Chapter - 11 From Barter to Money

 Chapter - 11 From Barter to Money

• Barter System: Exchanging goods or services directly without using money.
• Example: Exchanging an eraser for a pencil if both parties need what the other has.
• Early Form of Trade: Oldest method of exchange used worldwide.
• Items Used: Cowrie shells, salt, tea, tobacco, cloth, cattle, seeds, etc.
• Double Coincidence of Wants: Both parties must need what the other is offering.
• Difficulties in Barter:
• Hard to find matching wants.
• No standard value for goods.
• Disagreements on fair exchange.
• Modern Exchange: Now, we use money (coins, notes) and digital payments for buying and selling.
• Divisibility Problem: You can't divide an ox to exchange a part of it for a smaller item like a sweater.
• Portability Problem: Large items like an ox are difficult to carry around for trade.
• Durability Problem: Items like wheat can rot or get spoiled, making them hard to store.
• Double Coincidence of Wants: Both traders must want exactly what the other has.
• Common Standard Measure of Value: Lacking a set value makes fair exchange difficult.

These problems led to the invention of money, which solved issues of divisibility, portability, durability, and value comparison.

Book Exchange Club:

• Trade old books with friends like a fun treasure hunt.
• Discover new stories without spending money.
• Example: Swap a jungle adventure book for a mystery book.

Clothes for Utensils Exchange:

• A vendor exchanges new utensils for old clothes.
• Households get useful items and clear out unwanted clothes.
• Vendors repurpose or resell collected materials.

Benefit:

• Both parties gain something useful without using money.
• A modern form of barter still seen today.

Basic Functions of Money in short points:

• Medium of Exchange:- Money replaced barter as a common method for buying and selling. Makes trade easier and more efficient.
• Store of Value:- Money can be saved and used later, unlike perishable goods (like wheat).
• Measure of Value:- Money provides a standard way to compare the value of goods and services. Prices help us understand worth easily.
• Standard of Deferred Payment:- Money allows people to make payments over time (e.g., school fees, salaries). Helps in planning and completing future transactions.
• Widely Accepted:- Money is accepted by everyone — from shopkeepers to workers to schools.

Coinage 

• Coinage and Minting:- Minting is the process of making coins in a mint (coin factory). Coins were among the earliest forms of money.
• Rulers and Coins:- Ancient rulers issued their own coins for use in their kingdoms. Powerful rulers' coins were accepted in many regions, helping trade.
• Materials Used:- Coins were made of precious metals like gold, silver, copper, or their alloys (metal mixtures for strength).
• Names and Symbols:- Early Indian coins were called kārṣhāpaṇas or paṇas. They had symbols (called rūpas) punched or engraved on them.
• Designs and Motifs:- Obverse (head) and reverse (tail) sides had different engravings like animals, trees, hills, deities, and rulers. Example: Chalukya coins had Varaha (Vishnu avatar) and a three-tiered parasol.
• Impact on Trade:- Coin usage boosted long-distance and maritime trade. Coins found in Kerala and Tamil Nadu show India’s strong trade links with the world.
• Conclusion:- Coinage made trade easier, supported the economy, and connected India globally.

Paper Money:

• Reason for Paper Money:- Coins became hard to carry and store in large amounts.
• Origin:-First used in China; introduced in India in the late 18th century.
• Currency:- A system of money used in a country (e.g., Rupee in India).
• Denominations:- Indian coins: 50 paisa, ₹1, ₹2, ₹5, ₹10.
• Notes:- ₹10, ₹20, ₹50, ₹100, ₹200, ₹500, ₹1000.
• Authority:- Only Reserve Bank of India (RBI) can issue paper currency in India.

New Forms of Money (Digital Money):

• Digital Transactions:- Payments made using QR codes, UPI, debit/credit cards, net banking. Example:- A fruit seller uses a QR code for customers to pay directly into his bank account.
• Intangible Money:- Money that exists electronically, not in physical form.
• Advantage:- Fast, convenient, and safe transfer of money from one account to another.

NCERT QUESTIONS

1. How does the barter system take place and what kinds of commodities were used for exchange under the system?  

Answer:- The Barter System Takes Place:

• Direct Exchange: People exchanged goods or services directly without using money.
• Double Coincidence of Wants: Both parties had to want what the other offered.
• Example: If you have an extra eraser and need a pencil, and your classmate has an extra pencil and needs an eraser — you both can exchange.

Commodities Used for Exchange in Barter System:- Cowrie shells, Salt, Tea, Tobacco, Cloth, Cattle (cows, goats, sheep, horses), Seeds

2. What were the limitations of the barter system?

 Answer:- Limitations of the Barter System:

• Double Coincidence of Wants – Both parties had to need what the other offered.
• Lack of Common Measure of Value – No standard way to compare value of goods.
• Indivisibility – Some goods (like an ox) couldn’t be divided for smaller exchanges.
• Lack of Portability – Large or heavy goods were hard to carry around.
• Lack of Durability – Perishable items (like wheat) could spoil over time.
• Difficulty in Storing Wealth – Hard to save value in the form of goods.

3.What were the salient features of ancient Indian coins?

Answer:- Salient Features of Ancient Indian Coins:

• Issued by Rulers – Kings controlled the minting and circulation of coins.
• Made of Precious Metals – Coins were made from gold, silver, copper, or their alloys.
• Called Kārṣhāpaṇas or Paṇas – Early names for Indian coins.
• Punch-Marked Symbols (Rūpas) – Coins had symbols representing deities, nature, or rulers.
• Two Sides – Obverse (head) and Reverse (tail) had different engravings.
• Included animals, trees, hills, gods, goddesses, or royal emblems.
• Facilitated Trade – Widely accepted, helped boost trade across regions and overseas.
• Regional Variety – Different kingdoms had their own coins, accepted locally and sometimes beyond.

4. How has money as a medium of exchange transformed over time? 

Answer:- Transformation of Money as a Medium of Exchange (in short points):

• Barter System – Direct exchange of goods and services without money.
• Metallic Money (Coins) – Introduction of coins made from gold, silver, copper for easier trade.
• Paper Money – Used for higher denominations; lighter and easier to carry than coins.
• Authority Control – Reserve Bank of India (RBI) now issues and regulates currency in India.
• Digital Money – Modern forms like debit/credit cards, UPI, net banking, and mobile wallets.
• Contactless Payments – QR codes and digital apps allow instant, cashless transactions.

5. What steps might have been taken in ancient times so that Indian coins could become the medium of exchange across countries? 

Answer:-

• Strong and Stable Kingdoms: Powerful rulers issued coins that were trusted and accepted beyond their own territories.
• Use of Precious Metals: Coins made from gold, silver, and copper had intrinsic value, encouraging acceptance.
• Distinctive Symbols and Quality: Clear symbols and good craftsmanship helped verify authenticity.
• Trade Relations: Active maritime and overland trade connected India with other countries, spreading Indian coins.
• Standardized Weights and Measures: Consistent coin weights made it easier for foreign traders to trust their value.
• Diplomatic Alliances: Treaties and cultural exchanges promoted the use of Indian coins abroad.
• Reputation of Indian Economy: India’s wealth and demand for foreign goods made its currency desirable.

6. Read the following lines from the Arthaśhāstra. “An annual salary of 60 paṇas could be substituted by an āḍhaka of grain per day, enough for four meals…” (One āḍhaka is equal to about 3 kg) What does this indicate about the value of one paṇa?  

The fine for failing to help a neighbour was 100 paṇas. Compare this with the annual salary. What conclusion can you draw about the human values being encouraged through this?

Answer:- Value of One Paṇa:

• An annual salary of 60 paṇas could be replaced by 1 āḍhaka (about 3 kg) of grain per day.
• This shows that one pana had significant value, enough that 60 paṇas equaled a substantial yearly grain supply.

Fine Compared to Salary:

• The fine for not helping a neighbour was 100 paṇas, which is more than the annual salary (60 paṇas).
• This means the penalty was very high, exceeding a year’s earnings.

Conclusion About Human Values:

• The high fine indicates that helping others and social responsibility were highly valued.
• The law encouraged people to assist their neighbours, promoting community welfare and cooperation.
• It reflects the importance of human values and ethics in society.

8. The RBI is the only legal source that prints and distributes paper currency in India. To prevent illegal printing of notes and their misuse, the RBI has introduced many security features. Find out what some of these measures are and discuss them in class. 

Answer:- RBI Security Features on Currency Notes:

• Watermark with Mahatma Gandhi’s image
• Security thread embedded in the note
• Latent image showing denomination when tilted
• Micro-lettering of small texts like RBI
• Raised (intaglio) printing felt by touch
• Color-changing ink on denomination numbers
• See-through register matching design on both sides
• Fluorescent elements visible under UV light

9. Interview a few of your family members and local shopkeepers, and ask them their preferences in making and receiving payments — do they prefer cash or UPI? Why?

Answer:- Most family members and local shopkeepers prefer UPI payments because it is fast, convenient, and reduces the need to carry cash. Some still like cash for small purchases or when digital access is limited. Overall, digital payments are becoming more popular due to ease and safety.