Money is anything people will accept as a means of payment for goods or services. Money’s primary function is to facilitate exchanges and is infinitely easier to use than BARTER, which requires one person to want what another person has to offer in exchange. To find a person who is willing and able to make a barter exchange often takes considerable time and effort. Money allows producers to sell to any customer wanting their PRODUCT and then buy from other producers. It also allows people to retain their purchasing power during the time between they sell goods and make other purchases. In addition to serving as a medium of exchange, money serves as a unit of account, store of value, and unit of deferred payment. Relative values are measured by the price of various goods; money serves as the unit of account. It is simpler to say something costs $10 than it is to say it cost 10 chickens or five goats. The store-of-value function allows producers and consumers to defer their purchases. Of course, during periods of high inflation, money’s purchasing power can decrease rapidly, and as a result, it does not serve well as a store of value during periods of high INFLATION. Money also serves as the standard of deferred payment. Debt obligations are assessed in terms of money owed and interest payments due to the creditor. In the United States, many different commodities and tokens have served as money. In the prerevolutionary period, Native American groups used wampum, made from the shells of a type of clam, to make exchanges. Some nations specialized in drilling holes in clamshells so they could be strung together as beads. In 1637 the Massachusetts Colony declared white wampum as legal tender, which meant colonists could pay their taxes and make other exchanges using clamshells. European immigrants brought with them steel drills, which allowed colonists to create and expand the supply of wampum, causing a dramatic decrease in its value. Early Virginia residents paid taxes in the form of hogsheads of tobacco; while in South Carolina, indigo and rice served as a means of payment. In many areas furs, wheat, and maize were exchanged. In New England, fish served as money to some degree, but because it was perishable, fish was not an effective store of value. During the British colonial period, there was a chronic shortage of coins. In addition to British coins, Spanish, French, and Portuguese gold and silver coins all freely circulated in the colonies. The shortage was so drastic that in 1775 North Carolina declared 17 different forms of money as legal tender. While many different commodities were used as a medium of exchange, the common unit of account was British pounds, shillings, and pence. In 1690 Massachusetts became the first American colony to issue paper currency. The colony issued notes (“bills of credit”) to pay soldiers involved in an expedition to Quebec; the notes promised payment in gold or silver and could be used to pay taxes. Unfortunately for the colonial government, the expedition returned before the government had secured sufficient reserves to convert the notes, causing significant disgruntlement among the soldiers and a market discount on the face value of the notes. Other colonies also experimented with paper currency. Tobacco notes, certificates indicating the quality and quantity of tobacco deposited in a warehouse, circulated as currency throughout Virginia in the 18th century, and Benjamin Franklin became printer for notes issued by the Pennsylvania Land Bank. Eventually the British government restricted the rights of colonies to issue paper currency. The American Revolution ended British control over money in the former colonies, and the new American government issued Continentals, a paper currency, to pay for the war. By the end of the revolution a Continental was worth one-tenth of one percent of its nominal value, sparking the phrase “not worth a Continental.” The new Congress chartered the Bank of North America in 1781, which was followed by the creation of several state banks. Financial chaos and conflict after the end of the revolution led to the creation of a national currency, replacing state-issued currency. Banking was a hotly debated topic in the new, independent America. Alexander Hamilton led the argument for a strong central bank and establishing the new government’s financial credibility, while Thomas Jefferson led the advocates of state control over banking and the issuing of paper money. The first national bank, the Bank of the United States, was forced to close in 1805 when its 20-year charter was not renewed. The U.S. Civil War led to the creation of two currencies. The Union government issued “greenbacks,” which were not convertible into gold or silver but were authorized as legal tender for most purposes. Greenbacks lost some of their value but were obviously worth more than the currency issued by the defeated Confederate government. A scene in the classic American film Gone With the Wind shows Scarlet O’Hara visiting Rhett Butler in a Union prison after the war. She has come to beg for money to save her family plantation, Tara, because her patriotic husband bought Confederate—and now worthless—war BONDS. Rhett, on the other hand, is well off because he kept his ASSETS in gold and silver. After the Civil War, the United States used both gold and silver as money, but by 1873 gold had replaced silver as the standard money measure. The lawyer William Jennings Bryan eloquently but ineffectively argued for a bimetal standard, trying to support silver and silver-mining interests. In the late 19th century, checks replaced coins and paper currency as the primary form of money in the United States. Banks, of course, issued checks, and, after a series of bank failures, the U.S. Congress created the FEDERAL RESERVE SYSTEM (known as the Fed) in 1913. The Federal Reserve System, the nation’s central bank, supervises banking practices, manages the amount of credit available in the BANKING SYSTEM, and issues Federal Reserve Notes, today’s paper currency. Early Fed leadership was widely criticized for contracting the supply of money during the STOCK MARKET collapse in 1929, contributing to the subsequent severe decline in the U.S. economy called the GREAT DEPRESSION. More recent Fed leaders are credited with effective control of the MONEY SUPPLY and contributing to the economic expansion throughout the 1990s.