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Year 1 Term 2 the World of Work the History of Money Week 14 – 17 April Name: ______Date: ______ PSW – Year 1 Term 2 The World of Work The history of money Week 14 – 17 April Name: ___________________________ Date: ____________________________ 1. Traditional societies A long time ago, people had to produce all the goods and services that they needed. There were no markets and people did not trade. This kind of society, where people produce all the things that they need, is called a subsistence economy With the passing of time, people in traditional societies realised that they could have a greater number and range of goods if they specialised in the production of only a few things. By focusing their efforts on the production of something they were good at making, they could produce a surplus. This surplus could then be traded with other people. Soon markets began to develop where people could bring the goods they had produced and trade them with other people. There was no money to shop with in those days. People had to trade by exchanging goods with one another. This kind of trading where goods are swapped and no money is used, is called bartering 1 1.1. Bartering When people barter, they exchange goods without using money. People bartered because money had not been invented yet. Although some people still barter, people don’t often trade in this way anymore. 1.2 Problems with bartering Bartering is inefficient because, before trade can happen, each person must want what the other person has, and must be willing to trade for it. This make trading complicated and time consuming. As a result of this problem, money was invented to make trade easier. Barter is often regarded as an old-fashioned means of trading. Today, bartering is seldom used because money makes trade much more efficient. Money is used as a medium of exchange between people in the market where a willing buyer and a willing seller come together to exchange their services and goods. For instance, in an economy that has money, an apple farmer who needs shoes simply has to find a shoe shop to buy shoes. In a barter economy, the apple farmer would have to find not just a shoe producer, but one who happened to want apples at a time when the farmer wanted shoes. SUMMARY In early traditional societies there was no money or trade. People had to produce or grow everything they needed When people started to specialise in the production of items they were good at making, they produce a surplus that could be traded At first, trade took place by bartering Bartering occurs when people swap goods without using money to trade The problem with bartering is that it is a slow and difficult way to trade 2 Activity 1: Important: This is just a game / exercise and everyone must take their own article home again. 1. This activity will allow you to experience what life was like in an economy that did not have money. 2. Imagine that you are a producer. You are going to trade with other learners in your class, therefore you have to bring an article that the consumers will want to have. 3. You will be given a chance to advertise your product to the rest of the class by telling everyone what you have brought and explaining why they should trade for this product. 4. Once you have seen what other learners have produced, decide what products you would like to have. You will be given some time to trade / barter to get the products you would like. You may need to make a few trades to get what you want. Answer the following questions 1. Why do people trade with one another? [2] ___________________________________________________________________ ___________________________________________________________________ 2. Did everyone in the class get the products they wanted? Why? [2] ___________________________________________________________________ ___________________________________________________________________ 3. What happens if businesses make good and services that consumer’s don’t want to buy? [2] ___________________________________________________________________ ___________________________________________________________________ 4. What happens to businesses that produce goods and services that many consumers want? [2] __________________________________________________________________ __________________________________________________________________ 3 2. Money and electronic banking In today’s modern economy we usually use money to buy the things we want. Money, like fire and the wheel, has been around for a very long time, but as you have learned there was a time when money did not exist. No one knows exactly when money came into existence, although we do know that many different items have served as money in the past. 2.1. Money makes it easier The use of money allows for indirect trade. In indirect trade, individuals accept money for the products they have produced and then use the money to purchase other goods and services. Money makes trade much simpler and faster. 2.2. The development of money Many items, such as shells, tobacco and furs, have been used as money in the past. Cattle were often used to trade in the past and continue to be used, not only in rituals and ceremonies, but also as a form of money. The practise of measuring as individual’s wealth by the amount of cattle they have is common throughout Africa. Precious metals, such as gold and silver, were also used as money in many ancient societies and civilisations. 4 2.3. Coins No one knows exactly when or where the first coins were made. There is evidence that coins were being used in ancient Greece as early as 650 B.C. Coins have been used in South Africa as a form of money since 1652 when Jan van Riebeeck founded the settlement in the Cape. 2.4. Paper money In 1782, paper money was introduced for the first time in the history of the Cape Colony by the Dutch Governor Van Plettenberg. This early paper money was issued in rix dollar and stiver denominations, the currency of the Cape at that time. Because there were no printing press in the Cape at the time, all the notes, until about 1803, had to be hand written and stamped with an official government stamp. After 1803, all notes were printed Did you know? In South Africa our money is called the rand. The rand has the symbol “ R “ and is subdivided in to 100 cents. We use the symbol “ c “ for cents. Our money takes its name from the Witwatersrand, the ridge upon which Johannesburg is built and where most of South Africa’s gold deposits were found. The rand was introduced as the official currency of the country in 1961. Before then the British pound was used as currency. 5 Activity 2 Choose a word from the word block and complete the paragraph. [6] British pound currency 100 Johannesburg 1961 Witwatersrand R Rand 1782 c In South Africa our money is called the _____________. We use the symbol _____ for rand and _____ for cents. One rand can subdivided into _______ cents. Our money takes its name from the _________________________. The rand was introduced as the official __________________ of the country in 1961. 3.5. Electronic banking We are now moving into a period of history where computer technology is changing the way people spend their money and buy and sell goods. Many people buy goods on the internet and pay for them electronically without any notes or coins being exchanged. This kind of “ electronic money “ or “ digital money “ will be the money of the future. Today people can use their computers, cell phones and tablets to do their banking. Money can be transferred electronically and people can be paid electronically without going into a bank or standing in a queue waiting to be served. This has made it much easier for people to keep control of their money and conduct business. 6 2.5.1. Advantages and disadvantages of electronic banking There are many advantages of electronic banking. These include: Electronic banking saves time since you do not need to go to a bank or stand in long queues in order to carry out transactions. Elektronic banking is convenient sice it allows you to carry out your banking at any time and from anywhere in the world Elektronic banking is efficient since transactions are processed much more quickly through the use of computers The single biggest disadvantage of electronic banking is security. If someone has access to your password and log-in details, it is possible for them to take control of your money and to make payments from your bank account. You have to make sure that your personal information like your password, user name and pin number of your bank account, is kept in a safe place. SUMMARY Money developed in order to make it easier for people to trade. Money enables indirect trade to occur Many items, such as shells, tobacco and furs, have been used as money in the past before coins and paper money were introduced. Current forms of money include notes and coins, bank cards, cheques and digital money Today people can use their cell phones and computers to do electronic banking without having to go into a bank. 3. The role of money 3.1. Characteristics of money For money to be an effective medium of exchange, it should have certain characteristics. These include: The item used as money should be relatively scarce. Items that can be easily found or copied are not good form of money The item should be durable. Items that break or fall apart and lose their form should not be used as money. The item should be portable. Items that cannot be easily carried around or transported are not a good form of money It should be possible to divide the item used as money into smaller units.
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