The prehistory of money is fascinating from a philosophical point of view. It can be presumed that from the early period of agriculture at the latest, some crops and goods were traded or bartered. For instance, a cow might have been swapped for a box of seeds or for a day’s labour on the land. It seems obvious that some goods would fairly early have become useful as stores of value – for instance, in the barter of seeds and the cow, the seeds might be useful to keep for future exchanges, since they are relatively durable and can be subdivided. Since pure barter only works where two traders have exactly the goods the other party wants, goods such as the seeds would very quickly have become a kind of proto-money (generally called ‘commodity money’).
Using tally sticks or other primitive records of what had been bought or sold, people could also grant or store credits for later purchases. This means that the concept of debt was also part of monetary systems from an early stage. In fact, the concept of negative numbers was invented by Chinese mathematicians who wanted to record both credits and debits. They recorded debits in a different colour to credits, and subtracted them rather than adding them.
Relative rarity also made an object suitable for use as commodity money. For instance, cowrie shells were in use as money tokens 3,000 years ago on the Indian subcontinent, because it was hard to acquire an excessive quantity of them.
It is uncertain when a good that was being used in such exchanges first became seen specifically as ‘money’, but the earliest organized currency we have records of comes from the Mesopotamian civilization in about 3000 BC. The unit of weight and currency was the shekel, which referred to a particular weight of barley, and equivalent amounts of metals such as silver, copper and gold. The fact that the shekel was defined in this way suggests that both barley and precious metals had already been in use as commodity money, and that this was an attempt to legislate how they were used and to define their relative value.
The Code of Hammurabi, the best-preserved ancient body of laws from Babylon in about 1760 BC, gives us a sense of the role that money played in these civilizations. It lists fines and compensations for malpractice, and sets a limit on how much interest can be charged on a debt. Even the earliest of civilizations had problems with sharp practice among moneylenders!