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Money - In New Zealand

Written by: David Weusten

Article Overview: History of money and it's evolution from a New Zealand perspective

Money - In New Zealand

Time line from www.pbs.org

Dictionary definition

Money: Current medium of exchange in form of portable pieces of stamped metal and/or promissory documents representing it (paper).

Encarta definition

Money: Any medium of exchange that is widely accepted in payment for goods and services and in settlement of debts. Money also serves as a standard of value for measuring the relative economic worth of different goods and services. The number of units of money required to buy a commodity is the price of the commodity. The monetary unit chosen as a measure of value need not, however, be used widely, or even at all, as a medium of exchange.


Money came into being as a medium of exchange to facilitate trade (replacing barter) a very long time ago.

A short story of how money came about.

Imagine this, a fisherman was very good at catching fish, much more than his family needed and there was no way of preserving the fish. Another man grew grain; he too produced more than he needed. Yet another one farmed animals and yet another mined gold, each of them produced more than they needed.

The fisherman wanted a new cow so took his surplus fish to the farmer. The farmer, however, hated fish but wanted some grain for his animals. The grain grower wanted some gold for his wife.

The miner loved fish and the fisherman sold all of his surplus fish to him and took the gold in payment. The fisherman then went to the grain grower and bought some grain, the fisherman offered the smallest nugget for the grain but this was refused, he then offered the next biggest, again this was refused, the next biggest was accepted and the fisherman took the bag of grain.

The fisherman was pleased with his work and went to the farmer to buy his cow. The farmer was not satisfied with the amount of grain on offer and said it was not enough for the cow. The fisherman was shocked and offered some gold plus the grain to make the exchange as he told the farmer that the grain grower wanted more gold and would exchange his grain for the gold.

The exchange was made and the fisherman thought about what had happened as he led his new cow home and felt the weight in his pocket of the gold he still possessed. He decided to talk to his neighbours about using the gold to make exchanges from now on.

 Money replaced barter to facilitate trade

The above story is my imagination running wild but I hope explains the hassles early man had in exchanging their good and services. History tells us that “money” came into being some 2,700 years ago when the people of ancient Lydia (now Turkey) made the first coins. These coins were made of precious metal and their weight signified the value each coin carried. Precious metals were not always available and other forms become accepted payment -. shell money, feather money etc. Money took many forms and still does in many countries around the world. As long as what acted as money was accepted throughout the community/country in which it was used anything could be considered money.

 Money takes many forms.

In the 11th century, China saw the introduction of paper money or bills. Paper money had no value so the issuer promised to exchange the paper for a stated amount of gold.

 Paper money was introduced in China in the 11th Century.

Today coins are made of almost worthless metal so the value is stamped on them and paper money no longer has a guaranteed exchange for gold. The governments of the world instead have passed legislation to guarantee their paper money’s value.

 Modern currency has no intrinsic value.

Paper money appeared in New Zealand in 1840 when the Union Bank of Australia, part of what is now known as ANZ, issued the first notes. The other trading banks soon followed their example. It was not until 1934 that the Reserve Bank of New Zealand took over sole responsibility of issuing notes and coins on behalf of the New Zealand Government. These early trading bank notes (and coins) can have considerable value now to collectors.

 Private Banks introduced paper money in New Zealand in 1840.

Prior to 1933, New Zealand used mainly British coins to make smaller payments. In 1933 New Zealand introduced a threepence, sixpence, shilling. florin and half crown, it was not until 1940 that New Zealand introduced a halfpenny and a penny.

 New Zealand introduced its own coins in 1933

On the 10th July 1967 New Zealand left the British sterling system of coinage and went decimal and introduced a one, two, five, ten, twenty, and fifty-cent coins.

One and two dollar notes were replaced by coins in 1990.

Today of course money or currency has evolved with technology, first with the advent of cheques and now with credit cards, Eftpos (electronic funds transfer, point of sale) and the use of the Internet.

Money has come a long way from the first pieces of gold or silver to now being represented by zeros and ones in a computer’s memory bank.

 Money is rapidly being replaced by electronic transfers.

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