Although used commonly in currency now, gold was not always the most popular of the precious metals used throughout the history of money. Read on to find out more.
Gold has been used by humans as far back as the Chalcolithic or Bronze Age. Early artisans of the time period used gold to fashion jewellery and other adornments. Golden artifacts have been found in the Balkans that predate the Christian era by four millennia.
The use of gold as proto-money has been traced back to the fourth millennium BCE when the Egyptians used gold bars of a set weight as a medium of exchange, as had been done earlier in Mesopotamia with silver bars. The first gold coins of the Grecian age were struck in Lydia at a time approximated to the year 700BC.
Contrary to popular belief, precious metals have rarely been used outside large societies.
Gold, in particular, is sufficiently scarce that it has only been used as currency for a few relatively brief periods in history. Gold and silver were used as the most common form of money throughout history. Although gold and silver were commonly used to mint coins, other metals were also used. For instance, Ancient Sparta minted coins from iron to discourage its citizens from engaging in foreign trade. In the early seventeenth century Sweden lacked more precious metal and so produced ‘plate money’ which were large slabs of copper approximately 50 cm or more in length and width, appropriately stamped with indications of their value.
The discovery of touchstone, which is a piece of fine-grained dark schist or jasper used for testing alloys of gold by observing the colour of the mark which they made on it, led the way for metal-based commodity money and coinage. Any soft metal can be tested for purity on a touchstone, allowing one to quickly calculate the total content of a particular metal in lump. Gold is a soft metal, which is also hard to come by, dense and storable. As a result, monetary gold spread very quickly from Asia Minor where it first gained wide usage, to the entire world.
Using a system such as the touchstone, still required several steps and mathematical calculation. The touchstone allows one to estimate the amount of gold in an alloy, which is then multiplied by the weight to find the amount of gold alone in a lump. To make this process easier, the concept of standard coinage was introduced. Coins were pre-weighed and pre-alloyed, so as long as the manufacturer was aware of the origin of the coin, no use of the touchstone was required. Coins were typically minted by governments in a carefully protected process, and then stamped with an emblem that guaranteed the weight and value of the metal. It was, however, extremely common for governments to assert that the value of such money lay in its emblem and thus to subsequently reduce the value of the currency by lowering the content of valuable metal.
Gold coinage began to be minted again in Europe in the 13th century. Frederick the II is credited with having re-introduced the metal to currency during the time of The Crusades. During the 14th century, Europe had all together converted from use of silver in currency to minting of gold. Vienna transferred from minting silver to gold during 1328.
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