commodity, had to carry some kind of utility, which could not be said about turtles.
In Mexico, when making payments, in addition to cocoa beans, the Indians used metal axes. And in Iceland, everything was measured in cod. Salt as a universal product has been widely used in different parts of the world. Roman legionaries received their salary with it. And in Ethiopia, until the 20th century, it was still used as money.
One of the most common types of commodity money was kauri shells, which at different periods of history were actively used as a means of payment for many peoples - North America, China, the islands of Oceania, Thailand, India, Africa. It is noteworthy that archaeologists discovered kauri shells dated to 800-600. BC e., in Lithuania, Latvia and Germany.
Advantages and disadvantages
The participant in trade transactions always had to remember that commodity money is primarily a product, therefore, in their use they already imply a certain risk and have both pros and cons.
Advantages of commodity money:
- real goods of value;
- practicality;
- the ability to independently create money (farming, hunting).
The disadvantages of commodity money:
- complexity of calculation, indivisibility;
- complexity of storage and accumulation;
- threat of damage (cattle, grain, slaves);
- dependence on weather conditions;
- the difficulty of trading where the money is not recognized.
Obviously, the cons outweighed the pros. Most of the goods could not satisfy all the requirements for them as money.
Metals as a universal product
Despite the fact that metal also belonged to commodity money, interest in it increased gradually, along with the requirements for a universal product.
With the rapid development of trade relations, a product claiming to be a money should now have the following properties: uniformity, strength, wear resistance, divisibility, compactness, transportability, recognition, constant cost and relative rarity. Thus, metals began to advance to the first positions.
The earliest references to iron money date back to the 15th century BC. e., - the time when in China tools made of various metals began to be used as money. Subsequently, iron money was presented in three forms. At first it was only tools made mainly of copper. Then, with an increase in metal mining, they began to make jewelry, which was typical to use precious metals. And the last form of iron money was golden sand.
Noble metals, due to their expressive properties and durability, have become demanded raw materials for jewelry production and a recognized luxury item. And as a result, in different parts of the world and in independent communities, gold and silver are recognized as the leading commodity money.
Commodity Money Functions
The first commodity money was tied to a specific area and performed two main tasks:
- Function is a measure of the value of the goods. It consisted in the ability of commodity money to evaluate and measure the value of other goods.
- The function of the medium of circulation. Commodity money acted as intermediaries of the exchange, when the transaction took place according to the scheme: goods - commodity money - goods.
But with the development of the market and the adoption of metals as means of payment, functions were also allocated: accumulation, payment (taxes, loans, salaries) and international circulation.
Modern Commodity Money
Under the current modern monetary systems and calculations, it would seem that commodity money should be squeezed out of the economic turnover, however, as reality shows, some goods still continue to be used as money. This can happen for various reasons: when there is no confidence in the stability of standard currencies, when there is a shortage of certain goods or when there is no possibility of access to the money itself. Examples of commodity money today are tea, cigarettes, and alcohol. In prison and distant villages, such goods sometimes appear as the only way to complete a transaction.