The Evolution Of Money

In separate places, under different cultures, all over the world, the concept of a "medium of exchange" grew. People noticed that some goods were easier to trade than others. And people also noticed that these "more tradeable goods" had similar properties:

• They were durable
• They were easily divisible into larger or smaller amounts.
• They were comparatively scarce, procuring them required effort.
• They were "homogeneous". Every item of the commodity was exactly like every other item.
• They were convenient. It was easy to carry enough around to made trades for other commodities.

Over time, a shorter and shorter list of commodities passed all these tests. These select commodities began to exhibit a sixth property, all important in the evolution of money.

This short list of commodities (most of them metals) had one thing in common with all other commodities. They were useful and commanded an exchange value in their own right. But because they were easier to trade than any other goods, they came to be perceived as having a value over and above their basic utility. They came to have a value as a "most (easily) tradeable good". They came to have a value as a MEDIUM OF EXCHANGE.

Once this value became widely recognized, the commodity in question was no longer "consumed" for any but the most vital purposes. Instead, it was used in exchange. It had become a MONEY