HISTORY AND IDEAS

HISTORY AND IDEAS

MONEY

Let us start with the evolution of money. Initially, man transacted business through trade by barter. But it was a very cumbersome means of doing business. There was the challenge of determining the value of the item you are giving to me viz-a-viz the value of my own product that you are taking in exchange. There was also the problem of whether I needed what you had to exchange for what was in my hand.
So ideas came to the rescue. Somebody somewhere came up with the idea of using commodities like Cowries, Seashells, Beads, Gems, Silver and Gold. These commodities’ arrival as a means of money for business transaction solved the problems of barter mentioned above.
This new “Money” was okay for transactions in a small geographical area like a village or small town. But once merchants started travelling over a hundred miles or more to do business it’s limitation was exposed! What if a merchant travelling with ten camels or donkeys laden with silver or gold is ambushed by robbers and robbed? That jeopardizes not only the merchant’s personal business, but the trade business as a whole. So, there comes another smart idea to the rescue.
Local bankers emerged who issued what is called receipt money to the merchant. All the merchant needed to travel with was a piece of paper which showed he had the value written on it stored for safekeeping with his local banker. He would carry out his transactions with the receipt and the local banker in the far away land he has travelled to will reconcile/adjust accounts with the merchant’s local banker back at home. How beautiful ideas are!
While this system suited the travelling merchant going to a far country, the generality of people who still carried out transactions mostly through the aforementioned commodities were getting tired of carrying weighty items around to consummate transactions. Man’s “saving” grace was another idea.
The idea of printed currency which was light and easy to carry solved other problems too by having a fixed and easily determined value and being universal as far as that particular country is concerned.

But then other problem arose as the global economy became more sophisticated and complex. No matter how light paper currency is, how does one move Ten Billion Naira from Abuja to Lagos? Or how will a Nigerian businessman make a $500million payment in America with paper currency. 

Ideas evolved again and today the banking system operates sophisticated money transfer mechanisms where billions of dollars are transferred from one point to another simply by the push of a button in some office thousands of kilometers away.