Saturday 24 November 2018

The Origins of Money (Part 1 of 2)

NJ Bridgewater
25 November 2018


What is money? And where did it come from? This is a subject which few people ask, because they know what money is—or do they? The conventional wisdom is that money is something printed by governments and distributed by banks. If I want money, I usually have to go out and get a job. I work from 9am to 5pm or from 8am to 4pm, and then I collect a pay cheque at the end of the week, or the end of the month. If I work for cash-in-hand (and potentially avoid taxes while doing so), I might get paid a lump sum at the end of the day. In either case, I am collecting either printed notes, coins or digital money in my bank account. Money is, the conventional wisdom states, divided into many different currencies, such as the United States dollar (USD), the Great British Pound Sterling (GBP), the Euro (EUR), the Swiss Franc (CHF), the Chinese Renminbi (or yuan) (CNY), the Japanese Yen (JPY or JP¥), the Australian dollar (AUD), the Canadian dollar (CAD), the New Zealand dollar (NZD), the South African rand (ZAR), the Kenyan shilling (KES), etc. If we extend this further back into history, we would include the Spanish doubloon (doblón), the British guinea, the Florentine florin, the ancient Greek drachma, the Roman denarius, the Persian daric, the medieval Islamic gold dinar, and the Lydian stater. All of these are government-issued currencies, which consist of either paper notes or metal coins, being made usually of gold, silver, copper or bronze. Money is backed by the government, most people presume, so it is safe. Government money cannot disappear in a day—it is something with the force of law behind it, and it is protected by a legal system. Most currencies throughout history, moreover, have been backed by precious metals, such as silver and gold, so this gives further solidity and value to the currencies. And it’s always been like this, most people would imagine. Is it necessary, therefore, for me to go on?

The Treasure of Villena (c. 1000 BCE)

Gold stater of Alexander the Great, Memphis mint (c. 336 – 323 BCE)

Money vs. Currency
The reality is far different from the conventional understanding. The facts do not conform with what most people imagine. Conventional currencies, as they exist right now, are not sound money, nor are they backed by gold or other assets. Moreover, money, throughout history, has not had value because of government decree. Money has value to society because of its intrinsic value and the natural properties which characterise it. In fact, when governments try to decree value for currency, this usually results in negative effects. Governments cannot, in reality, control the value of money, nor can they create money out of thin air. All they can do is to issue currencies which are backed by assets, or made from precious metals, or they can create debt in the form of fiat currencies, which are subject to massive amounts of inflation, and are backed by nothing other than sentiment and belief. All the major currencies which currently exist are actually fiat currencies, meaning that they are created by decree (i.e. fiat). They are not backed by anything at all. When the government creates a currency, all that they are doing is creating 1s and 0s in a digital ledger, which are then loaned out to banks, which loan these digital 1s and 0s to individuals. It’s debt-backed 1s and 0s, electronic currency stored in computer databases. A lot of paper notes are also printed, and coins, but these are only a small fraction of the total money supply, which is almost entirely digital. I have explained this in more detail in my article entitled ‘What is Bitcoin?’ on my Crossing the Bridge blog.[3] Fiat currencies, such as the United States dollar, are literally created from nothing and have no intrinsic value, other than the value that people believe them to have. This is a uniquely modern phenomenon, as currencies in previous centuries were backed by gold or silver.

$100 USD banknotes

One-third stater coin from Lydia (640 BCE)    

Bitcoin paper wallet

Let us then distinguish between “money” and “currency”. What the vast majority of governments use right now is not money. It is fiat currency, which is based on debt. It has not any real substance, other than what people believe it to have, and most of it is electronic. It can easily be hacked, manipulated, inflated and lost. It can also be subject to hyperinflation, which reduces the value of each unit due to failures in the economic and financial policy of a given country. “Money”, in contrast, is both a unit or medium of exchange and a store of value. The term “sound money” may be defined as hard currency, safe-haven currency or strong currency, which serves as a reliable and stable store of value, as opposed to soft currencies, which fluctuate wildly in value.[8] Fiat currency is a medium of exchange, but it is not a reliable store of value. It is money only in the sense that it is used to buy and purchase goods, but its value is highly inflationary and subject to manipulation. Money, in the truest sense, is capable of storing value over long periods of time, something which fiat currencies are currently incapable of doing. If you have $100 in your bank account today, it will be worth only a fraction of that in 10 years’ time. Therefore, fiat currencies do not meet all the requirements of being sound money, and must be regarded as soft currencies. In order to maintain value, money should be backed by hard assets, such as precious metals. If I know that $100 is backed by a certain amount of gold, then it would qualify as sound money, since that gold is limited in supply. So, let us try to go back to the history of money.

Now that we understand that money serves both as a medium of exchange and a store of value, we begin to realise that the history of money goes back very far indeed. It has nothing to do with governments, states, or central banks. Rather, money is something that goes back to the very origins of human history and human evolution. This is something which I have expounded upon at length in a previous essay, entitled “The Origins of Wealth”, published in four parts on my Crossing the Bridge blog.[9]  It has also been addressed at length by Nick Szabo in his article, “Shelling Out: The Origins of Money”.[10] Money is deeply-rooted in the human consciousness and psyche. It is commonly believed that primitive man had no form of money, and that society was largely equal, or perhaps “socialist” in structure. This is certainly the argument of most Marxists, and other ideologues who want to warp reality to fit their worldview. The reality, however, is quite different. Money is part of what we are as human beings. Man is, in his earliest origins, both a social creature and an intelligent being. He is essentially curious, sociable, inventive and innovative. In the world of nature, there are natural resources and there is wealth. Wealth is an element built into the fabric of reality. It’s not an invented concept. It exists in the mineral kingdom, in the animal kingdom, and in the resources which human beings create out of nature and reality. Early man was able to collect rocks, shells and other items and fashion these into tools, jewellery and ritual items. He was able to hunt animals and collect animal skins. He created artwork and other handicrafts, weapons and ornaments. All of these originated in the natural world, and they were transformed into new commodities and collectibles.

Each human being, being different in capacities, strength, intelligence and creativity, was able to create or acquire different amounts of wealth. A skilled hunter might collect many animal skins, whereas a craftsman might create many tools and weapons, and a skilled jeweller might create many beaded necklaces. Everyone had natural skills and abilities which allowed them to acquire different amounts of wealth. This wealth could then be transferred through trade, warfare or marriage alliances. As such, some early humans were wealthier than others, some bands had greater wealth, and some tribes were stronger and more able to acquire wealth forcibly or through trade. Natural self-interest and self-preservation led to warfare and conflict between bands and tribes, as well as networks of trade and commerce. The earliest human societies were based on the acquisition and trade of capital, and were hence capitalist, rather than primitive socialist, societies. Capitalism is an essential part of human nature, because each human individual is different in their capacities and abilities to acquire, collect and manage wealth. Why does wealth inequality exist? Because of the Pareto principle, which is a fact of nature. The Pareto principle (also called the ‘80/20 rule’) declares that 80% of the wealth tends to go to 20% of the population.[11] For more on that, see Part 3 of my essay on “The Origins of Wealth”.[12] The point is, money and differences in wealth are based on natural differences between people and go back to the earliest eras of prehistory.

Money made from cowries (Cypraea moneta) (1742)

The earliest forms of money took the form of collectibles. Shells were collected from coastal areas. These were then traded with bands and tribes further inland. Those who lived farther away from the sea had more difficulty acquiring shells. As such, shells were limited in supply. These were denominated by collecting them into necklaces, which could be easily transported. Shells collected by human beings can be found as early as 67,000 – 63,000 years ago in the Panga ya Saidi cave on the coast of Kenya, just north of Mombasa.[14] About 33,000 years ago, beads from shells some 9 miles away became popular, followed by beads made from ostrich shells some 25,000 years ago, and, roughly 10,000 years ago, seashells were commonly used.[15] Shells served as primitive money, which could be used as a means of exchange and a store of value. They could be traded for skins, tools, weapons, meat or other resources. They could also be used as a bride price or dowry, allowing for the exchange of that other important form of wealth: wives. Human capital, indeed, has always been an essential component of wealth and wealth transfers.

Early Societies
For more on the earliest forms of money, I would suggest reading the aforementioned article by Nick Szabo, as well as my previous article on the Origins of Wealth.[16] The point that we must take from the above is that money is a natural evolution of human society. In the earliest human societies, proto-money existed in the form of collectibles—objects which can retain value over time, serving as a store of value as well as a means of exchange. In the case of shells or beads, these can be stringed together and worn on the human body. The same goes for animal skins, tools or weapons. Shells, however, were smaller and easier to carry, and could also serve as jewellery. This meant that wealth could literally be displayed on the human body as a visual display of capital. Shell money could also be easily exchanged in the form of a bride price for a new wife, allowing for the development of peaceful arrangements between tribes and clans. Warring tribes and clans, likewise, could raid a rival clan and steal their wealth, in the form of women, shells, skins and other collectibles. Women, indeed, could also be seen as a form of transferrable wealth. Moreover, as tribes grew in size and settlements became more permanent, it was also possible to acquire slaves through war or trade, allowing for the greater accumulation of human capital. Slavery, though certainly not good by modern standards, was an important development in early human society, as it allowed for greater diversification of human industry and labour.

Lugal-kisal-si, king of Uruk

It was in the Middle East and Fertile Crescent that the first human settlements were made. This was, in part, due to the climate and geography of the area, which allowed for the domestication of a number of species, including sheep and goats, as well as a number of different grains, allowing humans to increase their calorie consumption and create permanent villages. This also allowed for the development of the first organized societies with a priestly elite, who developed organized religion, temples and collective worship, as well as warriors, merchants, craftsmen and slaves, each fulfilling a particular role within society. Greater wealth and food led to greater diversification of skills. This also necessitated the creation of record-keeping, which took the form of lines made with a reed pen on clay tablets. These started off as simple drawings or representations of living objects, but quickly developed into a full-fledged writing system, called cuneiform. This allowed the early priests and scribes to record tributes and taxes from the surrounding countryside, leading early settlements to transform from villages into the first cities, such as Uruk (from which we get the word Iraq) and Eridu within Mesopotamia. I have described this development in more detail in my previous essay on the Origins of Wealth. These first cities developed a system of government and laws, leading to the creation of law and order, which is an essential component of capitalism. Capitalism consists of three main elements: a free market, the rule of law, and private property. It is usually accompanied by some form of money (or proto-money), though it could also work with a barter system. Whenever these three elements are present, there is capitalism. Capitalism then, far from being an ideology, is a condition that naturally arises as a result of human development. Here’s a diagram I have made on the elements of capitalism.

The First Civilizations
What allowed mankind to create the first civilizations? Human beings did not set out to build complex societies. They were not created through some intentional feat of human social planning. Rather, complex societies evolved over time, gradually and incrementally, as the right conditions emerged, and the right systems developed. Proto-money, as we learned above, consisted of shells, beads and other collectibles. This allowed people to transfer and store wealth, i.e. capital. The accumulation of capital was difficult in hunter-gatherer societies, as food was limited and there was little diversification of labour. When humans began to find grains and animals they could domesticate, however, they were able to create fixed settlements and increase their food supplies. This allowed some people to become farmers—others priests, others potters, others scribes, others weapon-makers, and so on. This led to the creation of writing, permanent houses of mud-brick, organized religion and laws to govern society. A diversified labour force resulted in the creation of a market economy, in which each person sold the goods and services he could create in exchange for other goods or services, through a system of barter. Of course, shells and beads could still be used to exchange these goods and services, but more efficient and more permanent means of storing and exchanging capital were necessary. Humanity’s wealth increased on a vast scale, and that wealth needed to be stored and exchanged across vast distances. As the first cities emerged, warfare between city-states became common and slavery emerged as captured enemies were forced into labour. Trade also led to the creation of debt and debtors, leading some people to lose their liberty in exchange for debts amassed: hence slavery.

The first money in ancient Mesopotamia consisted of precious metals.  According to Professor Hayat Erkanal, about 5,000 years ago, there was a trade of production surplus, leading to the use of money for the first time.[19] This early money consisted of rings made of gold, silver and other metals, which were later turned into bullions of the same materials.[20] Bullion means gold or silver (or other precious metals) measured and valued by weight, rather than in the form of coins. This usually takes the form of bars or ingots.[21] The development of early money was tied to organized religion. Early temples were not just places of worship—they served as the very heart, soul and centre of every city. A city was, in reality, defined by its central temple, with everything else surrounding this centre of worship. The construction and maintenance of temples required a great deal of capital, which meant that resources had to be collected and stored from the surrounding countryside, allowing for the creation of building projects and the maintenance of a priestly hierarchy. Cuneiform writing allowed the early Mesopotamians to record taxes and make records of inventory. Production surpluses were collected within temples, leading to a concentration of wealth and capital which could be used to maintain the city. Eventually, these priests became priest-kings, commanding armies and territory, which led to the creation of early kingdoms and empires. 

How do we know that these early societies had market economies? Amazingly, records of early trade still survive in the form of hollow clay balls, called bulla. On the outside of a bulla, parties to a contract could write down the details of the obligation, including the resources to be paid, while, on the inside, there would be tokens which represent the deal. These ancient records, indeed, were among the first examples of financial contracts, and they date back to the city of Uruk in the 8th millennium BCE.[24] Human beings have recorded numerical records for a long time, with the earliest notation system going back 20,000 years, to the creation of the Ishango Bone, which was found near one of the sources of the Nile in the Democratic Republic of the Congo. It consisted of tally-marks on the thigh-bone of a baboon.[25] The ancient Sumerians, however, developed a far more complex system for recording numbers and figures. They developed abstract symbols to represent different numbers, e.g. a circle for 10 and a stroke for 1. Thus, 23 could be represented by a circle and three strokes.[26] By this means, financial records could be recorded, including debts, interest and other contractual obligations. The free market was maintained, furthermore, by the creation of a system of laws, which were recorded in ancient law codes. These law codes guaranteed the very first human rights, including the most fundamental right of all—i.e. the right to private property. Ancient Sumerian city-states, therefore, could be regarded as the first capitalist societies.

Mina, shekels and talents
The first recorded law-code, the Code of Ur-Nammu (c. 2100 – 2050 BCE), defined the basic laws of property and commerce which formed the basis of civilized, capitalist society. This included rules for the maintenance of slaves, property, money, murder, adultery, rape and sorcery.[27] This included both capital punishment and punishments in the form of monetary fines. For example, if someone knocked out the eye of another man, he would have to pay one half a mina of silver. One mina was equivalent to 1/60th of a talent and consisted of 60 shekels. One shekel was equivalent to 8.3 grams or 0.3 ounces. At the present time, one ounce of silver is about $14.21 USD, or $0.46 per gram.[28] However, the price of silver is currently highly devalued due to the fact that it is not currently being used as money. According to Dominic Frisby (2017), the daily wage of a construction worker today is about £120, equivalent to about 12 grams of silver in Athenian times, meaning that silver (by ancient values), should be worth about £10 GBP ($14) per gram, or about $400 USD per ounce.[29] Half a mina is thus 30 shekels, or about 9 ounces of silver, i.e. about $3,600 USD by today’s standards, which is a pretty reasonable compensation. The punishment for kidnapping is imprisonment and a fine of 15 shekels (about $1,800 USD). Women also had fixed rights. If a man divorced his first-time wife, he had to pay her one mina of silver (i.e. 60 shekels, or about $7,200 USD). If a man falsely accused another man’s wife of adultery, he had to pay 1/3 of a mina of silver (about $2,400 USD); if a man severed another’s nose with a copper knife, he had to pay 2/3 of a mina (about $4,800 USD), and if he knocked out another man’s tooth, 2 shekels (about $240 USD). If a witness committed perjury, he had to pay 15 shekels of silver (about $1,800 USD). Robbery and murder resulted in capital punishment.[30] All of these punishments showed that there was not only a well-established system of law and order, but also guaranteed property rights and an advanced system of money, weights and measures, fines and financial compensation. These are all established elements of a capitalist society.

A silver Jerusalem shekel (68 AD)

Ancient Wealth
There are many examples from ancient history, scripture and legend that give us a picture of how much wealth existed in the ancient world. The Prophet Job, for example, in the Bible, is recorded to have owned some 7,000 sheep, 3,000 camels, 500 yoke of oxen, 500 she-asses, and a great many servants.[32] Likewise, the Prophet Abraham was said to have had an army of some 318 men, presumably the able-bodied men among his servants/slaves.[33] In the ancient world, the price of a sheep varied from 2.6g to 16g of silver, e.g. about $36 to $224 USD. In Ancient Greece, the price of a slave was roughly 200 to 300 drachmas.[34] One drachma weighed about 4.3 grams or 0.15 ounces of silver. Thus, 200 drachmas would be about 860 grams (i.e. about $12,040 USD). According to West (1916), an ordinary labourer in the second century AD earned about 8 or 9 obols per day (about $80 USD). With about 6 obols to the drachma, that makes about 5.73g of silver per day, or about 172g of silver per month.[35] West estimates that camels sold between 144 – 160 AD sold for about 9 months’ wages, or about 1,548g of silver, i.e. about $21,672 USD. Job’s 3,000 camels, therefore, would be worth about $65 million USD by today’s standards. His sheep, likewise, would have been worth, at the very least, about $252,000 USD. The Prophet Abraham’s able-bodied male servants alone would have been worth about $3,828,720 million US dollars, assuming $12,040 per slave. And he certainly had a much larger number of women, children and older men among his flocks and herds, making him a considerably powerful and wealthy individual in ancient Mesopotamia, Canaan and Egypt. What this shows us is not just that some pastoralists and individuals were incredibly wealthy, but that they were able to accumulate that wealth in a world where hard commodities and sound money existed, where a free market allowed trade across vast distances, and a where silver and gold were used to store value. In fact, Biblical accounts frequently refer to both gold and silver, and the shekel is mentioned as a monetary unit used by Abraham and others.

“And all thy estimations shall be according to the shekel of the sanctuary: twenty gerah[36]s shall be the shekel.”[37]
- Leviticus 27:25

Gold and Silver – Hard Money
The question arises: why gold and silver? This brings us also to the question of what sound or hard money is. As we have already learned earlier, sound money is money which serves as a store of value over time, as a means of exchange, and the value of which is determined by the market. This latter element makes it very distinct from fiat currency, which is denominated by government fiat, rather than the free market. The best way to ensure that money can serve as a store of value is by ensuring that it is scarce. Shells are cheap by the seaside, because there they are abundant. Further inland, shells gain greater value, and when strung together on a necklace, they have greater value still, due to the uniqueness and rarity of the item. The value of shells, however, can go down over time as the supply increases. Supply and demand determine the value of any good or commodity, including money. If you flood the market with shells, you decrease their value. When the purchasing power of a form of money is reduced, we call this currency depreciation. The opposite is appreciation. When the supply increases, we call this inflation. When the supply decreases, it is called deflation. Inflation and depreciation go hand-in-hand, as money decreases in value as the supply increases. Conversely, it increases in value as the supply decreases. When governments print currency on a vast scale, as happened in Germany, Zimbabwe and Venezuela at various times throughout history, the result is hyperinflation, where fiat currency becomes practically worthless. The only way to avoid such rapid fluctuations in the value of money is by ensuring that it is limited and scarce. Gold and silver are excellent examples of money that is scarce.

“Gold and silver, like other commodities, have an intrinsic value, which is not arbitrary, but is dependent on their scarcity, the quantity of labour bestowed in procuring them, and the value of the capital employed in the mines which produce them.”[38]
- David Ricardo, The High Price of Bullion

Gold is great money because of a few key properties: first and foremost, it is limited in supply. The exact amount of gold in the world is unknown, but much of it has been used and reused for thousands of years. The total amount of gold mined by 2017 is estimated to be around 187,200 metric tonnes, with estimates varying by about 20%, with one tonne of gold being valued (in 2017) at about $40.2 million, and the total supply of gold in the world currently valued at about $7.5 trillion USD.[39] According to the World Gold Council, two thirds of the current supply of gold have been mined since 1950, meaning that, in ancient times, there would have been no more than about 62,400 metric tonnes of gold. If all the gold in the world were collected together in one box, it would only measure about 21 metres on each side.[40] That’s how little gold there is in the world. The second reason it makes good money is because it is durable. Gold is practically indestructible. It does not decay or rust over time. Therefore, the same gold that was in an ancient Roman coin might be the same gold you have in your wedding ring today. This, along with its scarcity, makes gold an excellent store of value. Third, gold is incredibly recognisable and verifiable. The properties of gold are universally recognisable, meaning that it is possible to easily verify that a gold coin or bar is legitimate, thus avoiding counterfeit money, fraud and deception. This means that gold it serves as a good means of exchange, because it is easy for merchants and salesmen to exchange gold for goods and services without having to trust the seller or buyer’s integrity. Trustlessness is essential for a well-functioning free market economy.

The Ancient Money Supply
Other properties of gold, such as its beauty, make it desirable as a commodity, but do not relate to its usage as a form of money. Likewise, those who argue that gold is valuable because of its use in science or jewellery, fail to understand the distinction between gold as money and gold as a material. The same could be said of silver. Silver, like gold, is a precious metal, meaning that it is highly sought after and valuable, though that value has gone down in the present century due to its demonetisation. It is estimated that there are currently 3 to 3.5 billion ounces of .999 fine silver in the world.[42] This is significantly more than was available in ancient times. By the second century AD, R.P. Duncan-Jones estimated that the total money supply of the Roman Empire was roughly 20 billion sesterces.[43] One sesterce (sestertius) was equivalent to 1 quarter of a denarius—as silver coin weighing 3.41g.[44] The total supply in precious metals amounted to 880 tonnes of gold and 5,766 tonnes of silver. There was thus roughly 6 and a half times more silver than gold in the Roman Empire, meaning that gold should have been about 6 and a half times more valuable than silver at that time. If we value one sesterce at about $10 USD (1 denarius = $40 USD), the total money supply would have been about $200 billion USD. Both gold and silver are not chemically very reactive, meaning that they can last for centuries. Thus, a large portion of the gold that is circulating the world has been doing so for centuries, or thousands of years, taking many different shapes and forms, as coins, jewellery and artefacts are melted down and recast or coined. Gold coins from the time of Alexander the Great still shine resplendent, while the mask of Tutankhamun, which weighs some 22.5 lb (10.23 kg) of 18.4 karat and 22.5 karat gold,[45] is immortal in its exquisite craftsmanship and resplendent glimmer. Gold lasts—which is one of the key characteristics of sound money.

The Mask of Tutankhamun

The First Coins
Measuring gold and silver in varying weights is all well and good, except that you can’t always carry a set of scales with you, wherever you go. Money should be portable, and that means that it should be possible to exchange it at a moment’s notice with a merchant or vendor. So, how could that be achieved? In ancient Lydia, they found a solution: gold and silver coins. In fact, the Lydians originally used a natural alloy of gold and silver called electrum. The first coins, therefore, contained both precious metals. The innovation of the Lydians was to basically stamp metal to show that it was a standard amount, ensuring that the coins were both fungible and countable. Fungibility means that something can be exchanged with something of the same value. I can exchange one gold coin for another. It is also divisible, because I can exchange one gold sovereign for two half-sovereigns, for example, or two silver half-dollars for one silver dollar. Gold, silver and electrum were already fungible as they could be measured and exchanged for equal amounts of the same substance and weight, e.g. the shekel weight, but they were not standardised. Coinage meant that money was now standardised and weighing precious metals became unnecessary. The origin of this innovation is disputed. Coinage may have been invented by King Croesus of Lydia (595 – 546 BCE), or Pheidon II of Argos (7th century BCE), while, according to Aristotle, the first issuer of coins was Hermodike II of Kyme (probably the first Greek to issue coins).[47] The earliest coins were not used directly in commerce. Rather, they were stamped with the image of a symbolic animal, e.g. a lion. These earliest coins may have been used as medals or badges issued by priests of the Temple of Artemis at Ephesus—a building which was counted as one of the Seven Wonders of the Ancient World. The first coin used in retail on a large-scale was probably the hemiobol (0.36 grams of silver, i.e. about $5 USD), or half an obol (0.72 grams, about $10 USD), which was a small silver coin issued by the Ionian Greeks in the 6th century BCE.[48]

Gold Croeseid, minted by King Croesus (c. 561-546 BCE)

One of the innovations of King Croesus of Lydia was the introduction of a double gold-silver standard, with the introduction of pure gold and silver coins.[50] So rich was Croesus that his name is used to represent extreme wealth with the phrase ‘as rich as Croesus’. In fact, the Alcmaeonids, who were an illustrious and ancient Athenian family, claimed to have obtained their wealth from Croesus. Alcmaeon, their ancestor, was an assistant to the Lydians of Sardis and he used to help them eagerly. When Croesus learned of Alcmaeon’s enthusiasm, he summoned him and offered him to take as much gold as he could carry. Alcmaeon, therefore, took a large tunic and high boots and filled both his boots and every fold in his tunic with as much gold-dust as he could carry, even sprinkling gold-dust in his hair and more in his mouth, so that he was stuffed full of gold. Croesus, when he saw him, was amused, so he gave him another portion of gold equalling that which he had taken.[51] However rich Croesus may have been, however, his wealth did not last. He probably died around 546 BCE, which is when Cyrus the Great of Persia marched on Lydia, killed its king and took his possessions, confiscating all of his wealth.[52] Following this conquest, Cyrus the Great (550 – 530 BCE) introduced coinage to the Persian Empire, which became the largest and greatest empire of the ancient world. Like Croesus, the Persians practised bimetallism, with a duel gold-silver standard, using the Persian daric (a gold coin) and the siglos (a silver coin), which were both used throughout the Achaemenid era.[53]

Persian currency was updated by Darius I (521 – 486 BCE), who introduced a new, thick gold daric with a standard weight of 8.4 grams of gold (and with a purity of 95.83%), which equalled 20 silver sigloi (or 25 Attic Drachmae) in value, or about $1,500 USD. Like modern coins, the daric displayed an image of the Persian king (as a warrior with bow and arrow). One siglos was equivalent to 7.5 Attic obols (1 obol = 0.72 grams; 7.5 = 5.4 grams of silver), or about $75 USD.[54] After capturing Babylon following the Battle of Gaugamela, Alexander the Great issued the double daric of 16.65 grams, which bore the name Alexander.[55] Metal coins were also used from the beginning of Chinese imperial history. The issuance of coinage was traditionally associated with Qin Shu Huang Di, the first emperor, who united China in 221 BCE.[56] This currency was called the Ban Liang, which means ‘half a liang’ (1 liang being a Chinese ounce, or about 16 grams, and consisting of 24 zhu), thus weighing about 8 grams (12 zhu). History tells us, however, that the first Ban Liang coins were actually issued by the State of Qin during the Warring States period. The State of Qin (Ch’in; Old Chinese: *dzin) was an ancient Chinese state that existed during the Zhou dynasty, emerging as one of the dominant powers of the Seven Warring States.[57] Unlike their counterparts in the Persian Empire, however, the Ban Liang coins were usually made of bronze, not silver. During the Han dynasty (from 118 BCE), however, a new gold coin was introduced, which was equivalent to 10,000 bronze Wu Zhu (‘five grain’) coins. One ‘grain’ was equivalent to 100 grains of millet.[58] In Western Han, 1 Jin was equivalent to 250 grams, so a 1-Jin gold weight was equivalent to 250 grams of gold. At the time, 1 head of cattle would cost about 1.619 liang of gold, with a sheep at 0.952 liang.[59]

Achaemenid Daric (c. 420 BCE)

The gold and silver standard across the world allowed for trade and commerce across vast differences. A Persian daric or silver siglos could be used across the entire Persian (Achaemenid) Empire, which encompassed a total area of between 3.6 and 5.5 million square kilometres,[61] linked by a 2,500 kilometre highway, including the Royal Road, which stretched from Susa (in the south-west of Persia proper, now in Khuzestan) to Sardis in Anatolia (now located in Manisa Province, Turkey).[62] By about 50 BCE, the Han dynasty likewise ruled over an area of some 6 million square kilometres, throughout which their own gold-standard currency could be used.[63] Beyond this, of course, gold is easily convertible (i.e. fungible), so a Persian daric, or a Chinese Jin, or Greek and Roman currency, could easily be exchanged for goods and services. Merchants and businessmen, traders and farmers, across the whole stretch of the Old World, were well aware of gold and silver’s value, as it was sound money. No one would refuse a coin simply because it bore the face of Darius, regardless of his national origin. Gold is gold, silver is silver, and real money is real money. Try buying bread with a Confederate paper dollar or a nineteenth-century British copper or bronze penny and see if you can convince the buyer to part with his goods. In all likelihood, he will not. Offer to trade an ancient Persian daric for some food in 2018, and you will probably find a buyer. It might not be accepted at your local chain supermarket, but you’ll find someone willing to part with his goods for sound money, because we instinctively know what is good and what isn’t good money. 

Gold, Silver and Prosperity
Not only is gold and silver good money, because of all the reasons mentioned above, i.e. they are scarce, durable, verifiable and fungible, as well as trustless—they are also a source of growing wealth and prosperity, because they allow people to store value over time and use it to build up trade and industry. Sound money, moreover, has a value determined by the market, rather than by fiat, and this is what we mean by ‘good money’. The various government decrees to strike coins or measure them by weight and purity, are merely the means by which the precious metals are weighed, but the value is in the precious metals themselves, with their value being determined by the law of supply and demand. Why would such money lead to prosperity? The answer lies in the various incentives which using sound money creates. Imagine if we lived in a city-state. In this city state, the government constantly needed to create new currency to pay for wars or public building projects. They also needed to support the cost of the arena and theatre, where the citizens would go for entertainment, and for free bread for the freemen of the city. This constant need to expend money means that the city-state must issue new currency to cover its debts. As a result, the state issues more and more debased currency.

The city-state starts off with coins that are made of gold. Then they mix the coins with bronze, until eventually they issue thousands of bronze coins covered with gold. Finally, they have to issue tens of thousands of bronze coins backed by nothing other than the decree of the state. Every time the coins are debased, the money supply increases, leading to inflation, while the value of each coin decreases. In such a case, would you want to save your money or spend it? The price of milk last month was 1 bronze coin. Now, a gallon of milk costs 10 bronze coins. Instead of keeping your bronze coins, you will no doubt spend them on an ever-increasing number of things. Perhaps you’ll buy an extra toga—a blue one—and maybe a few new vases, and a leather ball for your son, and a wooden mug, and so on. You’ll keep spending the currency because it is like a hot potato. If you keep it in your hands too long, it will burn up and be worth nothing at all. Therefore, you have to keep throwing it around, until it loses it all its value. If you’re the last person to receive the hot potato in that game, you lose. This creates a society of spenders, who spend money on an increasing number of frivolous or less-than-useful things, while the government spends money on an increasing number of wars and crippling debts. Eventually, the debts exceed the government’s capacity to create new money, and the entire society collapses. Your city-state gets taken over by a rival tribe or city, your civilization collapses, you go from wealthy merchant to peasant, or you might be killed, captured as a slave, or made to fight in gladiatorial combat for the amusement of a wealthy Roman. Game over!

This scenario has been repeated again and again, and still applies today, as we will find out below in relation to inflation and currency debasement in Rome. With sound money, however, the opposite is true. When a country has a gold-standard, the opposite incentive is created. People are encouraged to save their money. When they save money, they are able to build up capital. This allows them to create businesses, which in turn leads to economic growth and innovation. The farmer one year may become the merchant the next; the merchant may become a member of the gentry or a nobleman, and the nobleman may become a king. Even slaves in many societies could save up money over time and buy their freedom. A debtor could save up money and pay off his debts. Likewise, people’s tastes in art, architecture and music tended to appreciate low time-preference works, such as a sculpture which takes months to produce, a painting that takes days, or a building which takes years to build. This is because people can afford to wait to spend their money. There is no hot potato effect, so people can save their money, bide their time, and purchase works of art or architecture which take a great deal of time, effort and imagination to produce. There is no wasteful consumer economy. Society values good taste, excellent craftsmanship and invention. Rather than pursuing frivolities, people pursue useful commerce and industry which will allow them to accumulate more sound money. Governments, likewise, refrain from excessive debts and military spending, as they cannot afford to use up all their stores of precious metals. Sound money leads to a sound economy, economic growth and prosperity.

The Roman Empire

Human greed and the desire for power often result in corruption and the downfall of civilizations. Governments desire, first and foremost, to maintain power and control. Kings and emperors, throughout history, have desired to expand their territories, and the leaders of Greek democracies and the Roman Empire were no different. War is expensive, however, and requires a great deal of funds, and there is only so much money within the coffers of any state at one time. What was there to do, therefore, but to increase the money supply and allow the state to pursue warfare through currency debasement? While ancient Lydia had pure, sound money, and the Athenian drachma was maintained at 67 and 65 grains of silver over time,[66] other Greek city-states mixed their coins with base metals and debased the currency, leading to inflation. Eventually, even the Athenians resorted to bronze coinage during times of war, issuing token bronze coins in 406 BCE to help defray the costs of the Peloponnesian War (431 – 404 BCE).[67] Athens lost that war, by the way, so currency debasement did them no good. Debasement was also carried out by Dionysius of Syracuse, who called in all coins for counter-stamping, reducing the standard by half while doubling their nominal value and keeping half the coins to pay off his outstanding debts, thus debasing the currency by 50%.[68] Rome, the great empire of Europe, originally had a stable currency based on gold and silver. This, along with the other elements of capitalism, including the rule of law and a free market, allowed for the development of unparalleled wealth and prosperity. Marcus Licinius Crassus, for example, was estimated by Pliny to have had a total wealth of approximately 200 million sesterces,[69] which is equivalent to about $8 billion USD in today’s currency. 

Bust of Marcus Licinius Crassus

For centuries, the Roman Empire was the pinnacle of human civilization. Stretching across Europe and North Africa, from the Pillars of Hercules and the British Isles in the West, to Egypt and Libya in the south, to the edge of Anatolia, Syria and Arabia in the East, the Roman Empire was one of the largest and most powerful empires in history, comprising a total area of about 4.4 million square kilometres by 390 AD, and with a population of about 56.8 million people by 25 BCE.[71] According to Madison (2003), the GDP per capita across the Roman Empire was about $570 USD (in 1990 PPP Dollars),[72] though Lo Cascio and Malanima (2009) have revised this to $1400 G-K (Geary-Khamis) dollars,[73] which is roughly twice the Mesopotamian per capita income of roughly $728 1990 G-K dollars (about 30 shekels per year, or 2.5 shekels per month).[74] At the same time, subsistence level income in Mesopotamia, i.e. enough money to survive, would have been about $400 G-K dollars.[75] Roman GDP was also quite similar to the per capita income of the average Englishman between 1676 – 1700 AD, who earned roughly 9.958 pounds Sterling per capita, or about $1411 1990 G-K dollars. Nevertheless, there were great concentrations of wealth among the Roman ruling elites. At the time of the first emperor, Augustus Caesar, a Senator had to be a citizen of free birth, not be convicted of crimes under the lex Julia de vi privata, and have property worth at least 1,000,000 sesterces, i.e. about $10 million USD, and the total number of Senators was about 600 (600 x $10 million = $6 billion USD).[76] Disparities of wealth, therefore, are not a recent phenomenon, though the standard of living has now vastly increased for everyone on the planet.

Inflation and Currency Debasement – the Fall of Rome

The enemy of prosperity, of course, is inflation. The city of Rome was founded, according to tradition, on the 21st of April 753 BCE. The Roman Republic lasted from 509 – 27 BCE, a period of almost 500 years, and the Roman Empire lasted from the reign of August Caesar (27 BCE – 14 CE) until the last Roman Emperor, Romulus Augustulus was deposed by the Germanic King Odoacer on the 4th of September 476 CE—a period of 502 years. In total, the Roman Republic and Empire together lasted a period of about 1,000 years. Roman coinage was introduced in the Roman Republic c. 300 BC, beginning with bronze and silver coins following the example of the Greek city-states.[77] This replaced the earlier system of aes signatum (Latin for ‘struck bronze’), which consisted of large, bronze bullion (measuring 160 x 90 mm; 6.3 x 3.5 in), and weighing between 1,500 and 1,600 grams (53 – 56 oz).[78] Julius Caesar was the first ruler of Rome to introduce coins bearing his profile, which practice was followed by Augustus and later emperors.[79] The silver denarius of August contained about 95% silver, which was reduced to 85% by the time of Emperor Trajan in 117 AD. The trend of currency debasement sped up in the subsequent centuries, being reduced to 75% silver by the time of Marcus Aurelius in 180 AD, 60% in the time of Septimius and 50% by the reign of Caracalla, who was assassinated in 217 AD. It was in that same century that Rome experienced one of its worst periods, the Crisis of the Third Century, which lasted from AD 235 to 284, also known as the Military Anarchy or the Imperial Crisis, during which the empire nearly collapsed.

It was during this time of crisis that that the Emperor Diocletian (244 – 311 AD) introduced even more debased and inflated currency. The situation of third century Rome was rather like the modern world today, in the sense that the government resorted to the use of fiat currency and the state suffered from a number of self-induced crises and intractable problems. Diocletian’s economic policies, fraught with bad consequences as they were, are also reminiscent of the prevailing policies and economic theories of the 20th and 21st centuries. One of these policies was the Edict of Maximum Prices, which was issued in 301 AD. The edict not only set out to further inflate the official Roman currency, but it also set a series of price controls (or ‘price ceilings’), on well over a thousand products, including food items, clothing, freight charges and weekly wages.[80] By 268 AD, the Roman denarius had become so debased that it only contained 0.5% silver. Diocletian, therefore, did away with this coin altogether, replacing it with a new coin called the argenteus, which was fixed at a value of 50 denarii (of the old debased standard), with 96 coins to the pound of silver. While this might be seen as a positive step, Diocletian also introduced a new bronze coin fixed at a value of ten denarii, called the nummus. Despite these efforts, however, no more than a decade passed before the value of the nummus had inflated to 20 denarii and the argenteus from 50 denarii to 100, resulting in an inflation rate of 100%. The Emperor Constantine, who reigned during the fourth century, issued a new gold coin called the solidus, which was struck at 72 coins to the pound, being even more debased than Diocletian’s.[81]

Nummi coins from the reign of Anastasius I

In addition to currency debasement and price controls, the later Roman emperors also sought to manage the economy with ever-increasing taxation, much like modern Western democracies today. In the early Roman Empire (30 BCE – 235 CE), the Roman government paid for what it needed with gold and silver. By the time of the Crisis of the Third Century, however, this was no longer possible, so the government resorted to “requisition”, which basically means ‘forced purchase’, to support its armies and other expenses.[83] This was combined with a number of land taxes. Increased taxation leads to decreased productivity, resulting in worse economic performance. It’s a vicious cycle. As government taxes go up, people have less incentives to be productive, resulting in abandonment of businesses, farms, etc. As Thomas Sowell explains, existing tax systems, like those of Diocletian, tax productivity rather than consumption. He writes that “someone who is adding to the total wealth of this country is not depriving you of anything. But someone who is consuming the nation's wealth, without contributing anything to it, is. Yet our tax system penalizes those who are producing wealth in order to subsidize those who are only consuming it.”[84] He also attributes Rome’s decline to the growth of “a large parasitic lass” which served as “an underclass supported by government handouts”, along with “a large and growing bureaucracy.”[85]

Like today, ancient Roman had elections and politicians who benefited by appealing to the masses. Rome had a system of poor relief, which initially began by introducing low-cost wheat. This was eventually transformed into free wheat and, by the time Julius Caesar took power, there were some 320,000 people receiving grain relief.[86] Caesar set about to trim down the welfare state, reducing the number of people receiving relief to 200,000, but, forty years later, it had risen again to about 300,000.[87] The welfare state, once established, is difficult to dismantle, as people become dependent on it. Emperor Aurelian, who reigned from 214 – 275 AD, further entrenched the institution by making wheat relief hereditary. In fact, what is worse, the government no longer provided wheat which one could cook at home, but, rather, provided government-baked bread, and added free salt, pork and olive oil, thus increasing the ranks of the unproductive citizenry and ramping up government spending, which, in turn, led to greater currency debasement and inflation.[88] The government, therefore, had to requisition and tax more property from the productive citizenry, further destroying economic productivity. The same effect can be seen today in the massive welfare states of Western governments, which are burdened by huge and unpayable debts—debts which could potentially destroy the entire economic world order within the next few decades. The result of Diocletian’s policies in 301 are well-described by a contemporary called Lactantius, who wrote, in 314 AD:

“After the many oppressions which he put in practice had brought a general dearth upon the empire, he then set himself to regulate the prices of all vendible things. There was much bloodshed upon very slight and trifling accounts; and the people brought provisions no more to markets, since they could not get a reasonable price for them; and this increased the dearth so much that at last after many had died by it, the law itself was laid aside.”[89]

By the 5th century, the Roman Empire had decayed to such an extent that it was subject to foreign invasions and the sacking of Rome. In 330, the Emperor Constantine had moved the seat of the Roman Empire to Constantinople, which was founded as a second Rome. The last Roman Emperor to rule both the Western and Eastern portions of the Empire was Theodosius I (379 – 395 AD). Theodosius was a Christian who issued a series of decrees banning pagan religions, festivals, sacrifices and the Olympic Games. The last Olympic Games were held in 393 AD. Splitting the empire in two, Theodosias bequeathed the Western Empire to his son Honorius, and the Eastern Empire to Arcadius.[90] The Eastern Empire, which managed to defend itself through mercenaries and placating invaders with tribute, survived and became known to historians as the Byzantine Empire. The Western Empire, based in Rome, however, was not so fortunate. Even Theodosius himself was so weak that he had to pay an enormous annual tribute to Attila the Hun, literally paying him not to invade Rome and destroy the empire.[91] Lack of national security and secure borders was a fatal problem. Germanic tribes harassed the borders of the Empire to the north, and the economy and social order collapsed within. This was due, in large part, to government manipulation of the economy. Constantine the Great continued Diocletian’s policies of economic regulation, going so far as to tie workers to the land, along with their descendants, thus preventing internal migration of agricultural workers and causing economic stagnation. Nevertheless, tenants still abandoned land and trade decreased. The government continued to requisition resources, including food from farmers, leading to farmland becoming deserted wasteland.[92]

The Emperor Diocletian

In order to continue to pay for defence spending, the Roman Empire had to increase taxes yet more. In 444 AD, the sales tax rose from 1% to 4.5%. Nevertheless, tax revenues fell as more and more wealthier Romans sought to avoid excessive taxation. Large landowners began to attract small communities of tenants around them, with some people even signing on as slaves in order to support themselves. At the end, there was no money left to support the army, and the barbarians flooded in, being welcomed as saviours from excessive taxation and currency debasement.[94] In 410 AD, the Romans abandoned Britain, for example, leading to the end of Romano-British Britain. Britain was under attack from Germanic barbarians, and Rome had failed to provide protection. This led to the Romano-Britons expelling the magistrates of the usurper Constantine III. When the Western Roman Emperor Honorius was asked to provide assistance to the island, as well as other Roman cities, he replied with the Rescript of Honorius, telling the Roman cities to look after their own defence. He was himself already tied up with defending Italy from the Visigoths under Alaric, and the City of Rome itself was under siege.[95] Rome was sacked on the 24th of August 410 AD by Alaric. By 402 AD, the capital of the Western Roman Empire had moved from Rome to Ravenna, in northern Italy, until the ultimate collapse of the Empire in 476 AD, when Odoacer advanced to Ravenna, capturing the city and forcing the 16-year-old emperor to abdicate on the 4th of September. The Eastern Roman Empire recognised Odoacer’s conquest, giving him the title of Patrician, while he himself took up the role of King of Italy.[96]  The Roman Empire had ended. Inflation, excessive taxation and a large welfare state had finally brought down one of the greatest civilizations of all time.

China and Paper Money

China, as we learned earlier, used both precious metals and bronze coins. However, in the early 8th or 9th centuries, China introduced its own innovation: paper currency, called ‘flying money’.[97] This began as a draft rather than bank-issued currency, but private merchant drafts were replaced by government-issued notes in the early 9th century, under the Song dynasty (960 – 1279 AD), allowing the forwarding of taxes and revenues to the imperial capital (Chengdu, China). This first paper currency was called Jiaozi. Paper currency was eventually replaced by more durable silk-money, and, by the late 13th century, there was a unified currency throughout China, being used as far afield as Persia, with Marco Polo himself remarking on the innovation. Originally, this ‘paper money’ was backed by precious metals, just like the U.S. dollar and British pound Sterling. Like these more modern currencies, however, they were soon detached from the sound assets to which they had been tied. Under the Mongol-founded Yuan dynasty (1271 – 1368 AD), a new, paper-based monetary system was created, which was not backed by silver or gold, becoming the world’s first truly-fiat currency.[98] The ancient Greeks had inflated their currencies by using bronze coins in addition to silver and gold coins, but at least bronze had some value in and of itself, and it was sometimes used as bullion. The Yuan dynasty’s paper currency, however, was backed by nothing but faith, and was known as Chao. Like modern fiat currency, the Chao was printed (another Chinese innovation).[99] In addition, like modern fiat currencies today, the Chao was subject to massive inflation, as the government printed as much currency as it wanted to cover its expenses, leading to an expansion of the “money supply”, reducing purchasing power for each banknote. The problem grew to such an extent that the entire currency had to be replaced in 1287 AD, but inflation remained a problem until the end of the Yuan dynasty.[100]

--> Yuan dynasty banknote with printing plate (1287)

The Ming Dynasty began with promise, and the Great Ming Empire lasted for 276 years (from 1368 – 1644 AD), only to be followed by the Qing Dynasty—the last Chinese ruling dynasty. The Ming Dynasty was a native Han Chinese dynasty, replacing the Mongol-led Yuan dynasty. Its founder, the peasant-born Hongwu Emperor (r. 1368 – 1398), initiated a series of reforms from his capital of Nanjing, breaking the power of the court eunuchs, leaving a ‘mirror for princes’ with admonitions for his descendants to follow (i.e. the Huáng-Míng Zǔxùn, “Instructions of the Ancestor of the August Ming”), and leaving a legacy which was further fortified by his successors, including the Yongle Emperor, who established Beijing (formerly Yan) as a secondary capital, constructing the Forbidden City, restoring the Grand Canal and patronising the explorer Zheng He, who explored as far afield as Arabia and Africa.[102] When it came to money, however, the Ming Dynasty made the same mistake as the Yuan. From the beginning of the Ming Dynasty (i.e. 1368) until 1450 AD, the Ming used paper currency, resulting in the same hyperinflation suffered under the Yuan. The Ming note was known as the ‘precious note of great rising’ and was only introduced in one denomination, making divisibility impossible.[103] Copper coins were allowed to circulate, however, and this allowed for payments in smaller denominations. Due to the increasing worthlessness of the paper currency, silver gradually replaced the ironically-named ‘precious notes’.[104] Barter was widely used until silver began to flow in from Japan and Spain (via the Manila Galleon), being traded as bullion called sycee or yuánbǎo (lit. ‘coin pouch’). Sycee was not made by a central bank but, rather, by individual silversmiths, and was formed in various shapes, including square and oval ingots, boats, flowers, tortoises and other forms.[105] Cowrie shells were also traded during this period. Spanish dollars were also used. These, being approximately 38mm in diameter, where minted in the Spanish Empire from 1598 AD and corresponded with the German thaler.[106] So influential was this currency that it formed the basis of the United States dollar and remained legal tender in the United States until the Coinage Act of 1857.[107] By the 18th century, the Spanish dollar was virtually a world currency.[108]

While the Chinese were the first to introduce paper money, they were not the last. By the period of Late Imperial China, under the Qing Dynasty, China had both a silver and copper currency system, based on copper cash (called wen) and silver cash (called ). One , or ‘silver cash’, was equivalent to 0.0013 ounces (or 0.037g) of silver, with 1,000 silver cash being equivalent to 100 candareens, 10 mace or 1 tael (liang) of silver, i.e. 37.8g.[109] This remained the system until 1889, when the Chinese yuan was introduced on a par with the Mexicon peso, i.e. 8 Spanish reals.[110] Even after the overthrow of the Qing Dynasty and establishment of the Republic of China, a silver standard was maintained. While the United States left the gold standard due to the Great Depression, China maintained its silver standard until 1935, when China resorted back to a fiat currency system, issuing ‘legal notes’. Along with Hong Kong, China was the last country to maintain a silver standard.[111] The People’s Republic of China, likewise, issued renminbi banknotes from December 1948, continuing the fiat standard. That was, of course, until 2005, when the value of the renminbi was pegged to the US dollar, effectively creating a US-dollar standard.[112] We will look at this new fiat standard in the section on the ‘Age of Fiat Currency’ below. For now, let us divert our attention to the golden age of money, which coincided with the great European Age of Exploration and Discovery.

©️NJ Bridgewater 2018

[1] Image source: Treasure of Villena as a whole, 10th century BCE (CC BY-SA 3.0), created by Unknown, circa 2000 AD. URL: (accessed 22/11/2018). For more on the license, see: (accessed 22/11/2018).
[2] Image source: Gold stater of Alexander the Great (17mm, 8.59 g, 3h). Memphis mint, circa 336-323 BC. (CC BY-SA 3.0). Classical Numismatic Group, Inc. URL: (accessed 22/11/2018). For more on the license, see: (accessed 22/11/2018).
[3] See: NJ Bridgewater (2017) What is Bitcoin? Crossing the Bridge, 7 December 2017. URL: (accessed 23/11/2018).
[4] Image source: 100 USD banknote (CC BY-SA 2.0). URL: (accessed 22/11/2018). For more on the license, see: (accessed 22/11/2018).
[5] Image source A 640 BCE one-third stater coin from Lydia, shown larger. Classical Numismatic Group, Inc. (CC BY-SA 3.0). URL: (accessed 22/11/2018). For more on the license, see: (accessed 22/11/2018).
[6] Image source A sample picture of a fictional ATM card (CC BY-SA 3.0), created by Airodyssey at English Wikipedia (own work). URL: (accessed 22/11/2018). For more on the license, see: (accessed 22/11/2018).
[7] Image source Bitcoin paper wallet, (MIT license), created 29 November 2013. URL: (accessed 22/11/2018). For more on the license, see: (accessed 22/11/2018).
[8] See: Hard currency (Wikipedia article). URL: (accessed 02/11/2018 12:02 PM).
[9] See: NJ Bridgewater (2018) The Origins of Wealth (Part 1 of 4), Crossing the Bridge, Thursday, 5, July 2018. URL: (accessed 02/11/2018).
[10] See: See: Nick Szabo (2002) Shelling Out: The Origins of Money, Satoshi Nakamoto Institute. URL: (accessed 02/11/2018).
[11] See: Pareto principle (Wikipedia article). URL: (accessed 23/11/2018 12:41 AST).
[12] See: NJ Bridgewater (2018) The Origins of Wealth, Part 3, Crossing the Bridge, Friday, 6 July 2018. URL: (accessed 23/11/2018).
[13] Image source: 1742 drawing of shells of the money cowry, Cypraea moneta. Public domain. URL: (accessed 22/11/2018).
[14] See: Jason Daley (2018) People Lived in This Cave for 78,000 Years,, May 11, 2018. URL: (accessed 22/11/2018).
[15] See: Daley (2018).
[16] See: NJ Bridgewater (2018) The Origins of Wealth (Part 1 of 4), Crossing the Bridge, Thursday, 05/07/2018. URL: (accessed 22/11/2018).
[17] Image source: Lugal-kisal-si, king of Uruk. Public domain. URL: (accessed 22/11/2018).
[18] Image: NJB (2018) The Elements of Capitalism.
[19] See: ADANA (Anadolu Agency) (2014) Money used by Sumerians in Mesopotamia, says expert, Hurriyet Daily News, January 13, 2014 00:01:00. URL: (accessed 12/11/2018).
[20] See: ADANA (2014).
[21] See: Bullion (Wikipedia article). URL: (accessed 12/11/2018 07:45 AST).
[22] Image source: Sumerian inscription in monumental archaic style, c. 26th century BC. Public domain. URL: (accessed 22/11/2018).
[23] Image source: A bulla (or clay envelope) and its contents on display at the Louvre. Uruk period (4000 BC–3100 BC). Public domain. URL: (accessed 23/11/2018).
[24] See: Tim Harford (2017) How the world's first accountants counted on cuneiform, BBC News, 12 June 2017. URL: (accessed 12/11/2018).
[25] See: Harford (2017).
[26] See: Harford (2017).
[27] See: Code of Ur-Nammu (Wikipedia article). URL: (accessed 12/11/2018 08:05 AST).
[28] See: Silver Prices Today, Live Spot Prices & Historical Charts, Money Metals Exchange. URL: (accessed 12/11/2018 07:59 AST).
[29] See: Dominic Frisby (2017) What wages in ancient Athens can tell us about the silver price today, MoneyWeek, 02/03/2017. URL: (accessed 12/11/2018).
[30] See: Code of Ur-Nammu (Wikipedia article).
[31] Image source: A silver Jerusalem shekel (ad 68) from the First Jewish Revolt against Roman rule. The obverse inscription reads "Shekel of Israel / Year 3" and that on the reverse "Jerusalem the Holy". Classical Numismatic Group, Inc. (CC BY-SA 3.0). URL: (accessed 22/11/2018). For more on the license, see: (accessed 22/11/2018).
[32] Job 1:3 (King James Version).
[33] See: Genesis 14:14 (King James Version).
[34] See: Spiros (2012) How much expensive was life in ancient Greece, Hellenic History Subjects, Saturday, April 7, 2012. URL: (accessed 11/12/2018).
[35] See: Louis C. West (1916) The Cost of Living in Roman Egypt, Classical Philology, Vol. 11, No. 3 (Jul., 1916), pp. 293-314 (22 pages). URL: (accessed 11/12/2018).
[36] One shekel weighed 180 grains (11 grams or .35 troy ounces). One gerah is equivalent to 9 grains or 0.57 grams.
[37] Leviticus 27:25 (King James Bible).
[38] See: Ricardo (1810), p. 2.
[39] See: Gold reserve (Wikipedia article). URL: (accessed 12/11/2018 11:43 AST).
[40] See: World Gold Council (WGC) (2017) How much gold has been mined? World Gold Council. URL: (accessed 12/11/2018).
[41] Image: NJB (2018) Money (1).
[42] See: JM Bullion (2015) How Much Fine Silver Bullion is in the World? JM Bullion. URL: (accessed 11/12/2018).
[43] See: Global Security (2000-2018) How Much is That in Real Money? URL: (accessed 12/11/2018).
[44] See: Denarius (Wikipedia article). URL: (accessed 12/11/2018 12:03 PM).
[45] See: Mask of Tutankhamun (Wikipedia article). URL: (accessed 22/11/2018 13:18 AST).
[46] Image source: Since January 1, 2016 it is possible again to take photographs in the Egyptian Museum in Cairo. The funerary mask of Tutankhamun is certainly the most demanded exhibit (CC BY-SA 3.0), uploaded by Roland Unger. URL: commons/2/27/CairoEgMuseumTaaMaskMostlyPhotographed.jpg (accessed 22/11/2018). For more on the license, see: (accessed 22/11/2018).
[47] See: Coin (Wikipedia article). URL: (accessed 12/11/2018 07:49 AST).
[48] See: Coin (Wikipedia article).
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[50] See: Ancient Greek Coinage (Wikipedia article). URL: (accessed 12/11/2018 07:59 AST).
[51] See: Mark (2012) Tales From Herodotus XIV. Two Stories of the Alcmaeonid Family (translation), posted on August 17, 2012. URL: (accessed 13/11/2018).
[52] See: Croesus (Wikipedia article). URL: (accessed 12/11/2018 08:12 AST).
[53] See: Persian daric (Wikipedia article). URL: (accessed 12/11/2018 08:14 AST).
[54] See: Achaemenid coinage (Wikipedia article). URL: (accessed 12/11/2018 11:33 AST).
[55] See: Achaemenid coinage (Wikipedia article).
[56] See: Ancient Chinese coinage (Wikipedia article). URL: (accessed 12/11/2018 11:40 AST).
[57] See: Qin (state) (Wikipedia article). URL: (accessed 12/11/2018 11:45 AST).
[58] See: Wu Zhu (Wikipedia article). URL: (accessed 12/11/2018 12:01 PM AST).
[59] See:  Walter Scheidel (2009) Rome and China: Comparative Perspectives on Ancient World Empires (Oxford: Oxford University Press), p. 163.
[60] Image source: Type IIIb Achaemenid Daric, c. 420 BC. Public domain. URL: (accessed 22/11/2018).
[61] See: List of largest empires (Wikipedia article). URL: (accessed 12/11/2018 12:22 PM AST).
[62] See: Achaemenid Empire (Wikipedia article). URL: (accessed 12/11/2018 12:24 PM AST).
[63] See: Han dynasty (Wikipedia article). URL: (accessed 12/11/2018 12:27 PM AST).
[64] Image: NJB (2018) The Sound Money Cycle of Growth.
[65] Image: NJB (2018) Government Debt to Collapse of Civilization.
[66] See: Christopher Weber (2018) A Short History of International Currencies, Weber Global Opportunities p. 3. URL: (accessed 20/11/2018).
[67] See: Richard Henry Timberlake, Kevin Dowd (2017) Money and the Nation State: The Financial Revolution, Government and the World Monetary System (London: Taylor and Francis), p. 26.
[68] See: Timberlake, Dowd (2017), p. 26.
[69] See: Zachary A. Goldfarb (2014) Who was the richest man in all of history? The Washington Post, April 1, 2014. URL: (accessed 13/11/2018).
[70] Image source: Bust of Marcus Licinius Crassus located in the Louvre, Paris, uploaded by cjh1452000 (own work). Public domain. URL: (accessed 22/11/2018).
[71] See: Roman Empire (Wikipedia article). URL: (accessed 14/11/2018 07:32 AST).
[72] See: Brilliant Maps (2015) Roman Empire GDP Per Capita Map Shows That Romans Were Poorer Than Any Country in 2015,, May 4, 2015. URL: (accessed 14/11/2018).
[73] That is, a hypothetical unit of currency that has the same purchasing power as the U.S. dollar at any given point in time. See: Peter Foldvari & Bas van Leeuwen (2010) Comparing per capita income in the Hellenistic world: the case of Mesopotamia, 5 July 2010. URL: (accessed 14/11/2018).
[74] See: Foldvari & van Leeuwen (2010).
[75] See: Foldvari & van Leeuwen (2010).
[76] See: Senate of the Roman Empire (Wikipedia article). URL: (accessed 14/11/2018 07:32 AST).
[77] See: Roman currency (Wikipedia article). URL: (accessed 14/11/2018 11:39 AST).
[78] See: Roman currency (Wikipedia article).
[79] See: Roman currency (Wikipedia article).
[80] See: Edict on Maximum Prices (Wikipedia article). URL: (accessed 14/11/2018 12:08 PM AST).
[81] See: Joseph R. Peden (2017) Inflation and the Fall of the Roman Empire, Mises Daily Articles, 10/19/2017. URL: (accessed 14/11/2018).
[82] Image source: Yuan dynasty banknote with its printing plate (1287) (CC BY-SA 3.0), uploaded by PHGCOM (own work). URL: (accessed 22/11/2018). For more information on the license, see: (accessed 22/11/2018).
[83] See: Diocletian (Wikipedia article). URL: (accessed 14/11/2018 12:22 PM AST).
[84] See: Thomas Sowell (2004) A taxing experience,, Nov 25, 2004 12:00 AM. URL: (accessed 14/11/2018).
[85] See: Thomas Sowell (2010) The Thomas Sowell Reader (New York, NY: Basic Books), p. 210.
[86] See: Henry Hazlitt (1971) Poor Relief in Ancient Rome, Foundation for Economic Education (FEE), originally published Thursday, April 01, 1971. URL: (accessed 14/11/2018).
[87] See: Lawrence W. Reed (1979) The Fall of Rome and Modern Parallels, Foundation for Economic Education (FEE), originally published Thursday, April 21, 1979. URL: (accessed 14/11/2018).
[88] See: Reed (1979).
[89][89] See: Reed (1979).
[90] See: Byzantine Empire (Wikipedia article). URL: (accessed 15/11/2018 11:35 AST).
[91] See: Byzantine Empire (Wikipedia article).
[92] See: Bruce Bartlett (1994) How Excessive Government Killed Ancient Rome, Cato Journal, Vol. 14, No. 2, 1994, p. 299. URL: (accessed 15/11/2018 11:35 AST).
[93] Image source: Yuan dynasty banknote with its printing plate (1287) (CC BY-SA 4.0), uploaded by PHGCOM (own work). URL: (accessed 22/11/2018). For more information on the license, see: (accessed 22/11/2018).
[94] See: Bartlett (1994), pp. 300 – 301.
[95] See: End of Roman rule in Britain (Wikipedia article). URL: (accessed 15/11/2018 12:00 PM AST).
[96] See: Odoacer (Wikipedia article). URL: (accessed 15/11/2018 12:08 PM AST).
[97] See: Zheng Xueyi, Yaguang Zhang, John Whalley (2010) Monetary Theory from a Chinese Historical Perspective, National Bureau of Economic Research, Working Paper 16092, June 2010. URL: (accessed 15/11/2018).
[98] See: History of Chinese currency (Wikipedia article). URL: (accessed 15/11/2018 12:25 PM AST).
[99] See: Chao (currency) (Wikipedia article). URL: (accessed 15/11/2018 12:24 PM AST).
[100] See: History of Chinese currency (Wikipedia article).
[101] Image source: Yuan dynasty banknote with its printing plate (1287) (CC BY-SA 3.0), uploaded by PHGCOM (own work). URL: (accessed 22/11/2018). For more information on the license, see: (accessed 22/11/2018).
[102] See: Ming Dynasty (Wikipedia article). URL: (accessed 16/11/2018 14:48 PM AST).
[103] See: Xueyi, Zhang, Whalley (2010).
[104] See: Xueyi, Zhang, Whalley (2010).
[105] See: See: Sycee (Wikipedia article). URL: (accessed 16/11/2018 15:02 PM AST).
[106] See: Spanish dollar (Wikipedia article). URL: (accessed 16/11/2018 15:06 PM AST).
[107] See: Spanish dollar (Wikipedia article).
[108] See: Spanish dollar (Wikipedia article).
[109] See: Tael (Wikipedia article). URL: (accessed 19/11/2018 10:56 AST).
[110] See: History of Chinese currency (Wikipedia article).
[111] See: Silver standard (Wikipedia article). URL: (accessed 19/11/2018 11:03 AST).
[112] See: Renminbi (Wikipedia article). URL: (accessed 19/11/2018 11:06 AST).

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