We All Know How Important Money Is. But Who Invented It?

JL Matthews

King Midas didn’t invent money — but did his neighbor?

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“So Midas, king of Lydia, swelled at first with pride when he found he could transform everything he touched to gold; but when he beheld his food grow rigid, and his drink harden into golden ice, then he understood that this gift was a bane and in his loathing for gold, cursed his prayer.”
-Claudian

The myth of King Midas is at least 2,500 years old: the story narrates how the gods rewarded King Midas after he had provided hospitality to the satyr Silenus. Midas famously wished for everything he touched to turn into gold.

The moral of the story is clear. Wealth (and the power to increase it) does not bring happiness — indeed, it can be destructive. Yet, all these thousands of years later, the lust for wealth and money is as strong as ever.

So where did money come from? Who invented it? How did it spread?

Barter

In the broadest sense, money has always existed. As long as people have been able to assign value to objects, some things have been more prized than others, and therefore, more valuable.

Ultimately, money is simply a means of exchange, an abstraction of value. Before the invention of coinage, in-kind transactions or barter facilitated trade between people. This process still happens today, of course. If you ever traded snacks in the cafeteria as a child, you’ve engaged in it.
One bag of chips in exchange for a cookie? Sure. It’s simple — and unique to humans. Don’t believe me? Try bartering with a hungry wolf — you won’t get very far.

It’s likely that the key jump from barter to money came with writing. Once it was possible to write down what had been given and what was owed, the parties involved could make promises to deliver items and services that they did not have on hand at the moment. And it was this concept of an ‘I Owe You’ which eventually led to the next step.

Bullion

Think about the difficulties of being an ancient farmer. You might have some barley that you were willing to exchange for the necessities of life — food, clothing, shelter.

Yet, trading for those items would be difficult if the only way to procure them was by carrying your barley everywhere you went.

But what if, instead, you had an object that symbolized your barley? Or in an even more abstract sense, a token that symbolized your ability to reciprocate trade? Then you could give the token to someone else in exchange for a good or service. The recipient could then visit you later, return the token, and collect your barley (or whatever else you had that they needed).

Precious metals facilitated this type of delayed exchange. The shape of the token varied, depending on the culture. In Crete, locals shaped their metal ingots to look like ox-hides; the Chinese used ‘knife money,’ and the Greeks used bundles of metal rods.

While these unmarked metals did facilitate commerce, they were bulky, non-standardized, and conspicuous. A better system was needed to promote trade over long distances and ensure a fair exchange of goods and services.

Coins, The Lydians, and The Greeks

The first coins emerged in the Anatolian kingdom of Lydia, which was located in the western half of modern-day Turkey. Herodotus, writing in the 5th century BCE, identified the Lydians as the first minters of coins:

“So far as we have any knowledge, they [the Lydians] were the first people to introduce the use of gold and silver coins, and the first who sold goods by retail.”

Backing up Herodotus, modern Numismatists place the invention of coinage around 630 BCE, probably in or around the Anatolian city of Ephesus. The exact purpose (religious or mercantile) of these first coins remains mysterious. But we do know that the practice of shaping gold, silver, and electrum (a naturally occurring gold/silver alloy) spread rapidly. Within a few years, King Alyattes of Lydia became the first sovereign to mint coins.

Over the next century, coinage spread throughout the civilizations of the Eastern Mediterranean as well as further East, into Persia. By the 400s BCE, Greek city-states, such as Athens and Syracuse, had taken coinage to an art form, as evidenced by their stunning tetradrachms.

With the rise of Alexander the Great, and the spread of Greek culture throughout the fertile crescent and into Western India, coinage grew even more widespread. By 350 BCE, coins appeared as far away as in China.

Further Reading on the web:

Wikipedia — Coinage Portal

Ancient History Encyclopedia — Greek Coinage

Featured Image by Joshua Hoehne on Unsplash

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JL Matthews is a writer with interests spanning history, humor, tv/film, parenting, and more. His work has appeared in numerous publications, and he is a 6x Top Writer on Medium. Follow him on News Break, Medium, and Twitter for updates and latest work.

Raleigh, NC
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