William Bramley/The Gods of Eden/21/214

the barter system. Barter is the act of trading something one possesses or does for something of someone else's. Production and barter are the bases of all economy.

Coins and paper money were originally created to assist in barter. They allowed people to barter without having to carry around actual goods or immediately deliver a service. This permitted individuals to trade more easily and to save the profits of their labors for the future.

Paper money initially began as "promissory notes." A promissory note is a written promise to pay a debt. A person would write a note on a piece of paper promising the bearer of the note a certain quantity of goods or services that the notewriter could provide on demand. To illustrate, let us look at the following fictitious example:

Let us pretend that a chicken farmer was in the village market and wanted to trade for a basket of apples. He did not have his chickens with him, so he might write a note to the apple seller entitling the bearer of the note to come up to the farm at any time to pick out two healthy chickens. The chicken farmer would be able to walk away with his basket of apples and it would be up to the apple grower to visit the farm one day to redeem the note by getting his two chickens. As long as people have faith in the chicken farmer's ability to honor his notes, he will be able to use them for barter.

Let us now pretend that as the day draws to a close, the apple grower decides to have a look around the market. He comes across the cloth merchant. The apple grower's wife has been henpecking him for days to buy some of the new silk that just arrived on a caravan from the Far East. The apple grower's home life has been made miserable by her unceasing demands and her denial of wifely comforts, so he negotiates with the cloth merchant for some silk. The cloth merchant, however, does not need any more apples, so the apple grower, remembering that he has a note for two chickens, asks the merchant if the merchant needs poultry. The merchant says that he does, and the apple grower gives him the note for two chickens in exchange for silk. It is now up to the cloth merchant to trudge on up to the chicken farm to redeem the note. The chickens