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Brief History of Credit: By: Professor Caroline Grace Mella

Barter emerged out of necessity as a way for tribes to exchange goods without money. This increased productivity through specialization and improved diets. However, barter was cumbersome, so mediums of exchange like shells developed. Money then became the standard mode of payment, dramatically changing lives. Credit later arose and allowed for heavy transaction volumes, requiring banks and international standards. Credit is now a formalized, essential part of the global economy.

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Caroline Grace Enteria Mella
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216 views9 pages

Brief History of Credit: By: Professor Caroline Grace Mella

Barter emerged out of necessity as a way for tribes to exchange goods without money. This increased productivity through specialization and improved diets. However, barter was cumbersome, so mediums of exchange like shells developed. Money then became the standard mode of payment, dramatically changing lives. Credit later arose and allowed for heavy transaction volumes, requiring banks and international standards. Credit is now a formalized, essential part of the global economy.

Uploaded by

Caroline Grace Enteria Mella
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Brief History of Credit

By: Professor Caroline Grace Mella


HISTORY OF CREDIT

 Inthe beginning of mankind, men lived


in family units or tribes which were
self-sufficient and had no need for
outside contact.

 Outsiderswere probably frowned upon


and looked at as competitors in their
search for food.
HISTORY OF CREDIT

 BARTER came about, either by design


or necessity, probably by necessity as
necessity is the mother of invention.

 Itis defined as the exchange of goods


or services without the use of money
or to trade one thing with another
with equal value. (Webster)
HISTORY OF CREDIT
 BARTERS increased the productivity of these
tribal units, particularly due to specialization.

 If one tribe was made up of excellent deer


hunters, and they have the opportunity to
exchange deer meat with another group made
up of expert spear fishermen, both groups
would naturally improve their work skills by
developing better tools and new hunting and
fishing techniques.
HISTORY OF CREDIT
 Barter did not only increase work productivity,
but also improved the quality of life of those
who engaged in it.
 Their diets considerably improved with a new
variety of food: protein-rich fish, vitamin-filled
fruits and energizing carbohydrates from root
crops.
 The productivity improvement attributable to
barter were significant; however, the crude
exchanging of goods was cumbersome and time-
consuming, and probably led to disputes.
HISTORY OF CREDIT

 By
necessity, the use of medium of exchange
came into being.
 Earlymedium of exchange were fish hooks,
shells, and other items of determinable and
generally acceptable valuation.
 Inevitably,
money became an accepted mode
of payment, dramatically changing the lives
of everyone.
HISTORY OF CREDIT
 Later, credit was introduced; it was soon to
be extensively used due to the rapid growth
in the trade between nations.
 Credit allowed for the free flow of heavy
volumes of transactions, particularly along
international borders.
 This unprecedented growth required
institutionalization of banks and
international exchanges.
HISTORY OF CREDIT

 Thelatter development resulted in the


formalization and standardization of trade
practices, credit mechanisms, and
documentation for all kinds of transactions.
 Bythe natural process of evolution, credit
became a structured and essential economic
activity, soon to be backed up by the coercive
power of local laws, later on reinforced by
international trade agreements and treaties.

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