History of money: why did we settle on metal for money instead of something else ?

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For example most regions had a rural/ agrarian economy and could have used cattle horns. It would have represented their amount of cattle they had and therefore their actual wealth.
I think there is a small group of people in africa doing something like that with fish right now.

So why settle for metal coins?

In: Economics

13 Answers

Anonymous 0 Comments

In Sumer, accounting *was* often done in agrarian units (e.g. some volume of grain, number of sheep/cattle). In fact, the shekel was a value equivalent to one portion of barley. Coins were minted from silver, but there weren’t that many because silver is expensive. So if you really needed silver, you could take out a loan from the temple for coins, and pay back that debt with goats, sheep, cattle, barley, lapis lazuli, copper, wares you made, etc. Otherwise you just traded those things directly or would have the debt recorded and be on the hook to pay it back later when you have the thing to trade for (for example, you don’t have a goat to trade right now, but have a kid that will be grown-up enough in a month and would like these shoes now).

But why mint coins from silver? Well, silver is a thing that people sort of have agreed is valuable, and it’s pretty rare. It’s shiny, it looks nice, you can use it to make fancy things like jewelry and mirrors, but really it’s not very practical to Bronze-age civilization. And, a nice thing about any metal is that you can cast it into almost exactly the same shape every time, meaning you have almost exactly a standard amount of that precious metal in each coin. This simplifies exchange because now you know exactly how much silver you’re getting without having to weigh a bunch of lumps of silver. Equivalently, you can weight a bag of coins and know exactly how many coins are in it.

Another cool thing with coins is that they take a lot of equipment to counterfeit, and you can make pretty detailed and durable designs on them. That means that they represent an issuing authority, with a supply controlled by that issuing authority. If you had a Roman coin, that coin would be honored anywhere in the Roman Empire, giving it value (just like any fiat currency today). In fact, Roman coins were made from brass, bronze, and copper as well as silver and gold, and were often worth *more* than the equivalent weight of the same metal *because* of the usefulness and buying powering in the Roman empire. Bonus points for coins basically being the only way a ruling emperor could have their image known throughout their empire.

Gems, conch shells, sand dollars, goats… there have absolutely been tons of materials used as currency throughout history. But if you want every single piece of the currency to adhere to a standard shape, size, and weight, *and* you want to make it hard to counterfeit, *and* you want to put designs on it for propaganda or other purposes, *and* for it to have limited other practical use so your supply doesn’t get used up, *and* for it to be durable, metal coins are the obvious choice.

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