4 — The Advent of Coined Money (c. 600 BCE – 500 CE)

Part B — Commodity Money and Early Coinage

The introduction of coinage marked a fundamental shift in monetary systems, combining intrinsic metal value with state authority and enabling large-scale, standardised trade across regions.

Origins of Coinage

  • Lydia (modern Turkey), c. 600 BCE
    • Electrum coins (a natural gold-silver alloy) were stamped to certify authenticity.
    • Recognised as the first standardised coinage in history.
  • Greece
    • Silver drachma and tetradrachm coins circulated widely across city-states.
    • Supported trade, paid mercenary armies, and reinforced political authority.
  • Rome
    • Denarius (silver) and aureus (gold) coins used for taxation, army payment, and commercial exchange.
    • Coinage strengthened centralised economic and political control.
  • China
    • Bronze “spade” and “knife” coins, later round coins with square holes, standardised weights and value across regions.

Key Features of Early Coinage

  • State authority: Minting controlled by rulers or city-states, reducing counterfeiting and enforcing economic legitimacy.
  • Standardisation: Coins had consistent weight, purity, and design, facilitating trust in transactions.
  • Portability: Easier to transport and trade compared with bulk commodities.
  • Symbolism: Designs reflected political power, religious iconography, or civic identity.

Economic and Social Impacts

  • Trade expansion: Coins enabled long-distance commerce, both locally and internationally.
  • Taxation and governance: Standardised coinage facilitated systematic collection of taxes and tribute.
  • Social cohesion and authority: Coins reinforced the legitimacy of rulers and the state.
  • Financial innovation: Provided the foundation for credit systems, banking, and accounting practices in subsequent centuries.

Challenges and Limitations

  • Fluctuations in metal content could undermine trust in the currency.
  • Dependence on precious metals limited the total money supply and economic flexibility.
  • Counterfeiting remained a persistent problem despite state oversight.

Significance

  • Coinage represents the first universally recognised and standardised money.
  • Bridged the gap between commodity-based exchange and more abstract forms, such as paper money in later periods.
  • Established the principles of trust, authority, and standardisation that underpin modern monetary systems.

References

  • Howgego, C. (1995). Ancient History from Coins. London: Routledge.
  • Seaford, R. (2004). Money and the Early Greek Mind. Cambridge: Cambridge University Press.
  • Davies, G. (2016). A History of Money. Cardiff: University of Wales Press.
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