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Introduction of money
History of money
Illinois Learning Standards: 4.A.2a, 4.A.2b, 4.A.2a, 15.B.2b, 15.B.2c
What is Money?
At first sight the answer to this question seems obvious; the man or
woman in the street would agree on
coins and banknotes, but would they accept them from any country? What
about cheques? They would
probably be less willing to accept them than their own country's coins
and notes but bank money (i.e.
anything for which you can write a cheque) actually accounts for by
far the greatest proportion by value
of the total supply of money. What about I.O.U.s (I owe you), credit
cards and gold? The gold standard
belongs to history but even today in many rich people in different
parts of the world would rather keep
some of their wealth in the form of gold than in official, inflation-prone
currencies. The attractiveness of
gold, from an aesthetic point of view, and its resistance to corrosion
are two of the properties which led
to its use for monetary transactions for thousands of years. In complete
contrast, a form of money with
virtually no tangible properties whatsoever - electronic money - seems
set to gain rapidly in popularity.
All sorts of things have been used as money at different times in different
places:
Amber, beads, cowries, drums, eggs, feathers, gongs, hoes, ivory, jade,
kettles, leather, mats, nails,
oxen, pigs, quartz, rice, salt, thimbles, umiacs, vodka, wampum, yarns,
and zappozats (decorated axes).
It is almost impossible to define money in terms of its physical form
or properties since these are so diverse.
Therefore any definition must be based on its functions.
Functions of Money
Specific functions (mostly micro-economic)
1.Unit of account (abstract)
2.Common measure of value (abstract)
3.Medium of exchange (concrete)
4.Means of payment (concrete)
5.Standard for deferred payments (abstract)
6.Store of value (concrete)
General functions (mostly macro-economic and abstract)
7.Liquid asset
8.Framework of the market allocative system (prices)
9.A causative factor in the economy
10.Controller of the economy
Not everything used as money as all the functions listed above.
What is now the prime or main function in a particular community or
country may not have been the
first or original function in time, while what may well have been a
secondary or derived function in one
place may have been in some other region the original which gave rise
to a related secondary function.
The logical listing of functions in the table therefore implies no
priority in either time or importance, for
those which may be both first and foremost reflect only their particular
time and place.
Money is anything that is widely used for making payments and accounting
for debts and credits.
Causes of the Development of Money
"Money originated very largely from non-economic causes: from tribute
as well as from trade, from
blood-money and bride-money as well as from barter, from ceremonial
and religious rites as well as
from commerce, from ostentatious ornamentation as well as from acting
as the common drudge
between economic men."
One of the most important improvements over the simplest forms of early
barter was the tendency to
select one or two items in preference to others so that the preferred
items became partly accepted
because of their qualities in acting as media of exchange. Commodities
were chosen as preferred barter
items for a number of reasons - some because they were conveniently
and easily stored, some because
they had high value densities and were easily portable, and some because
they were durable. These
commodities, being widely desired, would be easy to exchange for others
and therefore they came to be
accepted as money.
To the extent that the disadvantages of barter provided an impetus for
the development of money that
impetus was purely economic but archaeological, literary and linguistic
evidence of the ancient world, and
the tangible evidence of actual types of primitive money from many
countries demonstrate that barter was
not the main factor in the origins and earliest development of money.
Many societies had laws requiring compensation in some form for crimes
of violence, instead of the Old
Testament approach of "an eye for an eye". The author notes that the
word to "pay" is derived from the
Latin "pacare" meaning originally to pacify, appease, or make peace
with - through the appropriate unit
of value customarily acceptable to both sides. A similarly widespread
custom was payment for brides in
order to compensate the head of the family for the loss of a daughter's
services. Rulers have since very
ancient times imposed taxes on or exacted tribute from their subjects.
Religious obligations might also
entail payment of tribute or sacrifices of some kind. Thus in many
societies there was a requirement for
a means of payment for blood-money, bride-money, tax or tribute and
this gave a great impetus to the
spread of money.
Objects originally accepted for one purpose were often found to be useful
for other non-economic
purposes and, because of their growing acceptability began to be used
for general trading also,
supplementing or replacing barter.
Thus the use of money evolved out of deeply rooted customs; the clumsiness
of barter provided an
economic impulse but that was not the primary factor.
Primitive Forms of Money
The use of primitive forms of money in the Third World and North America
is more recent and better documented than in
Europe and its study sheds light on the probable origins of modern
money. Among the topics treated are the use of wampum
and the custom of the potlatch or competitive gift exchange in North
America, disc-shaped stones in Yap, cowrie shells over
much of Africa and Asia, cattle, manillas and whales teeth.
Cattle are described as mankind's "first working capital asset."
The religious use of cattle for sacrifices
probably preceded their adoption for more general monetary purposes.
For sacrifice quality - "without spot or blemish" - was
important but for monetary purposes quantity was of more significance
since cattle, like coins, can be counted. Obviously there
were very practical reasons for the association between cattle and
wealth but anthropological evidence from Africa in very
recent times shows that when cattle are regarded as a form of money,
not only health cattle but also scrawny ones will be
valued to the detriment of the environment supporting them and their
owners.
Linguistic evidence showed how ancient and widespread the association
between cattle and money was.
The English words "capital", "chattels" and "cattle" have a common
root. Similarly "pecuniary" comes from the Latin
word for cattle "pecus" while in Welsh the word "da" used as an adjective
means "good" but
used as a noun means both "cattle" and "goods".
The Invention of Banking and Coinage
The invention of banking preceded that of coinage. Banking originated
in Ancient Mesopotamia where the royal palaces and
temples provided secure places for the safe-keeping of grain and other
commodities. Receipts came to be used for transfers
not only to the original depositors but also to third parties. Eventually
private houses in Mesopotamia also got involved in these
banking operations and laws regulating them were included in the code
of Hammurabi.
In Egypt too the centralization of harvests in state warehouses also
led to the development of a system of banking. Written
orders for the withdrawal of separate lots of grain by owners whose
crops had been deposited there for safety and
convenience, or which had been compulsorily deposited to the credit
of the king, soon became used as a more general method
of payment of debts to other persons including tax gatherers, priests
and traders. Even after the introduction of coinage these
Egyptian grain banks served to reduce the need for precious metals
which tended to be reserved for foreign purchases,
particularly in connection with military activities.
Precious metals, in weighed quantities, were a common form of money
in ancient times. The transition to quantities that could
be counted rather than weighed came gradually. The words "spend", "expenditure",
and "pound" (as in the main British monetary unit)
all come from the Latin "expendere" meaning "to weigh". The basic unit
of weight in the Greek speaking world was the "drachma" or
"handful" of grain, but the precise weight taken to represent this
varied considerably, for example from less than 3 grams in Corinth to
more than 6 grams in Aegina. Throughout much of the ancient world the
basic unit of money was the stater, meaning literally "balancer"
or "weigher". The talent is a monetary unit with which we are familiar
with from the Parable of the Talents in the Bible. The talent was
also a Greek unit of weight, about 60 pounds.
Many primitive forms of money were counted just like coins. Cowrie shells,
obtained from some islands in the Indian Ocean,
were a very widely used primitive form of money - in fact they were
still in use in some parts of the world (such as Nigeria)
within living memory. "So important a role did the cowrie play as money
in ancient China that its pictograph was adopted in
their written language for 'money'." Thus it is not surprising
that among the earliest countable metallic money or
"coins" were "cowries" made of bronze or copper, in China.
In addition to these metal "cowries" the Chinese also produced "coins"
in the form of other objects that had long been accepted
in their society as money e.g. spades, hoes, and knives. Although there
is some dispute over exactly when these developments
first took place, the Chinese tool currencies were in general use at
about the same time as the earliest European coins and there
have been claims that their origins may have been much earlier, possibly
as early as the end of the second millennium BC. The
use of tool coins developed (presumably independently) in the West.
The ancient Greeks used iron nails as coins, while Julius
Caesar regarded the fact that the ancient Britons used sword blades
as coins as a sign of their backwardness. (However the
Britons did also mint true coins before they were conquered by the
Romans).
These quasi-coins were all easy to counterfeit and, being made of base
metals, of low intrinsic worth and thus not convenient
for expensive purchases. True coinage developed in Asia Minor as a
result of the practice of the Lydians, of stamping small
round pieces of precious metals as a guarantee of their purity. Later,
when their metallurgical skills improved and these pieces
became more regular in form and weight the seals served as a symbol
of both purity and weight. The use of coins spread
quickly from Lydia to Ionia, mainland Greece, and Persia.
Noteworthy Points Regarding the Origins of Money
Money did not have a single origin but developed independently in many different parts of the world.
Many factors contributed to its development
and if evidence of what anthropologists have learned about primitive money
is anything to go by economic factors were
not the most important.
Money performs a variety of functions and the
functions performed by the earliest types were probably fairly restricted
initially and would NOT necessarily have been
the same in all societies.
Money is fungible: there is a tendency for
older forms to take on new roles and for new forms to be developed which
take on old roles, e.g. on English banknotes
such as the 5 pound notes it says "I promise to pay the
bearer on demand the sum of five pounds" and
below that it carries the signature of the chief cashier of the Bank of
England. This is a reminder that originally
banknotes were regarded in Britain, and in many other countries, as a
substitute for money and only later did they
come to be accepted as the real thing.
Teacher will have:
Activity 1
PLACE VALUE MADE FUN
Illinois Learning Standard: 7.A.2b
Start by having students in groups of two or three roll three dice.
Using the
numbers they rolled, have them make as many three digit numbers as
they can.
Have the students tell the places of the numbers as they write them
on the board.
You can ask the students if the 5 (for example) is worth more in this
number or
this number. Add a dice a day until they get to the1 millions place
(7 dice).
Keep your dice around for the next game, too. Pairs of students each
make four
columns on a sheet of paper or chalkboard, labeled "thousands" "hundreds"
"tens" and "ones". Then they take turns rolling one die. After each
roll, both
students must place the number in one of their columns. After four
rolls, compare
the resulting four-digit numbers. The high (or low) number winner receives
one
point, and play continues to a predetermined number. If both students
get the
same number, no points are given, and as they become more familiar
with the
concept, add more columns for larger numbers (and less chances for
ties).
This game is reminiscent of the MasterMind color sequence game, only
with
numbers, of course. Make three columns on the chalkboard titled
Guess,
Digit and Place. Write a three-digit number (no two digits the same)
on a slip
of paper, then have students guess the number. Write their guess in
the first
column, how many digits are correct in the second column and how many
of
the correct digits are in the correct place in the third column. Don't
tell which digits
are correct or in the correct place, only "how many". Students
keep guessing using
the clues until they have the number correct, and may need assistance
from you in
reasoning through the exercise. You can start this out as a whole class
game, then
let students in groups or partners take over. In addition, it makes
a good homework
game for teaching someone at home. As they progress, move into four-
and five-digit
numbers.
Activity 2
RACE TO 100
Illinois Learning Standard: 7.A.2b
Base ten blocks are essential for a concrete conceptual understanding
of place
value. If your school doesn't have base ten blocks, improvise with
popscicle
sticks bundled together with a rubberband to form tens or hundreds.
When they
understand the concept, you can play many games quickly that are fun
to
reinforce the concept.
This game is simple, but it strengthens student understanding of place
value and trading.
Question students a lot and have them count often (before and after
trading).
MATERIALS:
place values boards with a column for ones,
tens, and hundreds
dice
Base 10 blocks
METHOD:
1.Students roll one dice. They take the number of one
cubes indicated on the dice.
When they can trade for a tens rod they
do so.
2.The game continues until one student trades up to 100.
3.That student is the winner.
VARIATIONS:
1.Play the game backwards. This will provide a foundation
for subtraction with regrouping (or a
strengthening of basic knowledge for
older students).
2.Use Place Value boards with a thousands column to play
"Race to 1000" if time permits.
3.Make the connection between money and place value. Penny=
ones; Dime=tens;
Dollar Bill=Hundreds. Call the game
"Race for A Dollar".
Kids are in pairs with a place value mat in front of them and base ten
blocks and
one pair of dice. Starting at zero, one child rolls the dice, and puts
the resulting
number on the mat in the proper place and has to state what s/he did.
Then the
other child rolls and does likewise. Play continues with students describing
how
they are trading "ones" for "tens", etc. as they add each roll to reach
100. You
can throw many wrinkles into this such as "taxman" in which the teacher
says
"taxman" and whatever number is rolled...that number has to be subtracted
from
the place value mat. You can also play "Go for Broke" in which the
race is from
100 to 0.
Activity 3
MONEY MARATHON
Illinois Learning Standard: 7.A.2b
MATERIALS:
Activity 4
WHEEL OF FORTUNE MULTIPLICATION
Illinois Learning Standard: 7.A.2b
MATERIALS:
money value wheel from a Wheel of Fortune
Game
dice (I use blank dice and write the numbers
5-10 on each.)
score sheets
METHOD:
1.Each player spins the wheel to determine their money
value.
2.They must then roll the dice and find the product of
the two factors.
3.If they are correct they may add the money value to
their score card. (If the player
lands on bankrupt they lose their "money.)
4.The player with the most "money on their score card
when time is called is the winner.
Activity 5
ORDER OUT
Illinois Learning Standards: 7.A.2b,
22.A.2a
Objective:
The student will apply multiplication, planning and calculator
skills by using an order out bill.
Materials:
Teacher - Several take-out menus.
Students - paper, calculator, pencil.
Teacher Preparation:
Locate take-out menus from restaurants or fast food carry-outs
Procedure:
1.Divide class into cooperative working groups.
2.Hand out menus to each group.
3.Write the following headlines on the chalkboard and
ask a student from
each group to copy the information:
Quantity, Item, Unit Price, Total Price.
4.Students plan and order-out lunch for their group, with
each student
selecting what they want and totalling
their price.
5.One student from each group writes their choices under
the headings.
6.Students use the calculator to find the total price.
Variations/Options:
Before the students begin, ask them to estimate how much money it will
take
to feed the group. Students can also be assigned a certain amount of
money
to spend; they must order using as much of the money as possible without
going over the budget.
Activity 6
LEMONADE STAND
Illinois Learning Standards: 7.A.2b,
15.A.2a, 15.B.2b,
15.C.2c, 22.A.2b
Lemonade Stand is an engaging and addictive web game that teaches basic
business math
(sales minus expenses equals profits). The object of the game is to
make as much money as
possible in twenty-five rounds. Before each round starts, you review
the weather forecast.
Then you decide how many cups of lemonade to make and how much to spend
on advertising.
At the end of each round, you receive a summary of how many cups sold
and how much profit
was made.
Activity 7
INVESTING FOR KIDS
Illinois Learning Standards: 7.A.2b,
15.A.2a, 15.C.2a
Should you buy a new pair of sneakers or a share of Nike stock? Well,
adjusted for two stock
splits, a share of Nike sold for $18 in April 1995. Nineteen months
later, the same share is worth
over $55. How much is that pair of worn sneakers worth? This
is an activity that
teaches students
about making money with money.
Activity 8
SHOPPING SPREE
Illinois Learning Standards: 7.A.2b,
15.B.2a, 15.B.2b,
15.B.2c
Department Stores and Catalogs
Shopping spree! Give your students an allowance to spend at any department
store of their choice
and tell them that their goal is to buy items you have listed as necessary
but still have money left
over. When they are done, have them write about the experience and
explain in detail changes they
might have made. This is an excellent life skill to practice.
Activity 9
MONEYOPOLIS
Illinois Learning Standards
NCTM Standards Related to MoneyopolisSM
The math problems in MoneyopolisSM encompass the ten NCTM
Standards for grades 5-8 listed below. Click on a standard to
review
its scope and the math skills embedded in MoneyopolisSM.
Bolded
words refer to standards applied in MoneyopolisSM.
You can use the Correlation Chart to see which NCTM standards
and
objectives relate to specific Monyopolis problems.
Standard One Mathematics
as Problem Solving
Standard Two Mathematics
as Communication
Standard Three Mathematics as Reasoning
Standard Four Mathematical
Connections
Standard Five Numbers
and Number Relationships
Standard Six
Number systems and Number Theory
Standard Seven Computation and Estimation
Standard Eight Patterns and
Function
Standard Nine Algebra
Standard Ten
Statistics
MoneyopolisSM is a challenging math game, which requires students to
demonstrate math skills in the context of some real life money matters.
MoneyopolisSM is a town where money and math smarts are rewarded.
MoneyopolisSM is an advanced technology Web site designed to assist
in the teaching of sixth
through eighth grade math skills. The math skills practiced in MoneyopolisSM
are based on
standards and objectives published by the National Council of Teachers
of Mathematics (NCTM)
and the standards of learning as defined in several states.
In the MoneyopolisSM game, math skills are practiced in a personal financial
planning context.
Although principally a math resource, MoneyopolisSM can be used in
social studies classes as
well. MoneyopolisSM also lends itself to student counseling related
to managing and valuing
time, planning budgets, and identifying educational goals and objectives.
Before using it in the classrom, we recommend that you play the game
to get a sense of its flow
and content.
How to use MoneyopolisSM as an Educational Resource:
Your students can use the Moneyopolis
game as a self-paced learning resource.
You can set up groups or individuals
to compete against one another.
You can assign the offline activities
as homework, or in some cases group work.
Several of your students may have computers
at home to play MoneyopolisSM.
In the MoneyopolisSM game, the player will tour MoneyopolisSM,
visiting
each of seven Centers: Personal Planning Center, Job Center,
Shopping
Center, Banking Center, City Hall, Education Center, and Community
Center. Students must first enter the Personal Planning
Center and then
the Job Center. Subsequently, the students can choose which
Centers to
enter or you might choose to direct them in a particular order.
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