Sunday, February 10, 2013

Coined Money : The Phoenicians and the Lydians

Coined Money
The Lydians lived in an area northwest of Phoenicia in what is today the country of Turkey. Like the Phoenicians, the Lydians made a major contribution to the people of the Fertile Crescent. Theirs, too, was related to trade. Around 600 B.C. the Lydians became the first people to use coined money put out by their government.

As people around the Mediterranean began to trade with one another, they needed a kind of money. Its value had to be agreed on, and it had to be light enough to be carried on ships without sinking them. The first Lydian coins were the size of beans. They were made of a naturally occurring mixture of gold and silver called electrum. All the coins were the same weight and, therefore, had the same value.

Long before coined money, traders had relied on barter, the exchange of one good or service for another. The problem with barter was that two people could make a deal only if each had a good or a service that the other wanted. After a while, traders worked out a system of trading based on weighing silver. This system also proved difficult to use. Coined money meant that people no longer had to weigh silver each time they made a trade. The purity of the silver in coined money was also certain.

The use of money allowed traders to set prices for various goods and services.
Societies could then develop a money economy, an economic system based on the use of money.

How did the use of coined money change trade?

Money
After the Lydians, other cultures began to make coins for use in trading. However, some people began to shave off bits of gold and silver from the coins. These shaved coins were still used at their original value. Yet they were really worth less because they weighed less. To stop this, governments began to require that coins be milled, or cut several times along their edges. People were then able to identify the less valuable shaved coins as ones with smooth edges. They now knew whether they were getting their money's worth.

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