(2002-11-13) Earliest Currency
What was the World's first currency unit? When and where?
Primitive economic exchanges may have been limited to simple bartering,
but there was probably always some kind of preferred "commodity"
of reference, against which the fairness of any barter could be evaluated.
Between those primitive exchanges and the modern notion of money (which is essentially
a purely symbolic device to record economic transactions) there was a time when
the very concept of money became clear and practical with
the invention of a concrete device that would embody money for centuries: coins.
Before coins were invented, there was a stage when metals became the precious
commodity of reference.
This may have started early during the Bronze Age.
Possibly even earlier,
since gold (or electrum "amber-metal", a natural alloy of gold and silver)
is found in nature without any sophisticated mining or metallurgy.
The historical record shows that gold units were used for accounting in Egypt
in the third millenium BC, while silver and/or grain was used in Mesopotamia.
Actual brass coins appeared in China, in the 11th century BC.
These had a variety of odd shapes; they were not round but there were unmistakably
In the Western World, the invention of coinage is usually attributed to Cyges Mermnadae,
king of Lydia from 680 BC to 652 BC,
founder of the dynasty of the Mermnadæ
(whose last king was the well-known Croesus).
Early Lydian coins were ovals of natural electrum
(gold alloyed with 20% to 45% silver).
By the time of Croesus (561-546 BC),
the two metals could be separated.
Croesus (or Kroisos) thus outlawed electrum and introduced two coins
(both called staters)
one of silver and one
of nearly pure gold (98%).
The smaller gold stater was nominally 3/4
of the weight of the larger silver stater, but a gold stater could be traded
for 10 silver staters, thus establishing an official gold/silver price ratio of
(see next article for other historical ratios).
Looking at how the prices of precious metals vary from day to day,
it's hard to believe that gold and silver were once a stable basis
for defining currency.
Both metals were sometimes used simultaneously, with a fixed
ratio of the price of a weight of gold to the same weight of silver.
Such historic ratios were much lower than what the current market values of gold and
silver imply. Here's what we've gleaned,
mostly from Histoire de la monnaie by Jean Rivoire (PUF, 1989):
Historical Ratios of the Price of Gold to the Price of Silver
The depreciation of silver made the commercial ratio between gold and silver
go out of control late in the 19th century:
It was 16 in 1873, 18 in 1876, 20 in 1886, 33 in 1900, 38 in 1910...
This left gold as the sole money standard until the reference to precious metals was
(2009-08-11) The Medieval monetary system (units of account)
Charlemagne replaced the gold standard with silver, at a 12 to 1 ratio.
Exactly like the Ancien Régime
French monetary system (itself decimalized in 1795 and
by Napoléon in 1803)
the traditional British coinage system came from the Medieval monetary reform of
AD 794, implemented by
Charlemagne and the
Offa of Mercia
(who established the reputation of English coins for centuries to come).
When the silver-based monetary system of Charlemagne and Offa was instituted,
three popular Roman currency names were retained
(libra, solidus, denarius)
and so were their initials...
(*) The monetary
livre originally introduced by Charlemagne
is known to scholars as Livre
parisis (pound of Paris). Once the
King of France seized
Touraine in 1203,
it was gradually superseded, as a unit of account, by the
tournois (pound of Tours) which was so named because its
basic coin (denier tournois)
was originally minted by the Abbey of
Saint-Martin at Tours.
The livre tournois was 80% of the
(henceforth worth 25 sols tournois ) which
the monetary reform of Louis IX (1266) should
have made obsolete...
Yet, the parisis system lingered on for four more centuries:
It was only abolished in 1667 (the term "livre tournois"
wouldn't be officially shortened to "livre" until 1720.)
The intention of Charlemagne's reform was that
basic coins of the same weight in either metal
(denier d'argent and sou d'or )
were equally suited as a currency standard.
This idea begat stable fixed ratios among the various Medieval
units of account,
but the pressures of trade in precious monetary metals
soon changed the purchasing power of different actual coins.
Actually, gold coins were so valuable that the common man hardly ever saw them.
The original Roman gold
solidus (which had replaced the aureus
in AD 312) was either hoarded or used to pay soldiers.
That's the origin of the word; soldiers were people
compensated with solidi.
For several centuries following Charlemagne's monetary reform,
the daily economic life of most Europeans was based strictly on
The French use the same word (argent)
for silver or money...
(2009-08-11) French currency (1266-1795)
Saint Louis (Louis IX) and the
Ancien Régime monetary system.
The monetary domination of silver in Europe began to diminish when
of France started a reform inspired by the
Islamic monetary system, which he had discovered personally
Traditional Islamic bimetallic currency
(AD 697, revived in
is based on two famous coins: the (22-karat)
and the silver dirham.
By the standard of
Umar Ibn al-Khattab
(Caliph from AD 634 to 644)
10 dirhams weigh the same as 7 dinars. Monetary
alloy (22 k)
has a density of 18.5 (silver is 10.5).
The modern dirham
(25 mm, 3.00 g) is thus 4.4%
thicker than the dinar (23 mm, 4.25 g).
In 1266, Saint Louis revived gold currency by introducing
the first French gold coin, dubbed
écu d'or (containing 4.08 g of pure gold)
while silver currency would henceforth relate to a new silver coin, the
(4.52 g of pure silver, introduced at a value of
1 sol tournois)
which would soon be adopted by the Germanic world, under the
name of Groschen (for 12 Pfennig).
Neither metal was rigidly tied to the livre tournois
divided into 20 sols or 240
deniers ) which would serve only as
monnaie de compte
(unit of account).
Equivalences were thus changed at will by royal ordinances, dubbed
mutations (according to
Jérôme Blanc, there were 85
from 1337 to 1417).
Such was the framework of the Ancien Régime
monetary system between 1266 and 1795.
The ecu d'or itself was introduced in 1266 at
10 sols tournois
and last minted as a gold coin in 1691, for 114 sols tournois.
Until 1667, the livre parisi and its submultiples were also used,
which were worth exactly 25% more than their tournois couterparts.
In day-to-day operations, French subjects used actual coins
(monnaie blanche, monnaie de marché, monnaie d'échange,
espèces sonnantes et trébuchantes) according to a rapidly evolving
system which would only crystallize in the 17-th century
around three reference coins with a stable
equivalence in units of account (as nominal mutations
Gold coin:louis d'or worth 10 livres (1640).
Silver coin:écu blanc worth 60 sols
or 3 livres (1643).
Copper coin:liard worth 3 deniers or
¼ sol (1656).
The French revolution brought this to an end with decimalizarion
(1795) at least officially.
Yet, my father (born in 1907) saw fit to teach me that
a sou was worth 5 centimes
(20 sous to a franc). His older sister (born in 1906)
remembered that copper liards were still circulating
in the French countryside during her early childhood;
She seemed to recall that three of those could be exchanged for a sou (the
synonym sol was no longer used at that time).
According to the above, the exchange rate should have been
four liards to a sou...
(2009-08-11) British coins before decimalization day
(Feb. 15, 1971)
The monetary reform of 1971 left the pound
and shilling unchanged.
As inherited from the Medieval system of
Charlemagne and Offa,
the main traditional subdivisions of the British pound sterling
(slang: quid) were the shilling
and the penny. 12 pence to a bob, 20 bobs to a quid.
In 1971, the old British penny
(still abbreviated "d" for denarius )
was replaced by a new penny (abbreviated and pronounced "p")
worth 2.4 d.
( 1/- )
Most other monetary units named after popular coins did not survive the decimalization, as their
values were not even a whole number of newpence.
One exception is the florin (2 shillings = 10 p = 24 d)
which actually circulated until 1992. Curiously, it had been introduced by the Victorians in 1849
as a first step toward decimalization (10 florins ro the pound).
Decimal versions of the shilling and the florin (5p and 10p) were minted
(marked "new pence") ahead of
full decimalization and circulated as early as 1968.
worth 21 shillings (5% more than a pound) is now only of passing
The new version of the crown is a gold coin
with a face value of £5 minted only on special occasions.
is the main British
gold bullion coin, bearing a nominal face value of £1.
(2005-01-16) Money Exchange Rate
European exchange rates, on the day the Euro was born...
The conversion factors between national currencies vary daily.
However, there was one recent event which froze the exchange rates for the
currencies of 11 European nations.
According to the terms of the Maastricht treaty, 11 of the 15 nations
of the European Union made their national currencies a fixed multiple of a new monetary unit,
the "euro", born on New Year's day of 1999.
(These 11 currencies were phased out in 2002.)
The new euro replaced the former ECU, the European Currency Unit
(whose acronym matched the name of an ancient monetary unit,
but did not please the Germans).
The exchange rates of the 11 currencies were frozen at whatever the ECU was worth
in terms of the old units on December 31, 1998, at 1 pm
(legal time in France and Western Europe)
according to the report published by the EEC commission at that precise time.
The EEC also published the values of the ECU/euro in terms of certain currencies not
irrevocably tied to the euro, at the exact time the euro was so "defined";
these are listed without highlighting in the table below
(for good measure, the value of an ounce of gold is also given, based on the
$287.75 / ozt price in the London Bullion Market
on the day the euro was defined).
The 3-letter ISO symbols listed in the last column have been in use since 1989.
(Usually, the first two letters denote a country, and the third one is the initial of the
Greek drachma, drachme
grecque (parity frozen on 2000-12-31)
lira, lire italienne
Note that the British unit, the pound sterling, which was one of the important currencies
defining the ECU, was not one of the original 11 currencies out of which the
euro was born (4 countries of the European Union were not originally part
of "Euroland": Great Britain, Denmark, Sweden, and Greece).
Greece became the 12th nation to join the Eurozone, as of January 1, 2001.
The exchange rate of the drachma was frozen at 340.750 drachmas to the euro on
December 31, 2000 (2 years after the euro's introduction).
The US dollar exchange rate with the euro started fluctuating
even before the euro was officially born:
On December 31, 1998, during the few hours that followed the announcement of the
11 frozen exchange rates with the euro, and the statement that the euro was "originally" worth
$1.16675, the Wall Street Stock Exchange in New York rated the euro as high as $1.1755.
On the next business day (Monday, January 4, 1999), the euro was an "official" unit
and opened at $1.1747 in Australia, which is, therefore the actual "introductory rate"
of the euro against the US dollar; as the business day progressed around the world,
the exchange rate reached $1.181.
It approched 1.2$ in the following days, and fell back at $1.154
on monday, January 11, 1999 (when this writer got tired of watching).
Notice that the economists who defined the euro made the same mistake as
physicist of past centuries in defining a new unit in terms of old ones,
whose disappearance was scheduled... It would have been more
farsighted to state that a French Franc (FF or FRF) was
exactly 0.152449 of a euro,
since the euro would be the only unit making sense to future generations.
Instead, the euro was defined as 6.55957 FF,
which now makes the euro value of a French Franc equal to an awkward 0.1524490172374...
In the more precise world of metrology, this is as bad as having the meter defined as
either "3 pieds & 11.295936 lignes"
(as was done in 1795 and 1799) or as 39.37 British inches
(as was done in 1866 and 1893).
Both definitions are now obsolete, but the latter survives to this day within the so-called
"US Survey" system.
The correct approach would have been to enact as exact, for each obsolescent unit,
some rounded decimal fraction of the new unit.
(For example, since January 1 1959, an inch is now defined as exactly equal to 25.4 mm.)
(2004-06-09) Currency in Circulation Worldwide
How much of the major currencies [coins & paper] is in circulation now?
The following summary was gleaned from the various sources quoted below: