The first coins and notes
Find out how coins and notes first came to be used
Why were coins invented?
In
about 700 B.C. the Chinese started to make simple metal coins.
The Lydians (from Turkey) were the first to make silver into
coins, with the Romans and Greeks following not far behind.
Coins made from precious metals were weighed and the value of
each one was stamped on it. People had confidence in the new
coins because they knew they were valuable.
Why were notes invented?
The invention of coins solved many problems, but
not all. If you wanted to buy something expensive you needed
a lot of them! Large amounts of coins were heavy to carry around
and were an easy target for robbers. The answer was paper money.
The first type of paper note was invented by the
Chinese in 118 B.C. They couldn’t find enough copper to
make the coins they needed so they used a 30cm piece of deerskin
to stand for 40,000 units of ‘cash’ (a number of
coins).
In the 11th century, Italian traders started to
use paper notes (called ‘bills of exchange’) in
place of large amounts of coins. These notes had the details
of the trade written on them – the names of the traders,
the amount of coins and the goods being bought or paid for.
Robbers were not interested in stealing them because they could
not be used by anyone except the traders.
The first notes in the U.K. were issued by goldsmiths
in the 16th century. You could leave your gold coins with a
goldsmith to keep them safe and he would give you a receipt
for the amount. Because everyone trusted goldsmiths, people
started using the receipts to pay for things. They knew that
if they took the receipt to the goldsmith, he would give back
the gold coins.
The banknotes we use today developed from these
receipts.
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