Currencies

Abstract

Any commodity is capable of being used as a medium of exchange and history furnishes us with an almost endless list of commodities that have been used in this way: cattle, cacao, beans, salt, silk, furs, tobacco, dried fish, wheat, rice, olive oil, cloth, cowry shells, iron, copper, silver and gold. However, not all of these commodities are efficient means of exchange and the natural properties of cowry shells, gold, silver and copper led to their emergence as the most popular form of currency. The relative scarcity of gold and its indestructibility made this form of money highly desirable as a store of value; the relative abundance of cowry shells, combined with their uniformity and divisibility, made them an ideal medium of exchange for low valued transactions; silver and copper have natural properties that made them useful for transactions intermediate between these two extremes.

This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman