Saturday, October 27, 2012
A Brief History of Gold and Silver Coins
The first coin ever minted was minted by the Lydian people between 643 and 630 BC. They were made from a combination of gold and silver called electrum which could be mined very easily—in fact, it was often found above ground. The earliest coins were pretty crude; they were hammered out and the imprint of an image was hammered on the ‘coin’. The end result was something that was rarely perfectly round, but functioned perfectly well for its people.
The first gold and silver coins were minted around 560 BC when humans learned how to separate gold and silver coins. Right away, gold was delineated as the most valuable one; it started to be used by the Royalty. The silver coins were used by the more common folk. When the Persians swept in and took over, they also took over the currency structure and kept it the same since they too held gold in the highest regard.
What’s interesting at this point is that gold and silver coins were not only different in their worth and which classes of people used them, but the decision of which coins to use also rested along geographical lines. Greece for example stuck largely with silver coins because silver was far easier to mine. Persia on the other hand stuck with gold coins because gold was easier to get. And when the Romans rose, they used both, depending on where they got their trade from. Silver coins were the norm for a while, but as the Romans expanded their influence, they came into contact with nations that used gold and so the gold currency was absorbed.
When the Romans fell, two kinds of coins emerged from the rubble; the Byzantine coin which held on until it fell in the 13th century and the Islamic Dinar which had been in use for a while before the Romans fell, but became more prominent as the Muslims expanded their territory. However, both of these coins would ‘bow’ before the Venetian Ducat-the first truly standardized gold coin. It weighed precisely 3.5 grams, was round, and was .986 pure gold. The standardization of this coin was important to Venice because the city-state wanted to expand its influence through trade and knew that the best route would be through the best gold coins. It succeeded beyond their wildest expectations; the ducat not only became the global currency of the time, but also inspired many other countries to create their own types of ducats.
Silver coins were also being minted right alongside the gold ones, but they were even more strongly intended for trade. While gold coins were often flaunted more for show than to actually spend (unless a ruler had a lot of bills to pay), silver trade coins were minted all over the known world, used by many people and then brought in from the new world. They were used to prop up old empires such as the British and Spanish and to create new ones such as the new economies in Peru and Mexico. Over time, silver coins would actually end up dwarfing gold, particularly in ‘the New World’ where silver was more easily attainable. America for example had many silver coins that were just used in every day currency and were used from the 1700s right up until 192. England too created silver coins long after they stopped creating gold coins for currency because it was easier to get a hold of and use silver.
Both silver coins and gold coins faded out of currency all over the world by the 1960s. They were getting too expensive to use in every day use and the coins made from things like nickel worked just as well anyway. Instead, silver and gold coins now are usually ‘bullion’ coins; ones that are meant for investing or coins that you would collect or both. This doesn’t decrease their usefulness one bit; some people believe that the gold/silver coin currency may come back someday, or at least that the gold standard will return and furthermore, both of these metals are still fairly valuable in their own rights.