off with a cool 324,000 kilograms of silver, equivalent to 75 million denarii. In this way they cornered most of the available silver and ensured that the denarius would become the major currency in the western Mediterranean.
In Europe nowadays, if you dig up ancient coins, the chances are they will be Roman. This is because, in the second and third century BCE, the Romans minted many millions of them. However, since even they could not seize sufficient precious metal to make these coins, they steadily reduced the silver content. In the mid-260s CE in Britain, which the Romans had conquered, they replaced the denarius with the ‘radiate’, which by then was down to just 0.5 per cent silver. This did not prove very popular. Britons and others started to turn their noses up at coins whose value was set by imperial decree and reverted to weighing out precious metal. Indeed, following the collapse of the Roman Empire, most of the barbarian kingdoms wisely stuck to gold.
The seventh century saw the emergence of the first Muslim communities – spreading out from Mecca, one of the principal trading cities of Arabia, to establish a caliphate that would eventually extend from what is now Afghanistan right across to Spain. They too started to use coins. The prophet Muhammad himself was generally uneasy about money and is supposed to have said ‘money puts my community to the test’. But his victorious followers found it easier to go with the financial flow, and generally absorbed the monetary systems of the countries they conquered, though carefully replacing any Christian crosses with Islamic symbols that varied according to the religious orientation of the ruler, Sunni or Shi’a. Initially they used gold, largely from Africa, but later switched to silver. By the 11th century in Egypt, one dinar, derived from the Latin ‘denarius aureus’, could pay for a servant for a month, or buy around 100 kilograms of wheat.
China’s ‘little brothers’
Coins were also appearing on the other side of the world. In China at around the same time, when the kings were trading they sometimes used various commodities, including grain or cloth or knives or spades. But gradually they too started to adopt forms of token payment through coins. At first they felt more comfortable if these actually looked like miniature spades or knives. But eventually they found it easier to make metal disks. Distinctively, they punched a square hole in the middle, to make the coins easier to carry in bulk by passing a string through the hole. The Chinese are also fervent believers in the power of luck and some of their coins, particularly during the 10th century, were considered very auspicious and were known as ‘little brothers’. Across Asia you can still buy these, and their multiple successors and copies, as amulets or temple souvenirs.
Unlike European rulers, the Chinese royals and nobles resisted the temptation to put their own faces on the coins. Indeed it would not be until 1912 that the first Chinese face appeared – that of Sun Yat-sen, president of the newly formed Republic of China. China also originated paper money. But it seemed in no hurry to do so. Having invented paper around 100 CE the Chinese did not produce their first paper money until 1,000 years or so later, during the Song dynasty. This was a matter of convenience. At that point, China was divided up into many regions, each of which used its own currency, often in the form of low-value iron coins. Moreover, some regions forbade the export of coins. Itinerant merchants found this very awkward, and so started to buy goods not with coins, but with ‘exchange notes’, a kind of IOU which promised to pay the bearer the appropriate amount of cash or gold at a later date in a more convenient place. If the buying merchant who wrote the note had a good reputation, then that note, before it expired, was as good as gold.
Later, Chinese rulers latched on to this innovation and started to issue such notes themselves. But they did not put any time limit, and offered the more general promise to the bearers that they could exchange the notes at the mint for gold or silver or, if preferred, less-tattered notes. By the time of the Mongol Yuan dynasty, from the 13th century, the government permitted only paper money. When the Venetian merchant Marco Polo arrived in 1275, he discovered that China, as so often, was some way ahead of the rest of the world.
Pounds to pesos to dollars
London, by contrast, in the first millennium CE was still in the numismatic dark ages. Indeed, even coinage was rare until the eighth century when King Offa of Mercia issued the first silver penny. Subsequently some of the Saxon kingdoms started to issue silver coins, known as ‘sterlings’, of which they could turn out around 240 from a pound weight of silver. Hence the term a pound of sterlings, later abbreviated to a ‘pound sterling’. At this point most documents were written in Latin, in which the word for pound is ‘libra’, which is why the symbol for the pound is a crossed L, or £ in its more ornate form. Eventually, after the Normans conquered England, they developed an accounting system that also involved 240 pennies to the pound. This was to last, though with pennies made of copper, until 1971 when the UK decimalized the coinage, retaining the pound but dividing it instead into 100 pence – popularly, if inelegantly, abbreviated to ‘pee’.
Elsewhere in Europe there were the first stirrings of the almighty dollar. One origin was the St Joachim valley in what is now the Czech Republic, which had a number of silver mines. The German for valley is Tal and the coins produced there were often called thalers. This suffered many variations in spelling and pronunciation and, given the well-known gift for languages among English-speaking peoples, the thaler was often mispronounced as the dollar.
Other coins in continental Europe at this time included in Spain the ‘peso’ which is simply Spanish for ‘weight’. The prosaic peso does, however, have the distinction of having provoked an early example of global inflation. In 1544 the conquistadores who were trampling across South America came across in Potosí, in what is now Bolivia, a mountain which consisted largely of silver ore. For three or more centuries they excavated this treasure trove, delivering in all more than 62,000 metric tons of silver to Spain. This was an excellent result for the Spanish, who used this to pay off many of their debts. But it was less beneficial for the toiling Amerindian miners who dug out the ore, largely as slave labor. And it was also a mixed blessing for many other people back in continental Europe since, over the period 1500 to 1600 as the silver flowed across the Atlantic, prices rose fivefold. This was then transmitted to other countries. In England, for example, in the 200 years or so following the discovery of the Americas, prices rose three and a half times.5 If the citizens of Europe had not heard about the discovery of the New World in any other way, they would have felt the impact in their pockets.
The peso was also widely used in Britain’s American colonies. Here it became known as the Spanish milled thaler or dollar. So when the US designated its own currency in 1792 it also adopted the word dollar. But where did the $ sign come from? Surprisingly, its origins have been lost. One explanation is that it came from the standard abbreviation of the peso, a P, for which the plural was PS. If you just keep the vertical stroke of the P and superimpose the S on it you get the $. Quite so. On the other hand, the dollar sign often has two vertical strokes, prompting another explanation. The Spanish dollar had two vertical lines on the reverse to represent the Pillars of Hercules, and it is said that these lines eventually got transferred to the US dollar. Since no-one is entirely sure where the $ came from, feel free to invent your own explanation.
Finding funny money
Of course not everyone was trading with coins. A favorite observation of Europeans travelling to exotic parts was that these foreigners seemed to be using many odd things for money. Travellers venturing across Africa and the Pacific, for example, often ‘discovered’ people exchanging a wide variety of objects. One of the most common was salt. In 1520 a Portuguese visitor to what is now Ethiopia found people trading with blocks of salt ‘cut out of mountains’. English colonists in North America found the native people in Virginia using clam shells, while visitors to parts of India found local people using cowrie shells. Travellers to the Pacific encountered an even more diverse array of possibilities including teeth and, in one of the more arcane options, ‘the little feathers near the eye of fowls’.6
While
