The Roots of Commerce

The history of trade and commerce is as old as humankind itself, and likely began as soon as humans developed the ability to communicate. As far back as the Stone Age, our ancestors were exchanging goods and services – some estimates date the advent of long-distance commerce to 150,000 years ago.

These earliest forms of barter trade likely revolved around things that were necessary for immediate survival, like food and shelter. Of course, these trades were completely arbitrary. One might exchange some foraged goods for animal pelts to help stave off the winter cold; the next time, some flint for toolmaking and fire-starting.

As hunter-gatherer tribes settled down and formed the first agrarian societies, domesticating both plants and animals, they gained access to more reliable and diverse food supplies. Communities grew larger, and now that survival was a bit less of a struggle, they were able to divert time and resources towards improving their quality of life. This, in turn, paved the way for specialisation and division of labour, leading to the development of new technologies and more complex goods – and elevating the importance of trade within and between communities.

This helped to address some of the inherent challenges of barter: for example, there was no guarantee that you would find what you want in the market, or that people would want whatever you were selling – a double coincidence of wants. Finding the right people to barter with could be difficult and time-consuming. Other commonly traded goods might be harder to transport or divide (like livestock), or diminish in value over time (like perishable goods).

Even so, different communities might have different valuation systems, or different items considered valuable. As metalworking developed, people began to make coins out of metal, which were intrinsically valuable, portable, durable, and easily divisible. By 700 BC, manufactured coins had been introduced independently in India, China, and the Mediterranean. These were the first currencies, and the first steps towards a unified system of value. This would have been conducive for long-distance trade, and perhaps central to the development of societies that engaged in it – the exchange of goods was also the exchange of technology, ideas, and culture.

Early Financial Systems