Origins of Gold as Money

Abstract

Gold and silver have been used as money throughout history. Each civilization had to organize its monetary system, the foundation of its internal and external trade as well as the safety of its wealth. Monetary organization was similar across nations: it consisted of adopting a monetary law defining the unit of account, the standard of value, and types of coins in terms of weights and shapes to be allowed to circulate. The law organized the mints—administration, offices, and machinery—to issue the coins. Mints were to issue coins in compliance with laws for metal content, weight, size, and emblem. The mints issued coins for bullion brought to them without any limitation. Their role was a pure conversion of metal into coins without any influence on the quantity of money in circulation. The quantity of metal to be coined was purely decided by people who owned bullion and needed to change it into coins. Coins were standardized and stamped so they became instantly identifiable and circulated with perfect confidence in trade.