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Okay, context. There's a modern human sub-species (about 9,000) that needs to evacuate earth to avoid genocide from their human counter-parts. They have access to a portal to take them to a new viable planet similar to Earth, but with no prominent species or tech, like how Earth was when humans were still evolving.

It's been planned for like a year in advance by the MC and a group of people who have experiences in a wide range of work fields (farmers, bankers, architects, lawyers, etc), to give them time to gather the necessary supplies and people for the other side, but that is a lot of work. Building itself, not an issue. Fuel, not an issue. Food and water, not an issue yet.

But I'm struggling on how to figure out the banking system and how things would translate or change. It can start out with a simple system but a bartering system would only go so far in the beginning when they won't have a lot of tech.

The species will reproduce a little faster than real-life humans so the numbers will grow to populate the new planet much quicker than expected. They'd need to use a monetary system as they encounter more complex tasks like raising their offspring and expanding their territory. As their tech advances, the barter system no longer works, given the demand and various complications.

How would they go about changing from barter/trade to money and coins once the bank was even set up? the first accounts.... That's my struggle.

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  • $\begingroup$ Comments are not for extended discussion; this conversation has been moved to chat. $\endgroup$ – L.Dutch - Reinstate Monica Jan 10 at 15:41
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    $\begingroup$ Although your query is in the queue for reopening, I find that it is still quite a bit too broad. You're still kind of groping: you mention barter and banks and currency and accounts and all of these things that demonstrate a lack of focus. I would say please pick one thing to focus on and edit or rewrite your question accordingly. For now, I'd leave this closed. $\endgroup$ – elemtilas Jan 10 at 17:44
  • $\begingroup$ And why would they even barter instead of gift based economy that we actually used to have? $\endgroup$ – Mołot Jan 10 at 19:46
  • $\begingroup$ Didn't they have a monetary system in their old world? $\endgroup$ – Karl Jan 10 at 20:09
  • $\begingroup$ It's unfortunate you were so quick to pick an answer that is operating under a faulty premise, as are most of the answers here. For almost all of human history, we didn't use money. Your population is very small, and no matter how much they prepare, they're going to be living a very simple lifestyle for a long time. They will have to learn an entirely new way of life. There will be almost nothing a farmstead community would need that they couldn't produce themselves, and anything else they can just trade for now and again. They will have no use for currency. $\endgroup$ – Dan Jan 11 at 1:06
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Your people will not be relying on barter, not even in the beginning, they will be using money even if very simple money.

As far as we can tell no civilization has ever relied upon barter. Barter is basically useless in large populations for day to day transactions, you quickly run into the problem of coincidence of wants, AKA I make boats and you sell food, but you don't need any more boats but I'm hungry. debt was by far the most common in human history but that is not going to work well with your population.

Don't get me wrong Barter will be used as will the much more common debt method of exchange (sometimes called gift exchange), they are still used today after all, but they can't rely on them. Both breakdown with a large and/or specialized population. Barter due to the aforementioned coincidence of wants, barter is really only used for rare trades with strangers (aka people you don't trust) when all goods are present. And debt breaks down becasue debt only works if you know everyone, if you can trust everyone to pay their debt weeks, months, or years down the line, which means everyone needs to know everyone else intimately. Which you won't with large populations humans can't keep track of even a few hundred much less a few thousand.

But you have a real problem with large populations because most of the people you will interact with are strangers (no trust), so you cant use debt, but all the goods can't be present for most day to day transactions (I can't trade you 1/8th of a plow for breakfast, and even if you do have enough food to pay for it, that amount of food will rot before I can eat it). So people come up with some easily fractured medium if exchange, some third good you can use for exchanges, once they do that that thing whatever it is is considered money.

You don't need banks just money, nobody is taking out a loan at the beginning because nobody has any idea if said loans can be paid back, this is the same reason fiat currency is unlikely everything is too new for real trust. You are more likely to start with either commodity money or representative money, probably a mix of both.

Commodity money is just something valuable you trade with, not unlike cigarettes in prison, whether or not you smoke you still made trades using cigarettes. commodity money is just something durable, portable, and hard to counterfeit people use as a medium of exchange. Cowry shells were the most common in earth's history followed by precious metals. Grain gets used often becasue it is easy to measure and basically everyone has some, livestock is common for larger transactions.

Coins were just lumps of a valuable metal, worth whatever they were worth. Stamping the coins became a way to mark their purity, which is why it was usually the government making coins, all their coins tend to be made to the same purity so their stamp marked a value by weight.

Representative money is fairly common, it is what most of the developed world used until very recently. Usually it starts as a receipts. Receipts for something that they can trade the receipts back for, grain in a public grain silo, gold in a vault, a quota worth of military rations for labor, whatever just as long as people trust these recipes to be honored. Then some one says, "well I don't need all that X I have receipts for, maybe I can trade it for something else", and they end up trading some of the receipts for something else. this one is only likely at the start if you have some kind of central food distribution or storage, but if can replace commodity money pretty quickly.

If you want banks later you can get them in several ways, historically the first banks were either governments, wealthy merchants, or goldsmiths. Bank notes are basically just written receipts for large amounts of money.

Governments could make loans and print money because the government had so much money and made such large purchases it was often easier to just get a receipt for money than carry a million gold coins around the countryside. Everyone knew the government was trustworthy enough that the government would honor its debt. Arguably the first banks were just grain silos that issued receipts or tokens. I keep saying "the government" becasue it really does not matter what form of government.

Gold merchants had huge high quality vaults to store gold, lesser merchants would store their gold in these vaults in return for a receipt and letting the smiths be able to loan out said gold. The first banks we think of as banks were often this just people who already needed really secure storage and rented out some space in said storage.

Wealthy merchants who had a lot of money would make loans (or more often trade deals) and paper receipts were used instead of hard to transport, easy to steal, huge piles of coins. These merchants were trusted simply becasue they had enough money to honor said deals many times over. Of course this can also get you loan sharks.

This series will be very helpful for you if you want to understand how to go from simple commodity money all the way to banks. (Extra history the history of paper money)

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    $\begingroup$ Fiat currency is worth mentioning. Especially in a new settlement, people would likely want to avoid spending time accumulating something relatively useless (like gold) just to back their currency. Something without intrinsic value would be more useful. $\endgroup$ – ckersch Jan 11 at 0:07
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    $\begingroup$ @ckersch the problem with that initially is fiat only works if you have an institution you trust to maintain said currency, which they will not have at first. Everything is so new you are stuck with intrinsic value for a while. $\endgroup$ – John Jan 11 at 4:00
  • $\begingroup$ British notes actually have the phrase "I promise to pay the bearer on demand the sum of XXX pounds", which I'm guessing is a hold over from when the bank notes were literally receipts for cash. $\endgroup$ – Kyyshak May 10 at 12:27
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If the trade is within the transplanted population, they could stick with the monetary system they've had all along. They all belong to a society that accept that money is a thing, and agree that these tokens (or electronic bits) can be exchanged for goods and services.

You might got some folks willing to trade milk for chickens or whatever, but if everybody's used to dollars/credits, and there wasn't some sort of societal collapse after the trip, I expect people would be fine with sticking with what they know.

If there were being on this planet with which they could trade, they would almost certainly start with barter. But if they can show to them that the tokens are an acceptable form of trade, it might be picked up quickly. That'd likely be based on the level of civilization of said peoples.

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  • $\begingroup$ I think this is probably the case. 9,000 people is a small city, and if they are organized and have supplies, they'll bring with them a government infrastructure who can issue their own fiat. $\endgroup$ – GrandmasterB Jan 10 at 20:34
  • $\begingroup$ If their population was starting in the millions with an infrastructure like what they're used to, then maybe. But with such a small starting group, they're going to have to abandon just about everything about their old life. Just because they're accustomed to using money doesn't mean they can just transplant that same system and expect it to be dependable in even the short term. $\endgroup$ – Dan Jan 10 at 21:13
  • $\begingroup$ The big problem you run into is what I think a dollar is worth and what you think it is worth is not the same, the price is stabilized here by the government collecting and paying debt at a set value, they will not have that. I can't trust the dollars you traded to me will be worth anything. $\endgroup$ – John Jan 11 at 4:56
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Declare a fiat currency.

Assuming that your colonists collectively agree that a currency is a good thing, it shouldn't be terribly hard to declare a new one. Declare one, and create a fixed supply of it, divided between the government and individuals.

Fiat will be superior to any commodity-based currency, especially for a new settlement. It exists in fixed supply, so it can't be produced, aside from by an (ostensibly reasonable) governing body. It doesn't rely on hoarding any good that the colonists would be better off using, and doesn't rely on anyone spending their time gathering otherwise useless commodities, like gold.

A good basis for valuation of a fiat currency is work-hours. An hour of work is worth exactly one Hour. Public improvements, such as roads or common buildings, can be paid out of the initial stock of Hours allocated to the government. Individuals accumulate hours at a steady rate by working. Goods are priced based on the number of hours of work required to produce the good, plus whatever materials cost is associated with its production.

A real-world example of a currency based on this exact thing is the Ithica HOUR.

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After consulting the chat discussion, I think the key here is that a monetary system like what you're picturing would be unnecessary for your society for a very long time.

Attempting to begin with a monetary system from the very beginning wouldn't be desirable or possibly even feasible. Money backed by a commodity doesn't necessarily make sense is a small society if you can just trade the goods directly. And fiat money has its own dangers associated with it (for starters, it's inherently a worthless item and has been shown historically to be prone to crippling deflation). If you're curious about this in particular, you might consider researching the historical origins of money for more details.

The risks affecting the stability of currency are mitigated when you have a more robust sociopolitical system in place, but your people will be far from that once they step through that portal. Any monetary system they bring with them will, in a very practical sense, become essentially worthless.

Down the road, a direct transition from "bartering to banking" is not natural. Money (probably) originated out of gift economies first. You mention having a rare element that would be greatly valued. That's one way it could start.

Here's an example. A couple of millennia ago, Greeks and Romans would enlist Celtic peoples for military efforts. Sometimes they paid them in coinage (often gold). Celtic groups began to copy this practice and produce their own coinage, but these coins weren't necessarily used the way we think of money today. Rather, they were more of a prestige item. In fact, some coinage was so localized that it was essentially minted for use by one town or local group. Despite having coinage they used as a reward for services for a few hundred years, it was never their primary means of payment/reward; Celtic society and economics was never based on money. (In other words, it was never preferable to use coinage as a currency system over what they already had in place.) And this was a population in the millions that flourished for several thousand years on a comparable technology level to what your people might expect.

Of course, the parallels aren't completely direct, particularly insofar as sociopolitical structures, but technologically the comparison is apt. It's very important to remember that your society must take a significant step backwards technologically. 9,000 people is simply insufficient to maintain anything even resembling the society they're coming from. No matter their background, these people are all going to have to learn to transition to very, very simple rural life, and that in turn will necessitate entirely different political and administrative structures. It will be hundreds of years before their society has the sort of infrastructure that would benefit from something like a banking system. Their economics would simply take on a different form than what you're envisioning in your question for some time. The more important matter is what form their political structures take, how prestige translates to power and influence.

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There are several possible solutions centered around tangibles: Livestock, jewelry, gold, large stone coins, etc.

However, your colonists are coming from a culture that is more sophisticated. Modern banking and monetary control is based on public trust that stored money retains value. Various institutions and regulators work to maintain that trust.

The new political leadership must work fast to build that trust anew, and begin to provide a trustable fiat currency (perhaps backed at first) for the new arrivals.

Up front, the leadership must also break bad new to folks - the values of their lost homes and businesses on Earth are likely to be non-convertible, and likely must be left behind. Their base wealth is the goods they bring with them, not what's in their Cyprus bank account...unless they can come back someday.

The first banker (and, with only 9000 folks, perhaps the only banker for a while) can provide the greatest public good by providing safe deposit services for especially valuable items and ordinary demand deposit (checking) accounts in the new currency. Checks are handy to provide liquidity on market day. Savings and lending in the new currency come later, when there is value to store, and therefore available to lend.

Note that the sole retail banker is not a central banker. A different institution should be supervising the banker and governing the money supply. The USA Federal Reserve does this several clever ways.

In many parts of the world, banking is combined with other public institutions, most notably the Post Office, but it could be any trusted institution.

If portal travel will be resumed someday with Earth, then a market for trading goods and service between Earth and the colony must be set up. That market will determine exchange rates for the new currency, and eventually allow exchanges of wealth between the worlds.

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The problem with barter is that I might have a piglet and want a keg of ale, but the brewer would rather have flour. So I find a farmer, who wants a new wheelbarrow. Now where do I get that wheelbarrow?

The people are all used to the convenience of cash or digital credit. They won't like the complications of barter. On the other hand, things like inflation are a real risk, too.

Temporary Market Tokens

People come to a weekly market, or perhaps a less frequent one. Some powerful traders, or a coalition of traders, pay people in chits which are good for one bag of flour or another very common, very standard good at the end of the market day/week. Afterwards they will be completely worthless. If just about everybody wants to leave with some flour (or some iron nails, or some rifle cartridges), it should be feasible to use those chits as currency while the market lasts. I swap my piglet for a handful of tokens, I swap my tokens for that keg of ale, the brewer keeps them to get his flour at the end, which the farmer sold to the trader in exchange for tokens ...

This is similar to the use of cigarettes as black market currency in Germany after WWII, except for the use of tokens symbolizing a more healthy commodity. A similar effect would also be possible with actual bags of flour, but it makes shopping easier to handle the tokens.

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