Money In The Iron Age

At the end of the Stone Age, the Chinese once again took the lead. Around 1,000 B.C., they produced mock cowry shells made of base metal. In addition they used tools made of metal (knives and spades), as money. This was the world’s first metal currency! It gradually evolved into round pieces of the metal to be used as a means of exchange. The Chinese even solved the problem of carrying large number of such ‘coins’. They put holes in them to facilitate carrying them as a necklace!(This too was an idea which persisted till modern times, for as a kid I remember seeing a Pakistani one paisa coin with a large hole in it’s centre.) This was an age in which the common folk bartered, the moneyed gentry used base metal for exchange; while the ruling class accumulated precious metals and stones.

The reasons for this are obvious. Base metal was still a precious commodity, as whatever was available was barely sufficient for producing weapons and the tools required for the other important trades. Kings in particular needed huge quantities of base metal for equipping their armies. Apart from use of force, only precious metals could induce actual producers/suppliers of the needed metals and equipment to come up with the quantities required –but the use of force could be counter productive - and so treasuries to accumulate such ‘capital’ became a compulsion. Most famous of these are the fabled and now lost” King Solomon’s Mines’. Such treasuries were to become the fore-runners of our present day ‘State Treasuries and Banks’!

But with some kings this compulsion became an obsession, best exemplified in the story of Halaku Khan’s destruction of Baghdad. After ordering the massacre of every living being in the city, he invited the defeated King to a banquet. Here, instead of food ,the dining dishes were heaped full of gold, silver ,diamonds, rubies and other precious stones. On the poor man’s protesting how he could possibly eat them,Halaku counter questioned “then why did you gather them”, thereafter he ordered his beheading! This Incident was not the first evidence of anti-capitalistic thinking in history. Much before him the story of “Stephens” the first Christian martyr shows the communistic basis of early Christianity. But of course we digress, so back to a history of money.

Eventually even base metal became common and lost its value. And while we can assume that bartering including use of base metal continued to survive amongst the peasentry, its days amongst the increasingly prosperous merchant class and nobility were over. Amongst them, precious metals- in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value. Till around 500 B.C., pieces of silver were used as a means of payment. The control of money had even till then not been instutionalised!

Eventually however this form of money was replaced by coins of precious metals.These were also embossed with images of various gods and kings to mark their value. Such coins were first minted by the king of Lydia (Turkey), but after his defeat by the Persians metal coinage was adopted as the means of exchange throughout The Persian Empire.The Greek, Macedonian, and Roman empires built upon this ,till eventually officially minted bronze, gold, and silver coins became the predominant means of exchange of value throughout the world. The fact that these coins were composed of scarce metals such as bronze, gold, and silver, which had far greater intrinsic value,facilitated the process.Henseforth only Kings and Emporers could produce and control the use of money.Monetary control had finally been instutionalised and monopolised by the rulers.