Pragma Synesi – interesting bits

Compendium of interesting bits I come across, with an occasional IMHO

Origins of money


The Cradle of Cash

When money arose in the ancient cities of Mesopotamia, it profoundly and permanently changed civilization.

by Heather Pringle

The scene in the small, stifling room is not hard to imagine: the scribe frowning, shifting in his seat as he tries to concentrate on the words of the woman in front of him. A member of one of the wealthiest families in Sippar, the young priestess has summoned him to her room to record a business matter. When she entered the temple, she explains, her parents gave her a valuable inheritance, a huge piece of silver in the shape of a ring, worth the equivalent of 60 months’ wages for an estate worker. She has decided to buy land with this silver. Now she needs someone to take down a few details. Obediently, the scribe smooths a wet clay tablet and gets out his stylus. Finally, his work done, he takes the tablet down to the archive.For more than 3,700 years, the tablet languished in obscurity, until late-nineteenth-century collectors unearthed it from Sippar’s ruins along the Euphrates River in what is now Iraq. Like similar tablets, it hinted at an ancient and mysterious Near Eastern currency, in the form of silver rings, that started circulating two millennia before the world’s first coins were struck. By the time that tablet was inscribed, such rings may have been in use for a thousand years.When did humans first arrive at the concept of money? What conditions spawned it? And how did it affect the ancient societies that created it? Until recently, researchers thought they had the answers. They believed money was born, as coins, along the coasts of the Mediterranean in the seventh or sixth century B.C., a product of the civilization that later gave the world the Parthenon, Plato, and Aristotle. But few see the matter so simply now. With evidence gleaned from such disparate sources as ancient temple paintings, clay tablets, and buried hoards of uncoined metals, researchers have revealed far more ancient money: silver scraps and bits of gold, massive rings and gleaming ingots.

In the process, they have pushed the origins of cash far beyond the sunny coasts of the Mediterranean, back to the world’s oldest cities in Mesopotamia, the fertile plain created by the Tigris and Euphrates rivers. There, they suggest, wealthy citizens were flaunting money at least as early as 2500 B.C. and perhaps a few hundred years before that. “There’s just no way to get around it,” says Marvin Powell, a historian at Northern Illinois University in De Kalb. “Silver in Mesopotamia functions like our money today. It’s a means of exchange. People use it for a storage of wealth, and they use it for defining value.”

Many scholars believe money began even earlier. “My sense is that as far back as the written records go in Mesopotamia and Egypt, some form of money is there,” observes Jonathan Williams, curator of Roman and Iron Age coins at the British Museum in London. “That suggests it was probably there beforehand, but we can’t tell because we don’t have any written records.”

Just why researchers have had such difficulties in uncovering these ancient moneys has much to do with the practice of archeology and the nature of money itself. Archeologists, after all, are the ultimate Dumpster divers: they spend their careers sifting through the trash of the past, ingeniously reconstructing vanished lives from broken pots and dented knives. But like us, ancient Mesopotamians and Phoenicians seldom made the error of tossing out cash, and only rarely did they bury their most precious liquid assets in the ground. Even when archeologists have found buried cash, though, they’ve had trouble recognizing it for what it was. Money doesn’t always come in the form of dimes and sawbucks, even today. As a means of payment and a way of storing wealth, it assumes many forms, from debit cards and checks to credit cards and mutual funds. The forms it took in the past have been, to say the least, elusive.

From the beginning, money has shaped human society. It greased the wheels of Mesopotamian commerce, spurred the development of mathematics, and helped officials and kings rake in taxes and impose fines. As it evolved in Bronze Age civilizations along the Mediterranean coast, it fostered sea trade, built lucrative cottage industries, and underlay an accumulation of wealth that might have impressed Donald Trump. “If there were never any money, there would never have been prosperity,” says Thomas Wyrick, an economist at Southwest Missouri State University in Springfield, who is studying the origins of money and banking. “Money is making all this stuff happen.”

Ancient texts show that almost from its first recorded appearance in the ancient Near East, money preoccupied estate owners and scribes, water carriers and slaves. In Mesopotamia, as early as 3000 B.C., scribes devised pictographs suitable for recording simple lists of concrete objects, such as grain consignments. Five hundred years later, the pictographs had evolved into a more supple system of writing, a partially syllabic script known as cuneiform that was capable of recording the vernacular: first Sumerian, a language unrelated to any living tongue, and later Akkadian, an ancient Semitic language. Scribes could write down everything from kingly edicts to proverbs, epics to hymns, private family letters to merchants’ contracts. In these ancient texts, says Miguel Civil, a lexicographer at the Oriental Institute of the University of Chicago, “they talk about wealth and gold and silver all the time.”

In all likelihood, says Wyrick, human beings first began contemplating cash just about the time that Mesopotamians were slathering mortar on mud bricks to build the world’s first cities. Until then, people across the Near East had worked primarily on small farms, cultivating barley, dates, and wheat, hunting gazelles and other wild game, and bartering among themselves for the things they could not produce. But around 3500 B.C., work parties started hauling stones across the plains and raising huge flat-topped platforms, known as ziggurats, on which to found their temples. Around their bases, they built street upon twisted street of small mud-brick houses.

To furnish these new temples and to serve temple officials, many farmers became artisans–stonemasons, silversmiths, tanners, weavers, boatbuilders, furniture makers. And within a few centuries, says Wyrick, the cities became much greater than the sum of their parts. Economic life flourished and grew increasingly complex. “Before, you always had people scattered out on the hillsides,” says Wyrick, “and whatever they could produce for their families, that was it. Very little trade occurred because you never had a large concentration of people. But now, in these cities, for the first time ever in one spot, you had lots of different goods, hundreds of goods, and lots of different people trading them.”

Just how complex life grew in these early metropolises can be glimpsed in the world’s oldest accounting records: 8,162 tiny clay tokens excavated from the floors of village houses and city temples across the Near East and studied in detail by Denise Schmandt-Besserat, an archeologist at the University of Texas at Austin. The tokens served first as counters and perhaps later as promissory notes given to temple tax collectors before the first writing appeared.

By classifying the disparate shapes and markings on the tokens into types and comparing these with the earliest known written symbols, Schmandt-Besserat discovered that each token represented a specified quantity of a particular commodity. And she noticed an intriguing difference between village tokens and city tokens. In the small communities dating from before the rise of cities, Mesopotamians regularly employed just five token types, representing different amounts of three main goods: human labor, grain, and livestock like goats and sheep. But in the cities, they began churning out a multitude of new types, regularly employing 16 in all, with dozens of subcategories representing everything from honey, sheep’s milk, and trussed ducks to wool, cloth, rope, garments, mats, beds, perfume, and metals. “It’s no longer just farm goods,” says Schmandt-Besserat. “There are also finished products, manufactured goods, furniture, bread, and textiles.”

Faced with this new profusion, says Wyrick, no one would have had an easy time bartering, even for something as simple as a pair of sandals. “If there were a thousand different goods being traded up and down the street, people could set the price in a thousand different ways, because in a barter economy each good is priced in terms of all other goods. So one pair of sandals equals ten dates, equals one quart of wheat, equals two quarts of bitumen, and so on. Which is the best price? It’s so complex that people don’t know if they are getting a good deal. For the first time in history, we’ve got a large number of goods. And for the first time, we have so many prices that it overwhelms the human mind. People needed some standard way of stating value.”

In Mesopotamia, silver–a prized ornamental material–became that standard. Supplies didn’t vary much from year to year, so its value remained constant, which made it an ideal measuring rod for calculating the value of other things. Mesopotamians were quick to see the advantage, recording the prices of everything from timber to barley in silver by weight in shekels. (One shekel equaled one-third of an ounce, or just a little more than the weight of three pennies.) A slave, for example, cost between 10 and 20 shekels of silver. A month of a freeman’s labor was worth 1 shekel. A quart of barley went for three-hundredths of a shekel. Best of all, silver was portable. “You can’t carry a shekel of barley on your ass,” comments Marvin Powell (referring to the animal). And with a silver standard, kings could attach a price to infractions of the law. In the codes of the city of Eshnunna, which date to around 2000 B.C., a man who bit another man’s nose would be fined 60 shekels of silver; one who slapped another in the face paid 10.

How the citizens of Babylon or Ur actually paid their bills, however, depended on who they were. The richest tenth of the population, says Powell, frequently paid in various forms of silver. Some lugged around bags or jars containing bits of the precious metal to be placed one at a time on the pan of a scale until they balanced a small carved stone weight in the other pan. Other members of the upper crust favored a more convenient form of cash: pieces of silver cast in standard weights. These were called har in the tablets, translated as “ring” money.

At the Oriental Institute in the early 1970s, Powell studied nearly 100 silver coils–some resembling bedsprings, others slender wire coils–found primarily in the Mesopotamian city of Khafaje. They were not exactly rings, it was true, but they matched other fleeting descriptions of har. According to the scribes, ring money ranged from 1 to 60 shekels in weight. Some pieces were cast in special molds. At the Oriental Institute, the nine largest coils all bore a triangular ridge, as if they had been cast and then rolled into spirals while still pliable. The largest coils weighed almost exactly 60 shekels, the smallest from one-twelfth to two and a half shekels. “It’s clear that the coils were intended to represent some easily recognizable form of Babylonian stored value,” says Powell. “In other words, it’s the forerunner of coinage.”

The masses in Mesopotamia, however, seldom dealt in such money. It was simply too precious, much as a gold coin would have been for a Kansas dirt farmer in the middle of the Great Depression. To pay their bills, water carriers, estate workers, fishers, and farmers relied on more modest forms of money: copper, tin, lead, and above all, barley. “It’s the cheap commodity money,” says Powell. “I think barley functions in ancient Mesopotamia like small change in later systems, like the bronze currencies in the Hellenistic period. And essentially that avoids the problem of your being cheated. You measure barley out and it’s not as dangerous a thing to try to exchange as silver, given weighing errors. If you lose a little bit, it’s not going to make that much difference.”

Measurable commodity money such as silver and barley both simplified and complicated daily life. No longer did temple officials have to sweat over how to collect a one-sixth tax increase on a farmer who had paid one ox the previous year. Compound interest on loans was now a breeze to calculate. Shekels of silver, after all, lent themselves perfectly to intricate mathematical manipulation; one historian has suggested that Mesopotamian scribes first arrived at logarithms and exponential values from their calculations of compound interest.

“People were constantly falling into debt,” says Powell. “We find reference to this in letters where people are writing to one another about someone in the household who has been seized for securing a debt.” To remedy these disastrous financial affairs, King Hammurabi decreed in the eighteenth century B.C. that none of his subjects could be enslaved for more than three years for failing to repay a debt. Other Mesopotamian rulers, alarmed at the financial chaos in the cities, tried legislating moratoriums on all outstanding bills.

While the cities of Mesopotamia were the first to conceive of money, others in the ancient Near East soon took up the torch. As civilization after civilization rose to glory along the coasts of the eastern Mediterranean, from Egypt to Syria, their citizens began abandoning the old ways of pure barter. Adopting local standards of value, often silver by weight, they began buying and selling with their own local versions of commodity moneys: linen, perfume, wine, olive oil, wheat, barley, precious metals–things that could be easily divided into smaller portions and that resisted decay.

And as commerce became smoother in the ancient world, people became increasingly selective about what they accepted as money, says Wyrick. “Of all the different media of exchange, one commodity finally broke out of the pack. It began to get more popular than the others, and I think the merchants probably said to themselves, ëHey, this is great. Half my customers have this form of money. I’m going to start demanding it.’ And the customers were happy, too, because there’s more than just one merchant coming around, and they didn’t know what to hold on to, because each merchant was different. If everyone asked for barley or everyone asked for silver, that would be very convenient. So as one of these media of exchange becomes more popular, everyone just rushes toward that.”

What most ancient Near Easterners rushed toward around 1500 B.C. was silver. In the Old Testament, for example, rulers of the Philistines, a seafaring people who settled on the Palestine coast in the twelfth century B.C., each offer Delilah 1,100 pieces of silver for her treachery in betraying the secret of Samson’s immense strength. And in a well-known Egyptian tale from the eleventh century B.C., the wandering hero Wen-Amon journeys to Lebanon to buy lumber to build a barge. As payment, he carries jars and sacks of gold and silver, each weighed in the traditional Egyptian measure, the deben. (One deben equals 3 ounces.) Whether these stories are based on history or myth, they reflect the commercial transactions of their time.

To expedite commerce, Mediterranean metalsmiths also devised ways of conveniently packaging money. Coils and rings seem to have caught on in some parts of Egypt: a mural painted during the fourteenth century B.C. in the royal city of Thebes depicts a man weighing a stack of doughnut-size golden rings. Elsewhere, metalsmiths cast cash in other forms. In the Egyptian city of el-Amarna, built and briefly occupied during the fourteenth century B.C., archeologists stumbled upon what they fondly referred to as a crock of gold. Inside, among bits of gold and silver, were several slender rod-shaped ingots of gold and silver. When researchers weighed them, they discovered that some were in multiples or fractions of the Egyptian deben, suggesting different denominations of an ancient currency.

All these developments, says Wyrick, transformed Mediterranean life. Before, in the days of pure barter, people produced a little bit of everything themselves, eking out a subsistence. But with the emergence of money along the eastern Mediterranean, people in remote coastal communities found themselves in a new and enviable position. For the first time, they could trade easily with Phoenician or Syrian merchants stopping at their harbors. They no longer had to be self-sufficient. “They could specialize in producing one thing,” says Wyrick. “Someone could just graze cattle. Or they could mine gold or silver. And when you specialize, you become more productive. And then more and more goods start coming your way.”

The wealth spun by such specialization and trade became the stuff of legend. It armed the fierce Mycenaean warriors of Greece in bronze cuirasses and chariots and won them victories. It outfitted the tomb of Tutankhamen, sending his soul in grandeur to the next world. And it filled the palace of Solomon with such magnificence that even the Queen of Sheba was left breathless.

But the rings, ingots, and scraps of gold and silver that circulated as money in the eastern Mediterranean were still a far cry from today’s money. They lacked a key ingredient of modern cash–a visible guarantee of authenticity. Without such a warranty, many people would never willingly accept them at their face value from a stranger. The lumps of precious metal might be a shade short of a shekel, for example. Or they might not be pure gold or silver at all, but some cheaper alloy. Confidence, suggests Miriam Balmuth, an archeologist at Tufts University in Medford, Massachusetts, could be won only if someone reputable certified that a coin was both the promised weight and composition.

Balmuth has been trying to trace the origins of this certification. In the ancient Near East, she notes, authority figures–perhaps kings or merchants–attempted to certify money by permitting their names or seals to be inscribed on the official carved stone weights used with scales. That way Mesopotamians would know that at least the weights themselves were the genuine article. But such measures were not enough to deter cheats. Indeed, so prevalent was fraud in the ancient world that no fewer than eight passages in the Old Testament forbid the faithful from tampering with scales or substituting heavier stone weights when measuring out money.

Clearly, better antifraud devices were needed. Under the ruins of the old city of Dor along northern Israel’s coast, a team of archeologists found one such early attempt. Ephraim Stern of Hebrew University and his colleagues found a clay jug filled with nearly 22 pounds of silver, mainly pieces of scrap, buried in a section of the city dating from roughly 3,000 years ago. But more fascinating than the contents, says Balmuth, who recently studied this hoard, was the way they had been packaged. The scraps were divided into separate piles. Someone had wrapped each pile in fabric and then attached a bulla, a clay tab imprinted with an official seal. “I have since read that these bullae lasted for centuries,” says Balmuth, “and were used to mark jars–or in this case things wrapped in fabric–that were sealed. That was a way of signing something.”

All that remained was to impress the design of a seal directly on small rounded pieces of metal–which is precisely what happened by around 600 B.C. in an obscure Turkish kingdom by the sea. There traders and perfume makers known as the Lydians struck the world’s first coins. They used electrum, a natural alloy of gold and silver panned from local riverbeds. (Coincidentally, Chinese kings minted their first money at roughly the same time: tiny bronze pieces shaped like knives and spades, bearing inscriptions revealing places of origin or weight. Circular coins in China came later.)

First unearthed by archeologists early this century in the ruins of the Temple of Artemis in Ephesus, one of the Seven Wonders of the ancient world, the Lydian coins bore the essential hallmarks of modern coinage. Made of small, precisely measured pieces of precious metal, they were stamped with the figures of lions and other mighty beasts–the seal designs, it seems, of prominent Lydians. And such wealth did they bring one Lydian king, Croesus, that his name became a byword for prosperity.

Struck in denominations as small as .006 ounce of electrum–one-fifteenth the weight of a penny–Lydia’s coinage could be used by people in various walks of life. The idea soon caught on in the neighboring Greek city-states. Within a few decades, rulers across Greece began churning out beautiful coins of varied denominations in unalloyed gold and silver, stamped with the faces of their gods and goddesses.

These new Greek coins became fundamental building blocks for European civilization. With such small change jingling in their purses, Greek merchants plied the western Mediterranean, buying all that was rare and beautiful from coastal dwellers, leaving behind Greek colonies from Sicily to Spain and spreading their ideas of art, government, politics, and philosophy. By the fourth century B.C., Alexander the Great was acquiring huge amounts of gold and silver through his conquests and issuing coins bearing his image far and wide, which Wyrick calls “ads for empire building.”

Indeed, says Wyrick, the small change in our pockets literally made the Western world what it is today. “I tell my students that if money had never developed, we would all still be bartering. We would have been stuck with that. Money opened the door to trade, which opened the door for specialization. And that made possible a modern society.”


January 10, 2008 - Posted by | economics, history

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: