Where did
money come from?

What came before money — From clay tablets to the lion's mark

Textbooks teach us this: people bartered, and because it was inconvenient, currency was born. But the oldest records speak not of barter, but of credit and record-keeping.

3000 BC, Mesopotamia. Temple scribes inscribed on clay tablets who had lent how much barley to whom. What was written there was not an amount, but a relationship: who owed what to whom. If that was known, payment could be made later. For people you knew, a record was enough. Currency was needed for transactions with strangers.

No primary sources have yet been found to support the explanation that currency arose from barter. That is not to say that barter did not exist. All that can be said is that the oldest records were ledgers of debt.

Paying by weight

In Babylonia, there was the word shekel. Today it is the name of a currency, but it was originally a unit of weight: the weight of a certain amount of barley. Eventually, this weight came to be measured in silver. For each transaction, people placed a piece of silver on a scale. This silver, cut and weighed, is called hacksilver. More than a thousand years before coinage, value was weight itself.

In a world that pays by weight, currency is not needed. Scales are sufficient. However, one must weigh and verify the fineness for each transaction. The time spent on verification itself becomes a transaction cost. It was the next invention that eliminated this cost.

Shells, knives, cattle

In various parts of the world, people used different things as money. Cowrie shells from the Indian Ocean circulated from Asia to Africa. In China, there were small knife- and spade-shaped currencies made of bronze. In Homer's epic poems, the value of armor and people was expressed in "head of cattle."

What shells, knives, and cattle had in common was that everyone knew their value. The prerequisite for currency is not the preciousness of its material, but the shared belief that one's neighbor will accept it. Currency always takes the form of a social agreement.

Gold from the riverbed

Lydia, in Asia Minor. The Pactolus River, flowing down from Mount Tmolus, carried gold in its sands. Legend has it that King Midas, who turned everything he touched to gold, washed away his curse in this river. Sleeping in the riverbed was electrum, a natural alloy of gold and silver. It was not yet a coin, just a lump of valuable metal.

The trouble was that the proportion of gold and silver differed in each lump taken from the river. Even if they looked the same, their value was different. The receiver had to be suspicious each time. This uncertainty led to the invention of striking a mark.

Striking a mark

A lump of metal must be checked for weight and purity each time it is received. What if a ruler were to strike a mark on that metal, guaranteeing its weight and purity? The trouble of checking with every transaction would disappear. The act of striking was not for decoration. It was an event in which the state guaranteed the value. For the state to vouch for it meant that the state took on the burden of the time spent doubting.

If the trouble of checking disappears, the number of transactions increases. If transactions increase, the market itself grows. What the single act of striking changed was not the metal, but the speed of society.

The first electrum coins had no design. There were only striations. These striations are thought to be marks from the anvil used for striking. Just a lump, without even an image. But a mark was certainly struck on it. A mark before marks. The earliest electrum coins appear around 600 BC. Some sources suggest they may have appeared slightly earlier.

The Lion's Mark

600 BC, in the Lydian capital of Sardis. The king struck a lion's mark on lumps of metal from the river. The state guaranteed their weight and purity. This is considered the first moment humans promised value with metal. The lion's mark was a declaration that this lump was of this weight and this fineness. Only one who is not doubted can make such a declaration. That is why the first coins belonged to the king.

Sardis was a city of gold. The historian Herodotus wrote that the Lydians were the first people in the world to set up shops and engage in commerce. In the marketplace, instead of being weighed on scales, there were coins struck with marks. Being able to use them just by counting meant not having to carry scales around. For those who bought and sold dozens of times a day, the time spent weighing was a matter of life and death. Coinage changed the very form of commerce.

Separating Gold and Silver

King Croesus of Lydia. His reign was from 561 to 546 BC. His name became a synonym for wealth. He abandoned electrum and, for the first time, produced separate coins of pure gold and pure silver. Production began around 550 BC. Craftsmen developed the refining technique to separate electrum into gold and silver. They split a natural alloy in two with human hands.

This is counted among the first gold coins whose purity was guaranteed by the state. The world's first bimetallic system, using gold and silver coins side by side, was also born here.

The State Vanishes, the Mark Remains

In 546 BC, Sardis fell. It is said that a single Persian soldier scaled a cliff thought to be impregnable, and the gates were opened from within. Lydia disappeared from the map. The kingdom that invented coinage perished in less than a hundred years.

But it was the state that perished, not the invention. Persia continued to use the mint in Sardis as it was. Conquerors do not destroy good systems; they just make them their own. Persia would eventually strike its own gold coin, the Daric, but its form and weight standard were inherited from Lydia. Even if a country disappears from the map, a single piece in the palm of the hand remains. A pattern we will encounter many times in this book appears here for the first time.

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Ahead: Fire from the East — From Ionia to a Hundred Furnaces, Three Scales — Weight as Diplomacy, Coins That Declare Their Name — From Wappenmünzen to the Owl, Silver from the ground, ships on the sea — From Laurion to Salamis, The Currency of an Empire, and its Debasement, The Examiner and the Nomos — Rebuilding Trust, Beauty and Signature — The Great Silver Coins of Syracuse, Three Lands — India's Punched Silver, China's Knives and Shells, and Pre-Roman Times, The Gold of the Mountains, the Name of the King — Macedonia — and the reference section (timeline, people, sources).

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