NCERT Solutions Exploring Society: India and Beyond Chapter 11 Chapter opener · Theme E: Economic Life Around Us — The Big Questions

Before money existed, people exchanged goods and services directly for other goods and services. This system is called the barter system.

It worked like this: a person who had a surplus of one thing looked for another person who had a surplus of what the first person needed, and the two swapped. The book's classroom example is the simplest one — you have a spare eraser and need a pencil; your classmate has a spare pencil and needs an eraser; you swap, and both needs are met.

People bartered whatever was useful and valued in their region:

• Cowrie shells — small, countable and hard to fake
• Salt, tea, tobacco — always in demand
• Cloth and seeds
• Cattle — cows, goats, horses, sheep

Elsewhere in the world people used still stranger things — giant Rai stone discs on Yap Island in Micronesia, the Aztec copper Tajadero (a chopping-knife shape) in Central Mexico, and Tevau red-feather coils on the Solomon Islands.

Money came into existence because barter could not keep up once more kinds of goods were being exchanged over longer distances. As the book puts it, “necessity is the mother of invention.”

Barter has five specific weaknesses, all of which money removes:

So money became a common medium of exchange — a single thing everybody accepts. Once enough people used it for buying and selling, it became the accepted method of payment.

Money in India has moved through five broad stages, shown in the timeline of Fig. 11.10.

The direction of change is clear: money has become steadily lighter, more divisible and easier to move. Shells and cattle gave way to metal, metal to paper, and paper to something you cannot touch at all.