The Origins of Money

The world as we know it today could not function without a complex monetary system. From coins and paper currency to checks, credit cards, and bank drafts, money shapes everyday life and every transaction, even though we seldom think about it. Of course, there was a time when none of this existed, and the concept of using credit cards or cryptocurrency would have seemed as strange to primitive man as trading and barter seems to us today.

The Roots of Money

The earliest known forms of “money” were most likely trade items exchanged for other useful things of similar value. These included tools, clothing, food, and ornaments. By 900 to 800 B.C., trade flourished in the Mediterranean and Near East, about the time of the prophets Elijah and Eliezer, and King Midas. Royal authorities did not mint the first true coins until around 630 B.C. in Lydia.

The transfer of goods from one person to another is as old as humankind and an essential part of primitive civilizations. A toolmaker soon realized the advantage of trading his products to hunters who could provide him with food. In prehistoric times, people valued cattle, grains, and ornamental beads as desirable trade items. These exchanges depended on immediate needs, with value shifting from transaction to transaction. The concept of uniform values did not arise until wealth accumulated in forms that could be stored and traded—even for nonessential goods.

Wealth in the form of crops or livestock was always in danger of loss through spoilage or sickness. Bartering sheep or cattle for smaller items was also impractical. Consider the difficulty of making change for a cow when the need might only be a chicken, two doves, or a small utensil. Such problems encouraged the use of promissory agreements that could be repaid later with accumulated goods. Traders also struggled to agree on the relative values of items, since each person valued goods differently.

The Birth of Coinage

Over time, society recognized that metals such as silver and gold held value for nearly everyone. Their stability, usefulness, and universal desirability made them a common standard of exchange. People traded them in many forms—ornaments, ingots, rings, and carefully weighed fragments resembling tiny coins.

Artisans made the earliest coin-like units from a natural mixture of gold and silver called electrum. Some examples were carefully crafted from an amalgam of the two metals. Scholars consider these pieces “pre-coins” because artisans produced them without official authorization.

King Croesus of Lydia, still famous for his immense wealth, issued the first officially recognized coins of the ancient world. His coins, struck in either pure silver or pure gold, bore images of a lion and bull that symbolized his power over enemies.

Conclusion

By the end of the 6th century B.C., knowledge of coin minting and its use spread throughout the Greek world. Important cities around the Mediterranean quickly adopted the use of coins, and merchants from every region began using them to exchange goods. Hard money quickly became the standard monetary vehicle for over a millenia. Today, coins aren’t as common in commerce, but they have stood the test of time culturally. Thankfully, today’s collectors have centuries worth of collectibles to chose from.