Back in the days before we had central banks that printed dollars / pounds / euros, etc., how was the value of currency established? Was it based solely on the weight of the metal, so that it didn’t matter whose picture was on the coin, or how many florins or dollars or whatever was stamped on the coin, which country minted it, and so on? If so, would a chunk of silver or gold that hadn’t been minted (nugget, unmarked bar, whatever) have also been equally valuable as a coin?
This is maybe a more complex question than you think. A few relevant points:
1: A coin produced by a recognized, trusted government had a known weight and purity, so you could easily transact in them without needing scales or calculations.
2: In any given time and place, multiple different metals were used for currency, and there might have been an officially-fixed exchange rate between them. So you could get, for instance, a coin made out of gold but being marked as worth one pound of silver (the British pound, the Italian lira, and several other currency units were all originally defined as a pound of silver).
3: Just like now, there were a lot of governments who decided to make their problems go away just by making more money. In the era of specie coins, this was done by abasing the metal: Instead of a coin made out of solid gold or whatever, you’d make it with an iron or lead core coated with gold. If this was done slowly and gradually, such that the monetary unit remained relatively stable, people might still trade in those coins within the realm, but outside of the realm, who knows. Foreigners might still want those coins if the nation behind them was sufficiently rich and powerful, or they might shun them in favor of other nations’ purer coins.
Shouldn’t that be “debasing”?
In those eras pricing was a lot more fluid too.
In a local village everyone there knew each other and used the same coins.
In a seaport or a city near a border that was much less true. So how much a merchant charged you for a hat depended a bit on how trustworthy you looked, how local your accent was, which mix of coin types you proffered, etc.
Agree completely in spirit.
OTOH with the manufacturing tolerances of the day and the fact both gold & silver are soft, and coins got a lot of use, it would be easy for a careless merchant to shortchange themselves.
In fact an early form of counterfeiting was the practice of shaving coins. Whack a couple percent off 100 coins and you have precious metal equal to 2 whole coins. If you’re careful your handiwork just looks like normal wear.
Whether a coin could be used internationally depended less on whether the issuing government was recognised and trusted than whether the particular coin issue was. The early US used Spanish dollars, not because people trusted the notoriously shambolic Spanish administration but because they were available and fairly reliable. Maria-Theresa thalers continued to circulate as trade coins for generations after the Austrian Empire ceased to exist (and countries like the UK and US sometimes minted new thalers for African/Asian trade rather than try to pass their own coins).
Bimetallism - having bullion (rather than token) coins based on more than one metal - was always problematic since the market values of the metals tended to move against each other. And fixed exchange rates are always accompanied unofficially by black market rates.
Debasing currency was usually done by reducing the purity of the metal rather than introducing voids or plugs (which was harder to do and easier to spot) . The Roman silver sestertius was ultimately debased down to ~2% silver before it collapsed completely. The effect of debasing the coinage (like printing money) was inflation - and however scary the government, people were rarely willing to accept 4 sestertii worth of silver (in the form of debased coins) for 5 sestertii worth of goods. Instead Gresham’s Law kicked in - everyone hoarded the old, good coins and spent the debased ones, thus reducing the money supply.
Which is why coins started being made with reeded (grooved or milled) edges:
Reeded edges are often referred to as “ridged” or “grooved” (US usage), or “milled” (UK usage).[1] Some coins, such as United States quarters and dimes, have reeded edges. Reeding of edges was introduced to prevent coin clipping and counterfeiting.[2][3]
Coin weights were historically somewhat nominal, as medieval Europe didn’t have the metalworking techniques required to purify metals beyond a certain point. The UK Pound Sterling originated with Offa of Mercia, who established a nominal coinage based on the Troy pound or 5,400 grains. There was no actual pound coin and this was just the total weight and value of 240 silver pennies.
Wikipedia refers to Mercian coinage as being “99.9%” pure silver but I find that unlikely. In any event, later English rulers issued coins with more alloys to make them harder.
Historically US “silver” coins were 90% silver. That includes dimes, quarters, halves and the dollar coin. In 1965 the mint eliminated all the silver in dimes and quarters
The 1971 through 1979 Eisenhower dollars are 40%. Since 1986 the dollar coin has been 99.9% and they are commonly known as ASE, American Silver Eagle.
1964 Kennedy halves are 90%. 1965 through 1970 are 40%
Coins that are minted with 90% silver (pre-1965) are worth about 21 times their face value today. So a dime is worth $2.10
I think you’re referring to the ten dollar coin. Dollar coins are made from base metals like everything else, and anyway, an eagle is ten dollars (just like a dollar is ten dimes, a dime is ten cents, and a cent is ten mills: All five of them are officially-defined monetary units).
In fact, that is why the coins are milled (have grooves along the edges) even today when there is no point in shaving. Just a historical artifact.
No. mixdenny is talking about the American Silver Eagle bullion coin.
The values of precious-metal coins were directly tied to the metal’s value When King Edward IV introduced the “light penny” with 20% less silver than the “heavy penny”, it became 20% less valuable – at least after the (how many?) weeks it took for people to become aware of the debasement. (Of course debtors who had borrowed heavy pennies and could now repay with light pennies were delighted.)
The “best” coins were those like the gold florins of Florence, whose mint ensured a constant amount of precious metal over centuries. Money-changers often placed gold coins they were sure of into sealed packets, attesting to their value.
When I saw thread title, a different question occurred to me: WHY did the precious metals retain almost constant value over centuries? The prices of wheat or iron or copper fluctuated up and down – why not gold and silver? I think the main reason is that their primary use as money enforced a stable value. Of course the stable prices could not be maintained, especially in the late 19th century as huge increases in productivity meant the monetary gold base was inadequate; trustworthy paper money became essential. (Silver was plentiful and its use might have postponed the crises, but by that time most major countries had switched to a de facto gold standard.)
Did they?
I’m currently reading Harry Turtledove’s Hellenic Traders books, about two merchants in 4th Century BC Mediterranean, and one of the points which is occasionally brought up is the difference in value of the various currencies. I can’t offhand remember specifics, but there are times when the sales price of something will depend on where the drachma being used to pay was minted.
I recently learned of the less common 1964 Accented Hair Kennedy Half Dollar. Sure enough, it does look kind of … accented.
https://www.pcgs.com/news/differences-between-1964-accented-hair-and-regular-kennedy-half-dollars
They had money changers as far back as the ancient world. I once read about a religious radical in Jerusalem who famously whipped some money changers and threw them out of his father’s house. I think the money changers would examine the foreign coins to determine the type of metal they were made from and assign it a value in local coinage. Of course they’d take a cut for every Greek coin they exchanged for Jewish coins.
Nitpick: The Eisenhower dollars intended for circulation were composed of the same cupronickel/copper clad as the quarters and dimes. There were also some Eisenhower dollars composed of 40% silver that were sold at a premium by the mint to collectors. Also, the last Eisenhower dollars of this series were minted in 1978. However, if you want to be really pedantic (I think that’s encouraged here) there were also commemorative dollars featuring Eisenhower released in 1990 and 2013 coimposed of 90% silver as well as the 2015 presidential dollar featuring Eisenhower with the same composition as the Sacajawea dollar and the other presidential dollars.
Jerusalem at the time was part of the Roman Empire, and so the coins that most people used most of the time were Roman coins. But the Roman coins bore the image of the current Caesar, which made it prohibited to use them on the Temple grounds. And it was necessary to use coins on the Temple grounds, because Jewish law called for the sacrifice of certain kinds of animals under certain circumstances, and it was impractical for Jews living all over to bring their own animals all the way to Jerusalem, so they’d bring money instead and buy the animals there.
So you’d bring your Roman money with you to Jerusalem, because that’s what you had. Then you’d go to a money-changer just outside the Temple grounds, and exchange your Roman money for Jewish money that didn’t have any graven images on it. Then you’d take your Jewish money into the Temple grounds, and buy the ram or pigeons or whatever you needed to sacrifice, and offer it up inside the Temple. And all of this economic activity was not only permitted under the Law, but actually required.
Of course the animal buying could take place outside the temple grounds using Roman currency. Unless you could only sacrifice specially blessed temple-procured animals.
I’m blissfully ignorant of the details in effect there then.