Coined: The Rich Life of Money and How Its History Has Shaped Us

by Kabir Sehgal

  Silver and barley were the two most widely used proto-monies.18 Both of these commodities, but especially silver, seemed to fit the traditional definition of money: a medium of exchange, unit of account, and store of value.

  As a medium of exchange, payments to laborers were made in silver and barley. Documents that have survived since the second and first millennia BC indicate that one-quarter of a bushel of barley was the payment to a worker for a day’s labor.19 Loan and sale documents indicate prices in silver.20 Merchants would have weighed and exchanged silver bullion.

  To facilitate smaller transactions, some silver bars were made into ingots, spiral coils, or rings of similar weight. Each ring ranged in value from one shekel to ten shekels, which could be easily broken off from the larger coil.21 One shekel of silver would have weighed about the same as a US quarter—about three-tenths of an ounce.22

  As a unit of account, balance sheets show silver as an accounting measure: Incoming and outgoing goods were weighed and assigned a value in silver. The remaining balance was also expressed in silver. Because silver was rare, it wasn’t used in many transactions for slaves, real estate, or other goods. But prices were still quoted in silver, exhibiting the existence of a silver standard.

  As a store of value, silver maintained its worth. Silver was not abundantly available in Mesopotamia. It was mostly imported from neighboring areas, like the Taurus Mountains, that had more known ore deposits. Because of its scarcity, silver was seen as a prestigious item, and many squirreled it away for use at a later time.23 In contrast, the value of barley, which grew locally, fluctuated with the harvest.

  The Third Dynasty of Ur certainly had the ingredients necessary for a nascent market economy: silver and barley proto-money, a functional credit system, and merchants like Turam-ili. But instead of a highly decentralized market, kings and religious authorities played a redistributive role in the economy. They gathered food items and other goods and reallocated them to people according to status and occupation, like an archaic potlatch.24

  They also monitored monetary affairs. Not only did the temples, palaces, and other public institutions act like ancient central banks that adjusted interest rates; they also established weights for silver. They safeguarded standard weights in the shape of ducks and lions used to determine the silver standard. And they stored large amounts of silver bullion. “Silver was a highly valued substance with strong symbolic associations with royalty, wealth and power, and the substantial surplus that was not immobilised in treasuries was potentially available for monetary use,” write the curators at the British Museum.25

  The authorities increased the demand for silver by issuing law codes. For example, from the city of Eshnunna, an ancient law code contains a price list of nine common goods by weight and volume that were equivalent to one shekel of silver, essentially outlining the exchange rates against silver.26 A liter and a half of pig’s fat was priced at one shekel of silver.27 Fines were also assessed in silver: ten shekels for slapping someone’s face, and sixty shekels, or one mina, for biting a man’s nose.28

  Metallists and chartalists both find supporting evidence for their philosophies in this ancient civilization. Metallists contend that the authorities merely blessed what the informal market had already determined would be used as money. Silver was valuable regardless of whether the government authorized it.29 Chartalists assert that the state created the demand for silver by administering fines in this metal, for example. Moreover, loans were issued in the form of silver and barley, which increased the demand for these items. In other words, proto-money was an instrument to enact and repay debts.

  While the debate over the origin of money continues, most agree on what circulated as currency. Precious, durable metals increasingly replaced edible commodities as the dominant proto-money. This was the case not just in the city-states of Mesopotamia but also among the villages of the Nile River.

  Weigh Like an Egyptian

  Around 3100 BC, civilization arose like an oasis between a desert and a mountainous area along the winding Nile. The yearly flood of the river, known as the inundation, left behind minerals, organic matter, and fertile land.30 Crops like wheat and barley flourished and were used as proto-money to pay common laborers. These staples formed the basis of the Egyptian diet in the form of bread and beer. Beer, it should be noted, wasn’t a lager-colored, smooth liquid but resembled a wholesome soup, sometimes infused with local plants. Many tomb drawings show the elaborate preparation process of making both beer and bread, suggesting they were ubiquitous items.

  The Egyptians even created tokens in the shape of loaves to symbolize allotments of bread rations, which tokens could have functioned as proto-money. Tokens found in Egyptian fortresses in Nubia were about twenty centimeters in diameter, made of wood, painted, and shaped like various types of bread loaves.31 The symbols bear hieroglyphic inscriptions that indicate the number of loaves and the amount of wheat for which they could be redeemed. Though historians don’t know whether they were traded in great numbers, the carvings may be a personal tally of a ration’s value, which could have served as a claim if there were a disagreement about the value of grain in the ration received. The standard ration for workers was ten loaves and a beer that measured up to two jugs. Higher-ranking officials who staffed temples and palaces were provided larger rations. Calculating rations, like dividing one hundred loaves among ten men, required the use of fractions, which Egyptians are said to have invented.32

  Bread and beer served as payment for work completed, but as Egyptologist Rosalie David points out in her Handbook to Life in Ancient Egypt, wheat not only served as a medium of exchange but increasingly became a unit of account in the sixteenth century BC,33 as did other commodities. Egyptians traded with neighboring civilizations for silver, spices, and copper, for instance. Because of the influx of new goods, there was a need to establish a standard, first expressed in terms of wheat, against which other goods could be measured and appraised. Say there was a discrepancy between the value of two goods that were being traded. Some amount of wheat would be allocated to resolve the difference.34

  By 1580 BC, silver, gold, and copper were also used as a standard. Egyptians made special units to measure these metals: a deben, which weighed ninety-one grams; and a kite, which was one-tenth of a deben.35 These metals were used to value other goods and facilitate transactions, as the metals themselves rarely changed hands. Tomb drawings show officials using fixed weights in the form of a seated lion to measure a deben of metal, yet the system may not have become widespread, since Egypt’s economy was still mostly informal and pastoral. Nevertheless, merchants traveled with weights so they could conduct transactions more conveniently. As was done in Mesopotamia to make dealing with gold and silver more convenient, these metals were smelted into smaller ingots or rings.36

  The evidence that precious metal was precisely measured conveys that Egyptians believed it to have intrinsic worth. The Egyptian word for silver was hedj, which may have also meant “money.”37 Silver was imported from other countries, and for a time was considered more valuable than gold. The Egyptians searched their lands for more precious materials: copper, tin, and alabaster. Many pharaohs dispatched military expeditions to manage the sometimes tens of thousands of workers needed to mine in surrounding lands.38 In approximately 2500 BC, King Sahure dispatched men to Punt, which was known as “God’s Land,” and they returned with vast amounts of ntyw, or myrrh, and various metals. During the twelfth century BC, according to surviving documents, Ramses III “constructed great transport vessels… loaded with limitless goods from Egypt… They reached the land of Punt, unaffected by (any) misfortune, safe and respected.”39 But Punt has long been a mystery to archaeologists, who have been unable to determine its location.

  One region they have examined is Nubia, south of Egypt in the alluvial lands near the Nile. It’s an area where Egyptians mined gold.40 The Egyptian word for gold was nbw and may explain the origin of the place-name Nubia.41 Taxes wer
e sometimes collected in gold and then stored in the treasury, which was part of the most important temples.42 The pharaoh’s administration carefully tracked, measured, and weighed the incoming gold before some was provided to artisans to shape into jewelry, masks, and other ornaments. Jewelry pieces made from precious metals weren’t just symbols of status and wealth, but were thought to have magical qualities, protecting against evil. Pharaohs wanted to be entombed with their jewels so they could take them along and be protected in the afterlife.

  The pharaohs were certainly accustomed to being surrounded by immense wealth during their earthly lives as well. Technically, Egyptian pharaohs owned everything, including all the bread, beer, and gold. The pharaoh presided over the centralized economy and granted lands to friends and relatives, who became powerful landlords. As in Mesopotamia, temples were centers of enormous wealth, like one that managed almost 100,000 commoners, 500,000 cattle, and hundreds of orchards.43

  The middle class was composed of traders, soldiers, artisans, and, most important to the purposes of understanding the role of money, scribes. Up to 5 percent of Egyptians were literate, and many of them were scribes who created papyrus records of taxes, granary inspections, and commercial transactions in which precious metals were weighed.44 However, Graeber says there is scant record of interest-bearing loans, perhaps because papyrus isn’t as durable as coins in the archaeological register.

  However, economic historians can still study later Egyptian coins to understand more about the society in which they were issued. One such gold coin exhibits a fusion of cultures: on one side, hieroglyphics, and on the other side, a horse of Greek design. It’s probably from the reign of Nectanebo II, one of the last pharaohs, who came to power in 359 BC.45 The coin shows that Egypt was influenced by Greece. But coins weren’t invented in Egypt.

  Coined in Lydia

  Located on the Ionian coast of Asia Minor, in what used to be Anatolia and is today Turkey, the Kingdom of Lydia emerged around 700 BC under the Mermnad Dynasty. Not having left behind a copious archaeological record, it would have been a historical footnote if not for the discovery of a few hoards of coins and the writings of the Greek historian Herodotus, who wrote, “Lydia, unlike most other countries, scarcely offers any wonders for the historian to describe, except the gold-dust which is washed down from the range.”46 He is alluding to the wealth of this kingdom, the first to invent coinage in the Western world.

  Lydia derived its wealth from three sources: tributes, natural resources, and eventually, coins. Lydian kings conquered several Ionian and Greek cities and received tribute, which helped them to amass substantial fortunes. Lydia was blessed with abundant amounts of natural resources. Legend has it that Phrygian king Midas bathed in the Pactolus River to rid himself of his golden touch and left the golden gift in the waters. But the mines at Tmolus, near the Pactolus and Hermus Rivers, yielded another metal, what Herodotus called “white gold.”47 It was actually an alloy of gold and silver known as electrum, which comes from the Greek word electron, which means “amber.”48

  Just like gold and silver, electrum was first traded as bullion. But because the amounts of gold and silver varied in electrum, its value could not be easily determined. Over time, electrum bullion was turned into smaller chunks that were easier to handle—and eventually into coins. Archaeologists discovered more than ninety electrum coins at the ruins of the temple for Artemis, a Greek goddess, at Ephesus; they are estimated to be from 630 BC.49 The hoard includes coins of varying degrees of sophistication, from unstamped metal lumps to flatter ones bearing images of lions.50 Just as Paleolithic hand axes were refined, humans gave coins characteristics that increased their convenience. It wasn’t long until no weighing scale was needed. Electrum coins were standardized, weighing 14.15 grams and given the denomination of the stater. Coins became over time the new criterion against which to measure all other commodities.

  Coins are usually assessed by collectors according to their metal composition and the symbols they bear. Many staters have a face value that is up to 20 percent more than the intrinsic value of their metal content. Electrum from western Anatolia has a gold content of 70 to 90 percent, yet Lydian coins had less gold, around 50 percent. Lydians became skilled metalworkers and diluted the amount of gold in coins as an act of seigniorage: a way to profit from the issuance of currency. The difference between the face value of issued coins and the actual market value of the precious metal leads to a profit for the issuer.51 One justification for seigniorage is that the labor that goes into creating a coin may constitute a value-add, resulting in a higher face value.52 Seigniorage also lays bare the historical propensity for the issuer to control the value of money through its manufacture. Minting money is a profitable business, and many governments engage in seigniorage even today.

  The symbols on coins offer insight as to who issued them: merchants, bankers, aristocrats, or kings. One coin from this era has a Greek inscription, “I am the sign of Phanes.” Coins that bear the words KALIL and VALVEL have also been discovered.53 These inscriptions may reflect the name of the person or mint that issued them. During the early sixth century BC, the mint in Sardis, the capital of Lydia, probably produced the most coins.

  Coins thought to be from ancient Lydia came in several hundred types, with depictions of boars, horses, dolphins, and monsters, among others. The images were a distinguishing mark of the issuer. Coins issued by the Lydian kings bore a lion’s head or paw. The image was etched on a die and then placed on a chunk of electrum, on which it was hammered, leaving an impression.

  The last king of Lydia was Croesus, who reigned from 560 BC to 547 BC. He introduced coins made from pure silver or gold and bearing the mark of a lion and a bull. Croesus’s coins marked the inception of bimetallism, a monetary system in which two metals are accepted as money, with a fixed ratio of value between them. According to The Oxford Handbook of Greek and Roman Coinage, during Croesus’s rule the exchange rate between gold and silver was 1 gram of gold to 13.3 grams of silver, and 1 gram of gold to 10 grams of electrum. Issued gold staters weighed 8.1 grams, less than their electrum predecessors.54

  The spread of coinage made Lydia an even wealthier kingdom, and Croesus’s wealth became legendary. We still occasionally hear the English phrase “rich as Croesus.” He lavished gifts of electrum bullion and gold on oracles. He eagerly asked an oracle what would happen if he fought the Persians, which precipitated a cryptic reply that a notable empire would perish. Croesus interpreted the remark as a good omen, so he attacked the Persians, but lost badly.55

  The Kingdom of Lydia came to an end, but coinage flourished elsewhere in the Mediterranean world and even India and China. Classics professor David Schaps says that the coins made in Lydia, India, and China look different and were made using different technologies. Indian coins were lopsided, their sides cut off to ensure they were the right weight. They also had several punch marks that indicate they were made in a mint. Chinese coins were composed of bronze and shaped like spades, disks, and knives. Some had holes in them so they could be strung together.56

  It’s difficult to know whether these civilizations conceived of coins on their own or were influenced by others through trade. Even Schaps vacillates:

  Lydia, India, and China probably invented coinage independently of each other; and even if that was not the case, they surely developed the use of coins independently of each other. It is possible that these three independent events had independent causes, and that none of them has any light to shed on the others; but it is surely worthwhile to consider the possibility that there were similar conditions in these particular places that made coinage a plausible and a useful innovation.57

  Some scholars make the case that India, for example, developed coinage on its own. They point to silver tokens marked with cuneiform found at Mohenjo-daro, an Indus Valley civilization from 2500 BC, which suggests trade with Mesopotamia. The Rigveda, an ancient Hindu text that dates to 1500 BC, mentions a gold currency, which some hav
e interpreted as coins unique to what’s now India. Yet others contend that coinage was brought to India by the Achaemenian invasion or the eastern expansion of Alexander the Great and his Greek Empire.58

  A Democracy of Owls

  The people of Lydia and Greece had strong cultural ties. Croesus formed an alliance with Sparta and peacefully incorporated many Greek cities into his kingdom. The Lydian alphabet was derived from Greek. Several artifacts recovered from Lydia, like vases and bowls, were made in a Greek design, and Greek engravers also likely designed Croesus’s coins.

  Most Greek coins were made from silver. Greece received silver tribute from its allies, and another rich source of silver was just twenty-five miles away in the mines of Laurion. Roughly 30,000 slaves staffed 2,000 shafts at the mine during its peak of operation.

  The Greeks began producing coins in Athens around 546 BC, during the reign of Peisistratus, who needed to compensate mercenaries and finance his ambitious building plans. The unit of account for coins was the drachm, which comes from the Greek word meaning “to grasp” and was first used when measuring proto-money like grain or bullion. One drachm was made of six obols, which is derived from the Greek word that means “spit,” as in iron spits that were used to cook meat. There is evidence from the seventh and sixth centuries BC that spits were used as items in dedication or sacrificial ceremonies. Iron spits were a valuable item that may have functioned as proto-money. The trading of iron spits harkens back to Neolithic man, who relied on food preparation and sharing for survival.59 The drachm was standardized to 4.32 grams of silver, and an obol weighed 0.72 gram.60 Coins of greater value were issued, too. For example, the frequently used tetradrachm was equivalent to four drachmas and weighed 17.28 grams. The decadrachm, equivalent to ten drachmas, was the largest denomination, yet issuance of this coin was limited.