Of all the qualities of gold that kept it the king of monetary standards (Yeah, i know silver was queen for, well more than a day) i think it’s safe to say that it got there by being pretty. What if gold were dull and black and silver wasnt shiny either. Has anyone ever speculated on what would probably have been the main currency before fiat money was created. Could there have been multiregional agreement? Any one know the cigarette/seashell exchange rate I’m thinking about visiting prison.
Anything that was reasonably rare would suffice. It reminds me of a bit from The Hitchhiker’s Guide to the Galaxy where a bunch of hair dressers and telephone sanitizers crash land on prehistoric earth. They decide to use leaves as currency for starters and experience rampant inflation to the point of requiring several deciduous forests for one peanut. To solve this problem they decide to embark on a major defoliation campaign.
Jokes aside gold wasn’t used as currency because it was pretty it was used because it was rare. Copper was also used to mint coins as (as already noted) was silver. Metal also had the added attraction of being durable and you could make it into different sizes for different values. Gems, while meeting the rare requirement, aren’t very durable and it is hard to find a bunch of a uniform size that would equate into similar values. You’d have to have an appraiser handy every time you wanted to buy some mutton and a pint.
Ahh, the poor souls on the “B” ark. They figured they needed to invent the wheel, so they formed a committee. The penultimate joke of the book was that we Earth humans are their descendants.
But gold was used because it was pretty and rare. Metals became a currency because they didn’t rot and they were useful for everyday things, so everyone wanted them. Most just weren’t rare enough to keep you from having to carry around pounds of it.
Gold made pretty jewelry, so people wanted it, plus it was rare. It made for an ideal currency.
I recommend the book The History of Money by Jack Weatherford.
Rare is part of it, but pretty (and useful) are also key.
When I was about to ask my wife to marry me, I thought it would be cool to make an engagement ring from a meteorite. I figured it would be romantic since it was rarer than gold and not from this world. I abandonded the idea after a bit for several reasons, one of which was that I could buy the material required for about $10, and romance or not, I didn’t want to give her something that cheap.
The thing is meteorites are more rare than gold. But rarity isn’t the whole story. They are basically low-grade iron, which is both ugly and useless.
So, I agree with the OP. Being pretty (and useful) plus being rare is why gold is expensive.
Well gold is useful, but not so useful that it isn’t better used as coins then for another purpose. In a way it is a paradox, because the whole purpose of money is that I am willing to give it up for something I actually need. But it has to have value enough that someone else will take it. Eventually the willingness to take it simply comes form the knowledge that it can be exchanged for truly useful goods and services. Almost any commodity will do as money as long as people have faith that they can exchange it for stuff they really need.
Also gold can be easily made into coins, bars, etc.
Another very important quality for any medium that is to be used as money is that it can’t be manufactured by man.
Actually i read that book “The History of Money” a while ago and an even better book “The Philosophy of Money” and of course cant forget the ambitiously titled tome of economic brilliance that is “Human Action” by von Mises. I’m hip to the Paul Samuelson’s College Econ 101 reason for why a money is money but none of them got to the core of what it was like to come upon a chunk of gold for the first time and bestow it with value. It’s like, well these green clear shiny things are ALOT prettier but Ort down the street has it now so I hope Glog will except this second rate yellow shite for his pig.
Wait a second after having read my first response to my own post, I realized that wasnt really the question I wanted answered. I guess because the real question i want answered is one of those trick chicken/egg ones. I was really what role inability of gold to form compounds had in its choice as a monetary standard. Of course silver can oxidate but gold can’t. With that new polish that you can just dip your silver in and it will be like new, I’m surprised the world economy been brought to it’s knees.
Hey,KId! YOur syntax is breaking up. Are you posting on a cell phone??
I think you actually had something when you said gold was “pretty” and that might have been one of the reasons that it took on prominence as a monetary standard.
Of all natural elements which are metals, only gold and copper have color(not gray/white/blah}
Gold was rarer than copper, and had the property of not reacting naturally with oxygen, etc. So it stayed “pretty.”
Good going!
Well, gold was used all over the world for making jewelry way before anyone invented coinage. So gold had a use…making pretty things. People wanted the gold so they could have pretty necklaces and offered to trade goats or what have you for so many drams of gold. Eventually gold was standardized by weight into little ingots to allow it to be traded easily. Those ingots we call coins. And since people wanted the gold for pretty things, people would accept the lumps of gold in exchange for their goats, even people who didn’t particularly care about pretty necklaces since they knew that people who wanted pretty necklaces would trade them for things that they wanted.
Other metals were also used as money, or lumps of salt.
But the coolest monetary system of all time was the Aztec/Mesoamerican one. They used cacao beans as money. And the Aztec emperor drank dozens of cups of cacao every day to demonstrate his wealth. That was the biggest perk of being emperor of the Aztecs: unlimited cacao. Well, that and getting to cut your enemies’ hearts out with an obsidian knife…
Gold is also special because it’s so soft. You can stretch it easily into long thin wires, or pound it into an extremely thin plating. I don’t believe there is another metal that is so malleable. I think even if it was colorless it would still be widely used for jewelry in ancient times because of this.
There is some speculation that iron meteorites helped humanity develop iron-related technologies. (i.e., finding a big chunk of workable metal sitting at your feet rather than having to figure out how to mine it from the ground).
FWIW, meteorites still are valuable (monetary) given their rarity and scientific value…this site notes a common price of $10/gram but the price varies depending on the type of meteorite.
Beat me to it…
ALSO, because it is one of those metals that is usually found in natural form (nuggets) in the “wild” as opposed to most metals which occur in “bonded” form (eg Aluminium is normally found as Bauxite). This means that it was easily workable without needing to separate it from the sulphur/oxygen/halides that other metals are found in combination with.
Gp
Gold is pretty and soft, but so are tulips.
I am no expert on the matter, but I believe that it’s value stems from it’s non reactivity, as KidCharlemange mentioned earlier. All the precious metals have one thing in common - they are extremely resistant to oxidation. If they had chosen, say, iron to base the money on, a kingdom’s entire treasury could turn to red dust because of a leaky roof. They needed SOMETHING to use as money. The precious metals were hard to find - and when they were found - they remained a precious metal. It was a practical solution.
What about wampum? Some of the east coast Indian tribes used beads painstakingly carved from oyster shells as money. The supply of oysters was effectively unlimited, so how rich you were could depend on how hard you were willing to work to literally make money.
–sublight.
On the other hand, before people learned to smelt it, iron WAS a precious metal. Precisely because it was rare, known only through the small amount of free iron found in nature, mostly from meteorites. Bill H. might find meteorites ugly, but pre-iron age cultures sometimes treated them as rare jewels.
BTW, on metals being used because of their existance in a pure state in nature - copper has been used since ancient times (copper beads have been found in sites dated at 9000 BC). It also isn’t usually found in a free state (some exists that way, not much). The point is that the ore is rather common, and it is probably the easiest metal to smelt. Ancient people only had to use the right kind of rocks for a fire ring, decide to build a really hot fire, and they would discover copper.