In the beginning – commerce
Our ancestors bartered basic commodities from prehistoric times, but commerce – the exchange of goods and services over long distances – is a more recent development. Historians date the existence of long-distance commerce to as far back as 150,000 years ago. There is evidence that some of the earliest traded commodities were flint and obsidian, substances used to make primitive tools.
Greasing the wheels – money
While the original form of trade would have been barter – the exchange of goods – the invention of money greatly simplified and promoted trade. The first objects used as money were commonly available objects which, besides having an intrinsic value, were also acceptable to people as a medium of exchange for other goods and services. This type of money is called “commodity money” and examples from history are numerous, including cattle, pigs, salt, rice and seeds. In medieval Iraq, bread was used as an early form of money while the Aztecs used cocoa beans as money.
Coining it – metal coins
Ultimately, everyday commodities, such as cattle, are inconvenient as a store of value

for commercial trades due to their inconsistent quality, their indivisibility and be-cause they are easily perishable. As soon as mankind discovered metal, this was used to make utensils and weapons. Due to metal’s relative advantages, such as the ability to easily calculate its value, its divisibility, and its ease of transportation, it be-came the main medium of exchange. Originally, metal was used in its natural state but later it was fashioned into practical shapes, viz. coins, each having definite form and weight, and receiving marks indicating value. This development made transactions faster and easier. The first coins seem to have been manufactured in India, China, and around the Aegean Sea (situated between Greece and Turkey) between 700 and 500 BC. Probably, the first historical character to have his image appear in a coin was Alexander the Great around the year 330 B.C.
Pressing on – paper money
Banknotes began to be used in China during the 7th century AD. Before the use of paper, the Chinese used circular coins that could be strung together on a rope. Rich merchants in China found that their strings of coins were too heavy to carry and in-stead coins were left with a trustworthy person, and the merchant given a slip of

paper recording how much money he had left with that person. The notes could be traded for goods and the holder retrieve the coins from the holder. In the 13th century, Chinese paper money became known in Europe through the accounts of travellers, such as Marco Polo.

A risky business – insurance
Insurance is one of the oldest financial innovations, predating paper money and even coinage. The first methods of redistributing risk are thought to have been practiced by Chinese traders as long ago as the 3rd millennia BC, who, when travelling treacherous river rapids, would redistribute their wares across many vessels to limit the loss due to any single vessel capsizing. The first recorded written insurance policy dates back to about 2000 BC, with evidence found that the Babylonians developed a system whereby if a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender’s guarantee to cancel the loan should the shipment be stolen.

Bank on it – banking
The history of banking is said to have begun around 2000 BC in Assyria and Babylonia, when merchants made grain

loans to farmers and traders who carried goods between cities. Banking, in the modern sense of the word, can be traced to the rich cities of Florence, Venice and Genoa in medieval and early Renaissance Italy. The word bank is from the Italian banca meaning “bench” or “counter”. This is because benches were used as desks or exchange counters by Florentine bankers.

Share and share alike – companies and stock exchanges
Size tends to count in business; in modern times, companies dominate economic life in the global economy. Entities which carried on business and were the subject of legal rights were found in ancient Rome and in ancient India. The innovation of joint ownership made a great deal of Europe’s economic growth possible following the Middle Ages. The technique of pooling capital to finance the building of ships, for example, made the Netherlands a maritime super-power.The development of stock exchanges – markets where shares are traded – gave companies access to finance from vast numbers of investors. Unofficial share markets existed across Europe through the 1600s, where brokers would meet in or outside coffee houses to trade. The Amsterdam Stock Exchange, created in 1602, became the first official stock exchange when it began trading shares of the Dutch East India Company.
The plastic revolution – credit cards
The concept of a card, and more particularly a plastic one, functioning as money is relatively new. The idea of issuing a card which could be used to purchase goods on credit from multiple vendors is said to have

been thought out when a forgetful New York banker, having forgotten to bring cash with him, found himself unable to pay for his meal at a restaurant. The story goes that Frank McNamara came up with a new idea – a credit card that could be used at multiple locations. McNamara decided to form a new company – the Diners Club. The innovative part of the new concept was that the Diners Club would be a middleman between the vendor companies and their customers. Instead of individual companies offering credit to their own customers, the Diners Club was going to offer credit to individuals for many companies (and then bill the customers and pay the companies).

Automatic for the people – the Automatic Teller Machine
By the mid-20th century the scale of banking had progressed to the extent that most economically active adults had a banking account. The idea of self-service retail banking developed through independent efforts in Japan, Sweden, the United Kingdom and the United States. Luther Simjian has generally been credited with

developing the first automatic teller machine. His machine (which didn’t dispense cash) was first installed in 1960 in New York’s First National City Bank (now CitiBank). It allowed customers to pay utility bills and get a receipt without the use of a human teller. In 1967 a Barclays Bank branch in North London introduced the first cash dispenser; it used paper vouchers bought from tellers in advance. ATM’s are found on every continent including Antarctica.

Commerce in the Information Age – online banking
Today, internet banking is an enormously popular form of retail banking. Surprisingly though, the first form of computer based retail banking was offered as far back as 1981 by four of New York’s major banks (Citibank, Chase Manhattan, and two others) using the “videotex” system. If a customer had a terminal, monitor and a phone line, they could access the banking system by using a numeric keypad to send messages down the phone line to their bank. However, these banking services never became popular. Stanford Federal Credit Union was the first financial institution to offer modern online internet banking services in October 1994.
Over time, mankind has progressed from the basic bartering of stone and food to being able to transfer intangible wealth by tapping on a keyboard. Who knows what the future will bring and what innovations await us?