The Birth of Money

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Speaker 1 It's the ancients on history hit. I'm Tristan Hughes, your host.
In today's episode, we are exploring the story of the earliest coins ever minted, the birth of money.

Speaker 1 It's a topic that takes us back over 2,500 years to what is today western Turkey and the ancient kingdom of Lydia, home to the wealthy trading city of Sardis and famously rich kings such as Croesus, the man from whom we have the saying, rich as Croesus.

Speaker 1 Now our guest today is the TV producer, author and professor Alan Arrera.

Speaker 1 Alan, he has recently written this extraordinary new book all about gold and how this precious resource has shaped human history.

Speaker 1 Now one key part of Alan's book, it explores the invention of money, of coinage, and how intertwined this story is with changing human attitudes towards gold. Alan here is a wonderful storyteller.

Speaker 1 We cover everything from the earliest known use of gold over 6,000 years ago with the varna culture in present-day Bulgaria to the first financial crash in history.

Speaker 1 Lots of great information about gold and early money coming your way. I hope you enjoy.

Speaker 1 Alan, it is wonderful to have you on the podcast today.

Speaker 2 Well, it's wonderful to be here. It really is.

Speaker 1 We're talking all about the birth of money today and the use of gold thousands of years ago and the story of the first coinage, early money.

Speaker 1 Alan, this feels it's closely entwined with this continual human fascination with gold, which has been there for over millennia.

Speaker 2 Yes, it has, and it's very extraordinary because gold is itself a very weird substance. The behavior when people discovered gold is extremely weird as well.

Speaker 2 The first thing when they discovered the oldest gold known in the world, which turns out to have been in Bulgaria on the shores of the Black Sea at a holiday resort called Varna, probably wasn't a holiday resort in 4700 BC, but it's quite a while back.

Speaker 2 That's part of the point. Troy seems, the story of the Trojan War seems a long time ago to us.
Well, to people living through the Trojan War, this story is as far back again.

Speaker 2 We are talking about a very, very distant history, prehistory, when it was inconceivable that people were doing metalwork in 4700.

Speaker 2 And then this turns up, this cemetery, containing hundreds of graves, a fair number of which, over 60, have got gold in them, worked gold.

Speaker 2 And the graves are very strange and tell you something, but it requires quite a lot of interpretation to figure out what it's telling you.

Speaker 2 There's only one grave which has a human body with a substantial quantity of gold. A third of all the gold that's in this graveyard is on one body.

Speaker 2 And that one body is quite a tall man compared to the others. He had a gold headdress.
He had a gold scepter in his right hand. And he had a big gold disc.
Now this is where the story begins.

Speaker 2 And what you're looking at is the coronation regalia that was being used used in Westminster Abbey last year.

Speaker 1 So these are like 6,000-year-old kings who are using gold almost as part of their status.

Speaker 2 Nearly 7,000 years old. We don't know that the man was a king, except the stuff he's carrying is what we associate with a royal regalia.

Speaker 2 Why? Where does this idea come from? It comes out of nowhere. There isn't a predecessor to this.
And this is where the story of gold actually begins.

Speaker 2 No, that cemetery is really a culture we know nothing about. It disappeared from the face of the earth.

Speaker 2 Six of the graves contain not just no human being, but no human being, and quite a lot of gold. Three of them contain scepters with no bones in there.

Speaker 2 Three of them, so they and they associate also with weaponry. And the one that I call the Lord of Varna

Speaker 2 has got weaponry, and his weaponry is amazing. He has got a flint sword, 35 centimeters long.

Speaker 1 A flint sword?

Speaker 2 Flint, yes. Wow.
And it comes from Switzerland. I mean, this is a very, very long journey.
He's got material from the Alps, the Italian Alps. So there are huge journeys being undertaken.

Speaker 2 There are very long connections with people very far away. at this period when the rest of the Balkans is hunter-gatherers.

Speaker 2 This is associated with a small group of the earliest agricultural settlements there.

Speaker 1 Alan, it's really interesting. I mean, it might seem obvious to yourself, but to me, less so.

Speaker 1 But what you were talking about there, you know, with the Varna culture and these gold ornaments with these very high status figures.

Speaker 1 So it suggests, well, it shows that the earliest use of gold by humans, it's not they discover gold and they decide straight away to turn it into currency, to use it as currency.

Speaker 1 It's used for a very different purpose. First off, it's a status symbol to highlight these very important figures, do we think?

Speaker 2 Well, you say a status symbol. I think it's something different from that.
Okay. I think it's a direct connection with eternity.

Speaker 2 That is part of the status, of course. You have to be entitled.
But

Speaker 2 the thing that makes gold so strange

Speaker 2 is that it is incorruptible. So it doesn't belong in the mortal world.

Speaker 2 So you have people who've discovered this substance, which is unlike anything else in that it's absolutely malleable, absolutely ductile.

Speaker 2 You can change it in any way you like without altering it, because you can put it back together again after you finish working it, and it turns back into what it was.

Speaker 2 You can bury it in the ground for lifetimes, and when you dig it up again, it'll look exactly as it did when you buried it. There's nothing else like that on earth.

Speaker 1 So, can you imagine these people seeing it and thinking it almost as a supernatural material for supernatural beings?

Speaker 2 It is material that is somehow in the changing world, but not of the changing world.

Speaker 2 So it has a connection, obviously, an obvious connection to the sun, to the heavens, to eternity.

Speaker 2 And so there is an association with something that we could interpret as divine power or the authority of the heavens is being granted by something here on earth. to people, but certain people.

Speaker 1 So how long is it before

Speaker 1 gold changes in its meaning, at least in certain places of the world, in that it goes from meanings like as we've just mentioned there, to ultimately the first evidence of money emerging and gold being used as currency?

Speaker 2 Well money is a very difficult concept

Speaker 2 because I would distinguish between money and being used for exchange. Money is something with defined value and it's being used for exchange long before it has a defined value.

Speaker 2 And the problem for them is people have to work out how to use it for exchange. But it acquires this exchange identity because of its connection to eternity.

Speaker 2 I mean, even in the modern world, people regard gold as something which contains intrinsic value. That if you have a piece of gold, somehow that is more secure as a store of value.

Speaker 2 than anything you else you could have. This is, of course, entirely potty.
It's a psychological psychological thing. It has no other kind of reality.

Speaker 2 But that's how we think.

Speaker 2 And I would also just quickly like to point out that a very similar burial to the Vana burial that I just mentioned turned up in northern Peru at a place called Sipan, dated about 300 AD, where there is a figure who's referred to now as the Lord of Sipan.

Speaker 2 who has a gold headdress, a gold wrap scepter, and a big gold disc. Now, Now, I don't think this is cultural transmission.

Speaker 2 I don't think anybody in the world remembered what had been done in Varna and they certainly didn't get to Peru 5,000 years later and show everybody what a king looked like.

Speaker 2 These are ideas which formed independently. This is what gold inspired.

Speaker 2 I talk to people who work with gold and they say that they have the feeling that gold talks to them and tells them what they can do with it. Very odd substance.

Speaker 2 You first see that happening, I think, in the second millennium BC, where the first sign, I think, of what we're talking about is Hammurabi, King Hammurabi, holds a ceremony.

Speaker 2 He has had soldiers coming from Mari, which is a town in Syria, a very special town, first purpose-built town, which was built on a circular plan.

Speaker 2 as a trading center, crossroads, and also manufacturing center, making bronze. And

Speaker 2 soldiers who come from Mari, he holds a palace reception for them, and it's well recorded.

Speaker 2 And at this palace reception, he gives out what he calls sun discs, golden disks that are somehow connected to the sun, and they are given to the soldiers.

Speaker 2 You could see that as the first gold payment to mercenaries. I don't think they saw it quite that way.
but it's kind of the origin.

Speaker 2 And one of the features of it is that these sun disks have got a specified value stated on them in shekels. And the value that's stated on them is wrong.

Speaker 1 Oh, okay. So King of Babylon, the great king of Babylon, Hammurabi, he's messed up here with the values.

Speaker 2 He hasn't messed up. He's done it quite deliberately.
Oh. He has given them coins which are identified by him as a divine figure and king.
as having a value beyond the value of the metal.

Speaker 2 So it's enhanced by its source, by the fact that it's been given by him. So it's a very peculiar kind of thing that's going on, but this is the start of a process that will become important.

Speaker 1 And talk us through this process then, Alan, because I mean, you mentioned sundisks.

Speaker 1 I might think of early Bronze Age Ireland or Britain, where you have also those beautiful gold lunala, what do they call their necklaces kind of things, aren't they, as well? Those gorgeous...

Speaker 1 the torques as well, you see those emerging. So these gold objects are starting to emerge across the world.
And then you have this kind of exchange of gold too.

Speaker 1 How does that process develop into ultimately changing into the birth of what we might call money?

Speaker 2 Well, you start with the idea that if you are engaged in long-distance trade, you need to have some portable thing to be exchanged. We're not dealing with barter.

Speaker 2 Barter doesn't work for substantial trade. Firstly, what you may be trying to sell may be something which is perishable and you're selling it in the summer.

Speaker 2 What you want to acquire is perhaps much later in the year and with a different quality.

Speaker 2 So you need something where the value is being stored by the person who's selling so that they can then later use it to acquire the other things, not barter. So you need some symbolic material.

Speaker 2 The material that gets used quite quickly is electrum. Electrum is gold that is found in riverbeds, which is alloyed naturally, mostly with silver, to some extent with copper and other materials.

Speaker 2 It's called

Speaker 2 in the Sumerian period and the Egyptian period, it's called white gold because there's so much silver in it that it's white.

Speaker 2 The Greeks call it electrum, which is actually the word for amber, which also gives you an indication of what the material is like.

Speaker 2 But it also tells you that electrum can vary in its content from one lump to the next.

Speaker 2 So you've got traders traveling with electrum because it has this quality of goldness, but it's not pure gold, but it's very useful to do deals with.

Speaker 2 And you get bars being produced by the late about second millennium BC,

Speaker 2 bars of electrum for trade. And these marked in divisions.
And archaeologists refer to them as chocolate bars. You can break a bit off and do your deal with that bit.

Speaker 2 And these turn up, for for example, at Troy. They're not come from Troy, and we don't know quite where they've come from, but they travel around with the traders.

Speaker 2 And the traders are traveling long distances.

Speaker 2 There's a trade route that goes from Babylon to Troy. That's 2,000 kilometers.
That's a heck of a walk. It's going to take months.
So you want the material you're trading to be as compact as possible.

Speaker 2 And it's much easier to do a trade with a bar of electrum than with 15 such bars of silver, which is what you would need to get the sense of equivalence, or 200 sacks of wool or whatever.

Speaker 2 So the bar of electrum is a very handy, useful object.

Speaker 2 And the problem is that to do the trade, at the point where an exchange is being done, you've got to have an assessment of what this material actually contains.

Speaker 2 So there has got to be at the trade center an expert who is trusted by everybody who will assay the lumps lumps of material and tell you what they're actually worth.

Speaker 2 And if you don't do the trade, you've got to go somewhere else and find another equally qualified, equally trusted dealer.

Speaker 1 That must be one of the most highly sought-after jobs at that time for Wayne the Purity.

Speaker 2 Yes, they used a touchstone to do it.

Speaker 2 You know, a touchstone is a stone where you have sticks of different grades of gold, different levels of alloy, and you make a mark on the stone with it, and you compare it with the mark made by the lump that you're testing.

Speaker 2 And we still use that word touchstone to have that sense of jeopardy, something that it's a heightened moment testing the alloy. Much easier to find a way round it.

Speaker 2 Now, at the crossroads on this trade route up towards Troy is the kingdom of Lydia. The king of Lydia, his kingdom is rooted in Sardis.
Sardis is a huge market center, a bazaar of a fabulous scale.

Speaker 2 The world comes through Sardis.

Speaker 2 And the market in Sardis, for travelers who have been traveling for two, three months before they get there, is a great and exciting and thrilling place and a wonderful place to do deals.

Speaker 2 And the king comes up with this wonderful notion that he will offer the traders a deal.

Speaker 2 If they hand over the electrum they brought he'll get it assessed and he'll give them back tokens made of electrum to his own specifications and stamped with his personal badge.

Speaker 2 And these are the first coins.

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Speaker 1 And when is this? I've got to my notes. Is this like the late 7th century BC we're talking now? Yes.
Kingdom of Lydia. Yeah.

Speaker 1 And this is often regarded as one of the great, one of the great birthplaces of money with these early tokens of this king Aleates?

Speaker 2 Aleates, exactly. And you get an invention of currency going on in China.
You get an invention of currency going on in India.

Speaker 2 Probably roughly the same time. But it's not well documented and it's difficult to work out exactly what's happening.
Whereas in Lydia, it's much easier. The source material is much better.

Speaker 2 The archaeology is also much better.

Speaker 2 And we know pretty much what Aleates was doing in producing these. And it was hugely popular.
And lots of other mints start up doing the same thing because this is now business.

Speaker 1 Is this mints across the kingdom of Lydia or is it stretching beyond the kingdom?

Speaker 2 Beyond, beyond the cost doing it on the coast. And they're also being not just necessary kingdoms.
It's some individual businessmen seem to be

Speaker 2 minting coins to sell to traders. So long as you trust the source and you trust the mark on it, then it works.

Speaker 2 The Lydian stamp was a lion's head, and that was the identity of the king was there on the coin.

Speaker 2 And everybody seemed to have been very happy with that for quite a while.

Speaker 1 I mean, Alan, before we go on to the next part, I want to ask a bit more about that, because I know you'll be going on to the next part otherwise. Yeah, yeah, sure.

Speaker 1 The archaeology from Lydia at that time, you mentioned how it seems to be this great bazaar, this amazing marketplace.

Speaker 1 And surely then with the minting of these early coins, if they're made of electrum, archaeological record, do we have a rich record of these earliest coins surviving?

Speaker 2 We do have. Oh, yes.
And, well, there was a huge conference a couple of years ago, three years ago, on white gold, which is an enormous study of the archaeology of this material.

Speaker 2 Lydia, I should say, is a very odd place.

Speaker 2 It's odd because it's not part of Sumerian culture, it's not part of Greek culture, and its language, although it has a written language, is barely known at all.

Speaker 2 Herodotus writes quite a bit about Lydia and Sardis. To his astonishment, there is a huge monument to Aleates

Speaker 2 there after he dies. And it is on the monument, the monument is paid for by the citizens.
It's not celebrating anything divine.

Speaker 2 And the Lydians themselves don't seem interested in the notion of a connection between gold and divinity. And they don't use it for religious purposes.

Speaker 2 They don't have golden shrines like so much of the rest of the world.

Speaker 1 They have a more commercial approach so with that alan to try and understand a bit more about the context as to this king creating this coinage so it's based on having that significant commerce that great trade route so lots of gold and electrum coming in access to gold but is it also having to have that stable kingdom that prosperous kingdom at the same time is it all those things combined which allow for the creation of currency you're absolutely right he has a powerful army of horse archers which again separates them them from the other cultures around.

Speaker 2 And they are well trained and very effective. And they're there to protect the market and the merchants.
They keep the whole thing in balance. This will become important in that kingdom.

Speaker 2 So to Herodotus' astonishment, the majority of the donors to that great monument, to Aleates, were women, who Herodotus, being a Greek, assumes they're all prostitutes.

Speaker 2 But that tells you, you know, how different this is from Greek or Persian or Sumerian culture. Women are playing a formidable public role and are part of the commerce of the place.

Speaker 2 This all works very well. So the coins themselves contain forty percent gold, sixty percent silver.
It's and but the value is not the metal, the value is the stamp.

Speaker 11 Oh, okay.

Speaker 2 That's what tells you you can trust this. And you don't have to see what the coin is made of.
And in fact, they're gilded to stop them being tested by touchstones.

Speaker 2 So you can't actually find out what's in the coin unless you destroy it. And this is a good working system until the balance of value of the two metals moves apart completely.

Speaker 1 And so what is the cause of this?

Speaker 2 Now, what has happened, and this has been unclear up to now, what had happened was that the amount of gold available for the market had changed dramatically.

Speaker 2 And nobody's really looked at this connection before, but what had happened, the big thing that had happened, was the destruction of Jerusalem.

Speaker 1 So early 6th century BC, Nebuchadnezzar I, king of Babylon, sacking Jerusalem.

Speaker 2 Nebuchadnezzar, king of Babylon, becomes king in 605 and in 587 seizes the temple of Jerusalem. But it's not a quick and easy process and it's a very extraordinary one.

Speaker 2 What's happened is that when Assyria was great, Assyria attacked the northern kingdom of Israel. Israel was split into two parts.
The northern kingdom was attacked by Assyria.

Speaker 2 Its inhabitants fled south.

Speaker 2 A lot went to Jerusalem, carrying their treasure and carrying all the religious goods, tons of stuff, which all goes into the temple in Jerusalem, which is already a great golden shrine.

Speaker 2 And the Bible is very clear about the massive quantities of gold in there.

Speaker 2 And this is part of the general culture of the area in which the gods are associated very much with gold and a space that is created for them of gold allows a special human being who is divinely connected to be in there with the gods.

Speaker 2 The word after all in the languages of the time and in modern Hebrew for a temple is actually the word house.

Speaker 2 This is the house of a god and that's why it is spray-painted to an incredible scale with gold.

Speaker 2 It just is like an explosion in a gold factory going into Solomon's temple. And then there's more come down from the north.

Speaker 2 Assyria, obviously, Sennacherib decides that he's got to go on and grab Jerusalem as well, but he can't do it. It's a very well-defended place.
And that collapses.

Speaker 2 Then Nebuchadnezzar comes to power after the defeat of Assyria, and he has a great building program. He wants to rebuild Babylon.
To do this, he's going to need a lot of money.

Speaker 2 And the reason he's going to need a lot of money is because Babylon has no access to the natural resources needed to rebuild it. It's got no timber, it's got no stone, and it's got no metal.

Speaker 2 What it's got is agriculture, very prosperous and successful agriculture.

Speaker 2 And he's going to have to monetize this, but he's got to get hold of more gold from somewhere so that he can buy the enormous quantities of stuff he wants to rebuild Babylon.

Speaker 2 Where can he get this gold from?

Speaker 2 During the defense of Jerusalem, the king of Jerusalem had invited Babylonian delegation to come and have a look at the temple, presumably because he wanted to show them that he could afford to finance a rebellion by them against Assyria.

Speaker 2 It didn't go anywhere. But the prophet Isaiah was very annoyed about this having been done because one day you're going to get into serious trouble here.
You should never have shown them all that.

Speaker 2 And it means that Nebuchadnezzar now knows where he can go to get the gold. And this is the only possible explanation of his campaign against Jerusalem, I I think.

Speaker 2 Because Jerusalem is not on a trade route. It's not on a military road.

Speaker 2 The two big roads, one called the Sea Route, which goes up along the coast, the other called the King's Road, which goes up the Jordan Valley, they both avoid Jerusalem.

Speaker 1 Yes, it's not like a Damascus or Tyre or Gaza, is it? In that sense? No, it's not.

Speaker 2 It is not got that sort of...

Speaker 2 Why would you bother attacking it on a large scale? Nebuchadnezzar makes his first attack. He gets bought off, basically.
He goes away with a certain amount of gold. And what he does is interesting.

Speaker 2 And the Bible is very clear about this. He takes the gold vessels and he cuts them up.
He's not treating them as sacred booty. He's having them converted into money.
They are for sale.

Speaker 2 That's why he chops them up. There's no other reason why you would do that.
He's not going to use them. He's not going to show them off.
No. He's handing them out to the merchants.

Speaker 2 And clearly the merchants say it's not enough. So he goes back a year later.
And he's got to get it. And he knows there's a lot there.
And he can't get at it. So this is a siege that goes on.

Speaker 2 It looks like 30 months. 30 months of a great empire using its massive army to besiege a place which is of no military significance.
And when it finally succeeds, it doesn't just conquer it.

Speaker 2 It totally destroys it. It takes it apart stone by stone.
Where have they hidden the gold? And Jerusalem doesn't exist at the end of this. And he's taken out a hell of a lot of gold.

Speaker 2 And we know what the effect of that is, because we have these wonderful tables of prices, this extraordinary set of cuneiform tablets stored in the British Museum, which the temple records every month the prices of six commodities for centuries, including the period we're talking about.

Speaker 2 I think these are probably the finest financial records in existence, better than our records of our own economy, better than America's records of its economy.

Speaker 2 We have hundreds of years of price data of the same things measured in the same currency.

Speaker 2 And each one of those monthly records includes the positions of the planets, which is why these are called the astronomical diaries. We can therefore date all the prices.

Speaker 1 So what does this amazing resource provide us, Alan, or provide you, for learning more about how all of this gold taken from the Temple of Jerusalem, how it invigorates the Babylonian economy, affects the merchants.

Speaker 1 Are they making electrum coinage from it? What is the effect of this great influx of gold that has come to the Babylonian economy?

Speaker 2 The effect of this influx of gold is not what Nebuchadnezzar intended. It's exactly the same thing we see it happening later on with the Spanish in America.

Speaker 2 The Spanish think they take all the gold out of America, they'll be rich.

Speaker 2 No, what will happen is they'll take all the gold out of America and the gold will fall in value because there's too much of it. And that's what happened to Babylon.
The gold falls in value.

Speaker 2 It's a slower process than we're used to in the modern world because distances are greater, communications are slower. But from the time that the temple is seized, the value of gold falls steadily.

Speaker 2 This is because prices are in silver and gold and silver are in a ratio to each other. So the increase in the quantity of gold reduces the value of gold.
So the gold-silver ratio changes.

Speaker 2 And so, gold, then you have to regard it as a commodity, like barley, like anything else, and its value falls in relation to silver.

Speaker 2 And you see that in the price changes in these tables, which don't measure gold price, but they do give you silver prices for the commodities. And you can see this huge shift in commodities.

Speaker 2 And it's interesting, the person who published this incredible scholarly work, publishing all the information from these tables of the late 1990s, says there's this fall in prices and we don't know why.

Speaker 1 Is this almost, I mean, sorry, Alan, to bring kind of a modern analogy here, but if you have like shockwaves from this going across the known world, all the way to like Turkey and Lydia and places like that from Babylon, is this almost like the first financial crash in history?

Speaker 2 Yes. Wow.
Yes. Well, it must be the first because this is the first time they've been currency anyway to crash.

Speaker 4 Yes.

Speaker 2 And a friend of mine called Paul Craddock, who is the metallurgist who was working for the as an archaeologist with the British Museum, excavated in Sardis and he thought he'd found a mint that was producing the coins.

Speaker 2 And then he realized, as the excavation went on, this wasn't a mint. What they were doing in this place was taking the coins to pieces.
They were destroying the currency.

Speaker 2 And he found the whole of the methodology by which they did this, by which they take electron coins, turn them into foil, and then disintegrate them in order to separate the gold from the silver.

Speaker 2 Because it had got to a point where the face value of the coin was less than the value of the silver in it.

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Speaker 7 Put scratchers on your list.

Speaker 1 Oh, scratchers? Good idea.

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Speaker 10 Thanks, random singing people.

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Speaker 1 It's amazing how the actions of that Babylonian king affects the monetary system that is happening, you know, hundreds, if not thousands of miles to the west in western, what is Turkey, Anatolia today, in Lydia.

Speaker 2 Yeah, but this is where the traders are going.

Speaker 1 That is where the traders are going to be, of course.

Speaker 2 The trade routes are 3,000 kilometers long. This is what binds this world together.
There is a direct trade route that goes from Babylon to the Greeks in the Mediterranean.

Speaker 2 That's why I was stressing how what long distances things have traveled, even to Varna thousands of years before. People move enormous distances.
Objects move enormous distances.

Speaker 2 If they're wanted, they'll get them. And so that's what was happening.
The impact of value. I mean, it travels slowly.
It's a ripple. But it happens.

Speaker 2 And you can see it happening and you can see the value of gold commodities halving. It's overproduction of gold, creating inflation.

Speaker 1 And so how does this affect what happens next?

Speaker 2 next well what's happened obviously if they're destroying the currency the whole trade route is there's a word that starts with f i can't remember what it is um it's in a poor way so by the time aniates dies his whole currency has perished his successor is a chap called croesus who most people will have heard of rich as rich as croesus rich as croesus now one of the reasons that croesus is rich as croesus as aniates was also very rich the river that goes through sardis unlike any other, the gold that's found in that river is 100% pure gold.

Speaker 2 It's 24 caram. Wow.
It is not alloyed with anything. So you've actually got a source of real good gold there.
And so Croesus comes up with this marvelous idea.

Speaker 2 He will produce a new coinage made of 100% pure gold. And alongside it, a parallel coin of silver.
And these two coins will replace the old one that was the two metals joined together.

Speaker 2 And that will mean that shifts between the value of one and the other can be coped with.

Speaker 2 And it's coped with very simply actually, because when the when the value relative value changes, he actually changes the relative sizes of the coins. And he's now introduced currency stability.

Speaker 2 And you now have

Speaker 2 really very significantly the introduction of the gold standard and a gold coin which

Speaker 2 we still use.

Speaker 2 The one-third stator that Croesus introduced is the same size and weight, not quite exactly, but almost exactly, as the sovereigns they're minting, the gold sovereigns they're minting in London now.

Speaker 2 But instead, the symbols that he put on that coin were the lion facing down a bull, and the two of them are glaring at each other head-on.

Speaker 2 Now, the one change that we've made is that we now have the lion and the unicorn, one horn instead of two.

Speaker 2 But it's actually, you know, it's a gold, it's the gold currency and this has been the basis of the world's economy ever since with catastrophic consequences so at that time when croesus introduces these reforms of fully gold fully silver to avoid that issue of electrum coins before is it now that the amount of gold in a coin doesn't directly determine the value of it as you say it's a fixed rate oh it does it does it does the amount of coin in the amount of gold in the coin now is the value of the coin.

Speaker 2 Okay. That's why this is a disaster.

Speaker 2 Because what's happened is that what he's done is to convert money into absolutely a commodity. If you buy Croesus' gold coin, you're not actually depending on the stamp to validate it.

Speaker 2 What you're depending on is the certainty that it's pure gold, easily checked. and its weight.
That is the value of the coin. And that is why it leads to catastrophe.
Because

Speaker 2 once your money is itself, the pieces of money are themselves worth something, that's one big problem.

Speaker 2 And the second big problem is it's not just that they're worth something, but they have a connection to a religious connection, which has a drastic effect on what happens to them.

Speaker 2 After all, if you think about it, the price of gold is going up. all the time.
It seems to be steadily on the increase. Now, the amount of gold in the world can never go down.

Speaker 2 One of the features of gold is it's absolutely indestructible, except by very peculiar activity. So the amount of gold will constantly increase.

Speaker 2 The gold that was in the Roman Empire, the gold that was in the Babylonian Empire, is all still with us and probably is in bits of gold that we buy in jewelry shops now. There's no way of knowing.

Speaker 2 But its...

Speaker 2 religious significance means that there are other cultures which are much less interested interested in its monetary value than in its religious value.

Speaker 2 And so they will keep taking it out of circulation to offer it to the gods.

Speaker 2 For example, the mercenaries who are being paid with gold coins are not going to use that to go and buy a loaf of bread with.

Speaker 2 For a start, the gold coin is much too valuable, but also it has a totally different significance for them.

Speaker 2 So what used to be regarded as gold hoards buried in the ground for safekeeping in times of trouble,

Speaker 2 now most of them turn out to be not that at all. What they are is offerings placed in the ground for security, safety, protection.

Speaker 2 So you have towns in Britain which have gold coins placed in the ground at the entrance to the town as a guarantee of divine protection.

Speaker 2 You have enormous quantities of gold being used to celebrate divinity in India, in China.

Speaker 2 Look at those huge Buddhas, tons and tons of gold, temples in India with billions of pounds worth of gold in their vaults belonging to Krishna. Gold is being taken out of circulation all the time.

Speaker 2 Now, the thing about currency is that it has a function. Its function is to make trade possible.

Speaker 2 The Chinese worked out a long time ago, about the time that all this was happening, that currency was best regarded as not having value in itself.

Speaker 2 And it's better if you use tokens that don't have significant value.

Speaker 2 If you give them significant value, you run into trouble because you have to have enough of these tokens to make gold flow in a fluid way. If you produce too many, then you have inflation.

Speaker 2 If you produce too few, you have deflation. You've got to get the balance right.

Speaker 2 Now, the problem with the fact that gold is constantly being taken out, taken out, taken out, disappearing, always to the East, by the way, always to China and India,

Speaker 2 is that you run out of gold. You keep running out of gold.
And this causes one continual crisis after another, right through into modern times.

Speaker 1 Right through into. So this isn't just with Croesus, and this isn't tied to the fall of Croesus.
This is something that just goes on and on and on.

Speaker 1 And yet, at the same time, you are seeing, I mean, how long is it before, I mean, Croesus's monetary reforms, can we say, like, do start spreading across, say, the ancient Mediterranean, Egypt, Near East, and further?

Speaker 2 It's erratic. It's erratic because, for example, Persia doesn't have a market.
So when Persia destroys Babylon, it changes the whole significance of currency.

Speaker 2 Circulation of gold currency diminishes greatly and it becomes much more of

Speaker 2 a medal, a prize, a gift.

Speaker 2 But then it comes back again as other cultures see it as a way of paying mercenaries particularly.

Speaker 2 So

Speaker 2 it's not a continual story. It's one which is constantly being repeated and rediscovered.
And from time to time, it looks as though gold is disappearing as a currency system.

Speaker 2 This happens not only in the ancient world, when you have a period when the Greeks think that gold currency is an evil, and it's the currency of tyrants. And the currency you want is silver.

Speaker 2 So you go through a period like that, which is changed by Macedonia, which is very keen on gold currency, right up to when Rome falls, or falls because it runs out of gold, can't pay its armies anymore.

Speaker 2 The gold is all gone. And you go into a Europe which develops a new kind of methodology of how you pay people and how you pay your soldiers, which we call feudalism.
And they don't have any gold.

Speaker 2 And there's probably one bathtub of gold available to the whole of Europe in the 11th, 12th centuries. But then it comes back again through the Arab world.

Speaker 2 And you get these crises coming back and back and back.

Speaker 2 I mean, in the 19th century, where after the California gold rush, it was widely believed among Europeans that the California source of gold was endless.

Speaker 2 So when Germany decided to switch from having a silver currency to a gold one, the Germans were quite untroubled by the fact there might not be any gold for them to use for money.

Speaker 2 But they were wrong about California, and there wasn't any gold for them to use as money. And the result was an enormous financial crisis, devastating.
in the 1870s.

Speaker 2 So this is a problem that keeps on coming back. Gold has been the worst thing you can imagine as a currency.

Speaker 1 And to think that it all began with Aleates and his gold and silver coins, and then, of course, Croesus with this gold as well. I mean, Alan, this has been a fantastic chat.

Speaker 1 I must admit, the last thing I want to say before we wrap up entirely is it's so interesting how the birth of money as a currency, it's such a it's that shift in the human psyche back then of shifting gold, not just from the religious sphere, but into like the secular, the trading, the commerce sphere as well.

Speaker 2 It's a massive moment and an attempt almost to to to change that ideology those beliefs it is absolutely and you see the extraordinariness of it in america when the spanish arrive in america they arrive in a highly sophisticated world of large cities which don't have money they don't use money at all and a large part of the colonial enterprise of the spanish is to drive the indigenous people of South America, particularly, into having to use money, because this is the only way that Spain can get a taxation system that allows them to withdraw money.

Speaker 2 They're after the gold. The only way they're going to get it, if they can force people to trade using gold and take some of it as tax.
But Spain has

Speaker 2 entered a world where the idea of currency is unknown, where large cities survive without having markets of the kind that Eurasia had, but still survive perfectly well with a different system of exchange completely.

Speaker 2 And gold having an enormous sacred purpose, very important, very much related to life, energy, rebirth, and safety, but not money.

Speaker 1 Alan, this has been an absolutely fantastic chat. And as hinted at there, you can talk about so much more than just the birth of money in ancient history.

Speaker 1 You can talk all the way down to the 19th and 20th centuries, indeed, to gold and its use in the present day, which leads me to ask you about your book. It is called...

Speaker 2 It is called Gold, How It Shaped History. And it's come out at the very moment when a large number of countries are accelerating their possession of gold to an extraordinary and unprecedented extent.

Speaker 2 And it's not reported, but Russia has massively increased its acquisition of gold. So have countries in Eastern Europe like Poland, as well as India and China.

Speaker 2 And this is because of something that they think it's making them safer in the face of something coming down the road that they're expecting. And we don't even talk about it.

Speaker 1 We don't indeed. Well, poignant point to leave on, Alan, but it just goes to me to say thank you so much for taking the time to come on the podcast today.

Speaker 2 Why wouldn't I? Thank you. It's lovely to have the opportunity.
Really is.

Speaker 1 Well, there you go.

Speaker 1 There was Alan Herrera talking through the story of the birth of money, the origins of coinage, and how this story, it is closely intertwined with gold and changing human attitudes towards gold throughout ancient history.

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Speaker 1 That's enough from me, and I'll see you in the next episode.

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Speaker 3 Dashing through the store, Dave's looking for a gift.

Speaker 4 One you can't ignore, but not the socks he picks.

Speaker 5 I know, I'm putting them back.

Speaker 6 Hey, Dave, here's a tip.

Speaker 7 Put scratchers on your list.

Speaker 1 Oh, scratchers?

Speaker 8 Good idea.

Speaker 9 It's an easy shopping trip.

Speaker 4 We're glad we could assist.

Speaker 10 Thanks, random singing people.

Speaker 12 So be like Dave this holiday and give the gift of play.

Speaker 11 Scratchers from the California lottery.

Speaker 13 A little play can make your day.

Speaker 14 Please play responsibly. Must be 18 years or older to purchase play or claim.