Currency or money is a medium of exchange. Currencies initially appeared in the fertile river civilizations of Sumer and Egypt. These early civilizations used metal, beads, or ivory to represent stored commodities. By exchanging the tokens, they were able to trade various commodities without the need to physically move them. You can imagine how much easier it was to exchange copper ingots or strings of beads representing bushels of grain instead of the actual grain.
First Currency Crisis
The primary problem with the initial token system is that the value of the tokens was restricted to local areas. It took the rise of larger states and empires with the power to enact and enforce treaties with their neighbors to solve this problem. In the Bronze Age cultures of the eastern Mediterranean ingots of copper were the recognized trading currency. While this worked, it remained subject to the power of the states and empires to enforce the treaties.
Second Currency Crisis
While an improvement over the earlier city-states, Bronze Age kingdoms remained fragile by today’s standards. Crop failures, famines, wars, and large-scale migrations exerted pressure on them. The migration of the Sea Peoples in the late Bronze Age destroyed or weakened all the major powers in the eastern Mediterranean. In addition to the increase in piracy, the weakened states were no longer able to guarantee the trading currencies. The result was a dark age that lasted for more than two centuries.
Evolution of Coins
As the new states recovered and longer distance trade returned, so did the need for a reliable medium of exchange. One of the issues with the copper ingot system was that it relied on the stability of treaties. The next wave of trading, led by the Phoenician and Greek city-states solved this problem by creating coins. Unlike the ingots, coins derived their value from the metal they were made of. Even if the political entity which struck the coin was conquered, the metal in their coins guaranteed their value. Coins were typically struck from copper, silver, and gold. While coins could be counterfeited, shaved, or debased by changing their content, Archimedes’ principle allowed for verification.
Introduction of Paper Money
As wonderful as coins were, they still had several major drawbacks. The biggest, at least from the trader’s perspective was that they were bulky and dangerous to transport. Also, since their value was tied to their metal content, changes in metal supply would alter their value. For example, the discovery of a new silver deposit would reduce the value of silver coins. This created problems for both the traders and the sovereigns who typically controlled the minting of coins. The solution was the creation of paper currency backed by the power of the state. The only states with enough power to implement paper currency were the Chinese and Islamic empires. From the early 7th century through the 13th, both created stable paper currencies backed by a strong central authority. This system not only facilitated trade in goods but also stimulated the development of modern lending and banking.
Skipping Forward to the Present
In the interest of brevity, I’m going to skip forward to the modern world of national paper money. While there are 197 countries, there are only 164 currencies. That’s because many countries share currencies, e.g., the Euro (26 countries) and the $US (14 countries). However, many currencies share names, but otherwise aren’t related, e.g., the US$, C$, and AU$. That brings us to our featured map of world currency names courtesy of indy100.
As always thanks for reading.
Armen
Note to Pay the Bills: Ancient coins provide a key clue for the heroes in Penny Preston and the Silver Scepter, which is book 2 in the Misaligned series. If you’ve ever wondered how to mix theoretical physics and Welsh mythology in a YA fantasty story, you can learn more here or find links to purchase books here.
Additionally, consider signing up for my FREE newsletter. It will contain previews, announcements, and contests related to my novels. The April newsletter even divulged how many cups of coffee it took to write my latest novel. I promise that it will not overwhelm your inbox – I’m thinking once a month or less depending on news.