Podcast Summary: The Ancients – Episode "The Birth of Money"

Host: Tristan Hughes
Guest: Alan Herrera, TV Producer, Author, and Professor
Release Date: December 19, 2024
Podcast: The Ancients by History Hit

Introduction to the Birth of Money

In the episode titled "The Birth of Money," host Tristan Hughes delves into the origins of currency, tracing its roots back over 2,500 years to ancient Lydia in what is now Western Turkey. Tristan welcomes Alan Herrera, a seasoned TV producer, author, and professor who recently authored a book exploring the pivotal role of gold in shaping human history. Together, they explore how the invention of coinage intertwined with humanity's enduring fascination with gold.

Tristan Hughes [01:03]: "In today's episode, we are exploring the story of the earliest coins ever minted, the birth of money."

Early Use of Gold: The Varna Culture

Alan Herrera begins by discussing the earliest known use of gold, dating back over 6,000 years to the Varna culture in present-day Bulgaria. Archaeological findings at the Varna cemetery revealed over 60 graves adorned with gold, including one particularly notable burial:

Alan Herrera [02:41]: "There's only one grave which has a human body with a substantial quantity of gold...He had a gold headdress, he had a gold scepter in his right hand and he had a big gold disc."
(02:41)

This intricate use of gold suggests a societal structure where gold symbolized more than just wealth—it hinted at a connection to eternity and possibly divine authority.

Gold as Status Symbol vs. Currency

Tristan probes the initial use of gold as a status symbol, while Alan offers a deeper interpretation:

Tristan Hughes [05:52]: "So these are like 6000 year old kings who are using gold almost as part of their status."
(05:52)

Alan Herrera [06:19]: "I think it's a direct connection with eternity that is part of the status...gold is incorruptible and doesn't belong in the mortal world."
(06:19)

Alan emphasizes that gold's unique properties—its malleability, durability, and incorruptibility—imbued it with a mystical quality, making it an ideal material for symbols of eternal power rather than mere status symbols.

The Invention of Electrum as Currency

Transitioning from symbolic use, Alan explains the practical challenges of barter in long-distance trade, leading to the adoption of electrum—natural alloy of gold and silver—as an early form of currency:

Alan Herrera [11:56]: "Electrum can vary in its content from one lump to the next, but it's very useful to do deals with."
(11:56)

Electrum bars, marked in standardized divisions and often referred to as "chocolate bars" by archaeologists due to their appearance, facilitated easier and more reliable trade across vast distances.

Lydia: The Birthplace of Coinage

The conversation shifts to Lydia, where King Alyattes pioneered the minting of the first coins around the late 7th century B.C. He introduced stamped electrum tokens, ensuring uniformity and trust in their value:

Alan Herrera [16:36]: "These are the first coins."
(16:36)

Alan Herrera [18:34]: "The Lydian stamp was a lion's head and that was the identity of the king on the coin."
(18:34)

These innovations transformed currency from a commodity-based system to a standardized medium of exchange, setting the foundation for modern monetary systems.

The Impact of Nebuchadnezzar's Siege of Jerusalem

A significant turning point discussed is the siege of Jerusalem by Nebuchadnezzar of Babylon in the late 6th century B.C. This event had profound economic repercussions:

Alan Herrera [21:16]: "What has happened was that the amount of gold available for the market had changed dramatically...the destruction of Jerusalem."
(21:16)

Nebuchadnezzar's plundering of Jerusalem's temple flooded the Babylonian economy with gold, inadvertently causing its devaluation. This influx disrupted the established gold-silver ratio, leading to economic instability.

The First Financial Crash

The episode highlights this economic upheaval as the first financial crash in history:

Alan Herrera [29:13]: "It's almost like the first financial crash in history."
(29:13)

The sudden abundance of gold diminished its value, mirroring modern instances where an oversupply leads to inflation. This crash underscored the vulnerabilities of a commodity-based currency system.

Croesus and Currency Stabilization

In response to the economic turmoil, Croesus ascended to power in Lydia and introduced reforms to stabilize currency:

Alan Herrera [32:13]: "One of the reasons that Croesus is rich as Croesus...he's introducing the gold standard."
(32:13)

Croesus minted 100% pure gold coins alongside silver, establishing a fixed exchange rate between the two metals. This move aimed to restore trust and consistency in the monetary system.

However, Alan explains that this led to unforeseen consequences:

Alan Herrera [34:24]: "That's why this is a disaster. Because what's happened is that he converts money into absolutely a commodity."
(34:24)

By making currency intrinsically valuable, it became susceptible to the very issues that plagued electrum, such as overproduction and deflation, ultimately leading to recurring financial crises.

The Ongoing Challenges of Gold as Currency

Alan elaborates on the persistent problems of using gold as a standard for currency:

Alan Herrera [37:57]: "Gold has been the worst thing you can imagine as a currency."
(37:57)

He draws parallels to the 19th-century California Gold Rush, where the sudden influx of gold led to economic instability similar to Lydia's earlier experience. This cycle of gold causing both prosperity and economic decline continued to influence monetary systems throughout history.

Conclusion: The Enduring Legacy of Early Coinage

Tristan and Alan conclude by reflecting on how the birth of money fundamentally altered human societies. The shift from gold's sacred and status-related uses to its role as a universal medium of exchange marked a significant ideological transformation.

Tristan Hughes [40:24]: "And to think that it all began with Alyatti's and his gold and silver coins."
(40:24)

Alan emphasizes the lasting impact of these early monetary systems, noting their influence up to modern times and the ongoing complexities of gold's role in economies worldwide.

Alan Herrera [42:28]: "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."
(42:28)

Notable Quotes:

• Alan Herrera [06:19]: "Gold is incorruptible. It doesn't belong in the mortal world."
• Alan Herrera [18:34]: "The Lydian stamp was a lion's head and that was the identity of the king on the coin."
• Alan Herrera [34:24]: "He converts money into absolutely a commodity."
• Alan Herrera [37:57]: "Gold has been the worst thing you can imagine as a currency."

Final Thoughts:

"The Birth of Money" offers an insightful exploration into the origins of currency, highlighting the intricate relationship between gold and economic systems. Alan Herrera's expertise provides a nuanced understanding of how early monetary innovations continue to influence contemporary financial structures.

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