One common misconception from a historical perspective is thinking about money as some sort of means of exchange used to make bartering easier. We have all heard the story of the neighbor who came over and wanted to buy your cow for 3 goats, but you didn’t want goats so money was introduced as this way to bypass awkward bartering. But what archeology has shown is that there is no evidence in history where this happened. In fact, debt actually came way before money. The first piece of evidence for this is on clay tablets as far back as 2,400 BC Mesopotamia. During the reign of Hammourabi, for instance, there were elaborate debt-keeping systems on tablets that would be destroyed on a periodic basis to wipe the slate clean.
Coins, on the other hand, didn’t start popping up until about 600 BC when major armies were stationed. If you think about it, it makes a lot of sense why this is. If you have an army of say 10,000 soldiers, one of the biggest challenges is figuring out how to feed them. Food that is walking distance of the camp would all be depleted rather quickly, and it would take thousands of people to shuttle the food to the soldiers. It just isn’t a very efficient way to run an army. So, kings eventually figured out that they could take prisoners of conquerers to the mine shafts, dig out pieces of gold and silver, stamp their face on it, voila you have money. You tell the rest of the conquers that you will spare their lives and in exchange you will circulate this money and collect taxes to help finance the war. Historically, not everyone paid taxes, only the conquered. Meanwhile, you pay your soldiers with coins which then can purchase food in the local area and you now have solved the problem of feeding your army.
It’s hard for us to wrap our brains around but imaginary money has been around a long time.
Josh Allred's Blog 