Metal as money
Encyclopedia
Throughout history, various metal
s, some of which are considered precious
today, appear to have been used as a form of currency. The Bretton Woods system
, under which all major currencies were theoretically exchangeable for gold
, was abolished in 1971.
Other metals to have been used as money include silver
, copper
, and platinum
.
Currently, metal coins are nickel
s, dime
s, and quarters
.
When money substitutes, bills of credit, circulate as currency then payment risk is introduced to transactions. Occasionally, the payment risk becomes completely unmanageable with hyperinflation or other currency crisis like Weimar Germany, Argentina or Zimbabwe. The only similar experience where this happened with gold was when the conquistadors returned to Europe from America with the gold hoards.
Gold has been considered valuable since prehistoric times. While it might originally have been used in barter
for its value in ornamentation and rituals, gold and silver became established as a form of commodity money
and were first minted by the Lydia
n king Croesus
around 560 BC. For all of recorded history at all times and in all circumstances gold remains money. Thus Gold is the ultimate form of payment. Interestingly, as evidence of its monetary nature gold is the only commodity produced by humans to be hoarded.
Around 500 BC, the touchstone became available, allowing relatively easy detection of forgeries, and in the third century BC, Archimedes
invented a method of determining an object's density. Since gold was the densest substance then known, this could be used to verify an object was made of pure gold without destroying it.
Coins were first used in ancient Lydia
and some of the Greek cities on the coast of Ionia in the late 7th century B.C. They were first struck in a natural alloy (perhaps diluted a little) of gold and silver which we call electrum. Later, coins of pure gold and silver were produced in Lydia, although it was a long time before any of the Greek cities issued coinage in gold. The city-states of Classical Greece
and some of the tribes in northern Greece which had access to silver soon thereafter introduced silver coinage, which rapidly spread westward to most of the city-states' republics, including Rome
. In the heyday of the Athenian empire, the city's silver tetradrachm
was the first coin to achieve "international standard" status in Mediterranean trade. Silver remained the most common monetary metal used in ordinary transactions until the 20th century.
The Persian Empire collected tax
es in gold and minted its own gold coin, known as the dareikos
(δαρεικός) in Greek
. When Persia was conquered by Alexander the Great, this gold became the basis for the gold coinage of Alexander's Macedon empire and those of his Diadochi. The vast gold hoard of the Persian kings was put into monetary circulation, triggering the first known "worldwide" inflation
event.
Ancient Rome minted two important gold coins: the aureus
, which was approximately 7 gram
s of gold alloy
ed with silver, and the smaller solidus
, which weighed 4.4 grams, of which 4.2 was gold. Roman and Byzantine coins were frequently alloyed with other metals of much lower value to create the seigniorage
necessary for a rational system of government money.
The Roman Emperor Gallienus
, who ruled from 253 to 268, introduced a monetary reform in which surface-overvalued coins were no longer accepted for tax payments, resulting in inflation: for the surface overvaluation of an emergency coinage would soon degenerate to the point where the coinage simply traded for its metallic value, thereby eliminating the ability of the senate-constrained government to collect seigniorage
at critical times. Remarkably, the position was not remedied until after the fall of the Empire and the times of Justinian in the East and Theodoric the Great
, the first of the Ostrogothic kings of Italy.
The dinar
and dirham
were gold and silver coins, respectively, originally minted by the Persians. The Caliphate
s in the Islam
ic world adopted these coins, starting with Caliph Abd al-Malik (685–705).
In 1284 the Republic of Venice coined
the ducat
, its first solid gold coin. Other coins, the florin
, noble
, grosh, złoty, and guinea, were also introduced at this time by other European states to facilitate growing trade.
Beginning with the conquest of the Aztec and Inca Empire
s, Spain
had access to stocks of new gold for coinage in addition to silver. The wide availability of milled and cob gold coins made it possible for the West Indies to make gold the only legal tender in 1704. The circulation of Spanish coins led to the creation of the unit of account for the United States, the "dollar", based on the Spanish silver real
, and Philadelphia's currency market later traded in Spanish colonial coins.
, which sold many trade goods to Europe but had little use for European goods, drained silver from the economies of Western Europe
and the United States
. Coins were struck in smaller and smaller amounts, and there was a proliferation of bank and Demand Note
s used as money.
In the 1790s Britain suffered a massive shortage of silver coinage and ceased to mint larger silver coins. It issued "token" silver coins and overstruck foreign coins. With the end of the Napoleonic Wars
, Britain began a massive recoinage program
that created standard gold sovereigns and circulating crowns, half-crowns, and eventually copper farthings in 1821. In 1833, Bank of England notes were made legal tender, and redemption by other banks was discouraged. In 1844 the Bank Charter Act established that Bank of England notes, fully backed by gold, were the legal standard. According to the strict interpretation of the gold standard, this 1844 Act marks the establishment of a full gold standard for British money.
There were 113.00159 grains
(7.32g) of gold to one pound sterling
. The exact equivalent was that 1869 sovereigns could be minted from 40 pounds troy of crown gold (11/12 fine).
The U.S. adopted a silver standard
based on the "Spanish milled dollar" in July 1785. This was codified in the 1792 Mint and Coinage Act
. This began a long series of attempts for United States to create a bimetallic
standard for the US Dollar, which was to continue until the 1930s. Because of the huge debt
taken on by the US Federal Government to finance the Revolutionary War
, silver coins struck by the government left circulation, and in 1806 President Jefferson
suspended the minting of silver coins. The US Treasury
was put on a strict "hard money" standard, doing business only in gold or silver coin as part of the Independent Treasury Act of 1846, which legally separated the accounts of the Federal Government from the banking system. Following Gresham's law
, silver poured into the US, which traded with other silver nations, and gold moved out. In 1853, the US reduced the silver weight of coins, to keep them in circulation.
.
In modern times, it was Stockholms Banco
that in 1661 first issued banknotes that were intended to be fully redeemable for copper coins; while initially popular, the bank eventually could not redeem all the notes it had printed, and ceased operations in 1664 after a bank run
.
National banks later guaranteed the redeemability of representative banknotes put into circulation, though rarely to the extent of having the promised amount of metal on hand for all currency in circulation.
By 1865, however, the system appeared sufficiently stable to create the Latin Monetary Union
, establishing a common system for gold
and silver
coins used in several European countries.
The newly unified German Empire
introduced a common currency, the German Goldmark
, beginning in 1873; this currency was based on a strict gold standard, with banknotes redeemable for gold coins. Other countries rapidly followed suit, and by 1900 was accepted by all major economies.
has developed centered around gold.
Metal
A metal , is an element, compound, or alloy that is a good conductor of both electricity and heat. Metals are usually malleable and shiny, that is they reflect most of incident light...
s, some of which are considered precious
Precious metal
A precious metal is a rare, naturally occurring metallic chemical element of high economic value.Chemically, the precious metals are less reactive than most elements, have high lustre, are softer or more ductile, and have higher melting points than other metals...
today, appear to have been used as a form of currency. The Bretton Woods system
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century...
, under which all major currencies were theoretically exchangeable for gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
, was abolished in 1971.
Other metals to have been used as money include silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
, and platinum
Platinum
Platinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River." It is a dense, malleable, ductile, precious, gray-white transition metal...
.
Currently, metal coins are nickel
Nickel
Nickel is a chemical element with the chemical symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel belongs to the transition metals and is hard and ductile...
s, dime
Dime
Dime may refer to:Currency* Dime * Dime Media and entertainment* Dime , by Guardian* "Dime" , by Beth* The Dimes, a musical group* Dime novel, a type of popular fictionSports* Dime...
s, and quarters
Quarters
Quarters is a popular drinking game which involves players bouncing a quarter off a table in an attempt to have the quarter land in a certain place, usually into a shotglass on that table. The game is popular at parties, especially in colleges and universities in the United States and Canada, as...
.
Commodity money and coins
In daily conversation the term 'money' is used without academic preciseness by distinguishing between money, money substitutes or currency. Money must be a tangible asset while a money substitute may be only a claim on a tangible asset. Either money or a money substitute may circulate as currency. The reason money must be a tangible asset is so that transactions are extinguished (value traded for value). When a money substitute is used as currency the transaction is not extinguished until the money substitute is passed on in another transaction and value is received. Currency is merely a tool that allows humans to engage in the mental calculation of value.When money substitutes, bills of credit, circulate as currency then payment risk is introduced to transactions. Occasionally, the payment risk becomes completely unmanageable with hyperinflation or other currency crisis like Weimar Germany, Argentina or Zimbabwe. The only similar experience where this happened with gold was when the conquistadors returned to Europe from America with the gold hoards.
Gold has been considered valuable since prehistoric times. While it might originally have been used in barter
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...
for its value in ornamentation and rituals, gold and silver became established as a form of commodity money
Commodity money
Commodity money is money whose value comes from a commodity out of which it is made. It is objects that have value in themselves as well as for use as money....
and were first minted by the Lydia
Lydia
Lydia was an Iron Age kingdom of western Asia Minor located generally east of ancient Ionia in the modern Turkish provinces of Manisa and inland İzmir. Its population spoke an Anatolian language known as Lydian....
n king Croesus
Croesus
Croesus was the king of Lydia from 560 to 547 BC until his defeat by the Persians. The fall of Croesus made a profound impact on the Hellenes, providing a fixed point in their calendar. "By the fifth century at least," J.A.S...
around 560 BC. For all of recorded history at all times and in all circumstances gold remains money. Thus Gold is the ultimate form of payment. Interestingly, as evidence of its monetary nature gold is the only commodity produced by humans to be hoarded.
Around 500 BC, the touchstone became available, allowing relatively easy detection of forgeries, and in the third century BC, Archimedes
Archimedes
Archimedes of Syracuse was a Greek mathematician, physicist, engineer, inventor, and astronomer. Although few details of his life are known, he is regarded as one of the leading scientists in classical antiquity. Among his advances in physics are the foundations of hydrostatics, statics and an...
invented a method of determining an object's density. Since gold was the densest substance then known, this could be used to verify an object was made of pure gold without destroying it.
Early gold-coin standards
Lydia
Lydia was an Iron Age kingdom of western Asia Minor located generally east of ancient Ionia in the modern Turkish provinces of Manisa and inland İzmir. Its population spoke an Anatolian language known as Lydian....
and some of the Greek cities on the coast of Ionia in the late 7th century B.C. They were first struck in a natural alloy (perhaps diluted a little) of gold and silver which we call electrum. Later, coins of pure gold and silver were produced in Lydia, although it was a long time before any of the Greek cities issued coinage in gold. The city-states of Classical Greece
Ancient Greece
Ancient Greece is a civilization belonging to a period of Greek history that lasted from the Archaic period of the 8th to 6th centuries BC to the end of antiquity. Immediately following this period was the beginning of the Early Middle Ages and the Byzantine era. Included in Ancient Greece is the...
and some of the tribes in northern Greece which had access to silver soon thereafter introduced silver coinage, which rapidly spread westward to most of the city-states' republics, including Rome
Rome
Rome is the capital of Italy and the country's largest and most populated city and comune, with over 2.7 million residents in . The city is located in the central-western portion of the Italian Peninsula, on the Tiber River within the Lazio region of Italy.Rome's history spans two and a half...
. In the heyday of the Athenian empire, the city's silver tetradrachm
Tetradrachm
The tetradrachm was an Ancient Greek silver coin equivalent to four drachmae. It was in wide circulation from 510 to 38 BC.-History:Many surviving tetradrachms were minted by the polis of Athens from around the middle of the 5th century BC onwards; the popular coin was widely used in transactions...
was the first coin to achieve "international standard" status in Mediterranean trade. Silver remained the most common monetary metal used in ordinary transactions until the 20th century.
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es in gold and minted its own gold coin, known as the dareikos
Persian daric
The daric was a gold coin used within the Persian Empire. It was of very high gold quality, with a purity of 95.83%. Weighing around 8.4 grams, it bore the image of the Persian king or a great warrior armed with a bow and arrow, but who is depicted is not known for sure...
(δαρεικός) in Greek
Greek language
Greek is an independent branch of the Indo-European family of languages. Native to the southern Balkans, it has the longest documented history of any Indo-European language, spanning 34 centuries of written records. Its writing system has been the Greek alphabet for the majority of its history;...
. When Persia was conquered by Alexander the Great, this gold became the basis for the gold coinage of Alexander's Macedon empire and those of his Diadochi. The vast gold hoard of the Persian kings was put into monetary circulation, triggering the first known "worldwide" inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
event.
Ancient Rome minted two important gold coins: the aureus
Aureus
The aureus was a gold coin of ancient Rome valued at 25 silver denarii. The aureus was regularly issued from the 1st century BC to the beginning of the 4th century, when it was replaced by the solidus...
, which was approximately 7 gram
Gram
The gram is a metric system unit of mass....
s of gold alloy
Alloy
An alloy is a mixture or metallic solid solution composed of two or more elements. Complete solid solution alloys give single solid phase microstructure, while partial solutions give two or more phases that may or may not be homogeneous in distribution, depending on thermal history...
ed with silver, and the smaller solidus
Solidus (coin)
The solidus was originally a gold coin issued by the Romans, and a weight measure for gold more generally, corresponding to 4.5 grams.-Roman and Byzantine coinage:...
, which weighed 4.4 grams, of which 4.2 was gold. Roman and Byzantine coins were frequently alloyed with other metals of much lower value to create the seigniorage
Seigniorage
Seigniorage can have the following two meanings:* Seigniorage derived from specie—metal coins, is a tax, added to the total price of a coin , that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.* Seigniorage derived from notes is more...
necessary for a rational system of government money.
Gallienus
Gallienus was Roman Emperor with his father Valerian from 253 to 260, and alone from 260 to 268. He took control of the Empire at a time when it was undergoing great crisis...
, who ruled from 253 to 268, introduced a monetary reform in which surface-overvalued coins were no longer accepted for tax payments, resulting in inflation: for the surface overvaluation of an emergency coinage would soon degenerate to the point where the coinage simply traded for its metallic value, thereby eliminating the ability of the senate-constrained government to collect seigniorage
Seigniorage
Seigniorage can have the following two meanings:* Seigniorage derived from specie—metal coins, is a tax, added to the total price of a coin , that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.* Seigniorage derived from notes is more...
at critical times. Remarkably, the position was not remedied until after the fall of the Empire and the times of Justinian in the East and Theodoric the Great
Theodoric the Great
Theodoric the Great was king of the Ostrogoths , ruler of Italy , regent of the Visigoths , and a viceroy of the Eastern Roman Empire...
, the first of the Ostrogothic kings of Italy.
The dinar
Gold Dinar
The gold dinar is a gold coin first issued in 77 AH by Caliph Abd al-Malik ibn Marwan. The name is derived from denarius, a Roman currency...
and dirham
Dirham
Dirham or dirhem is a unit of currency in several Arab or Berber nations, and formerly the related unit of mass in the Ottoman Empire and Persian states...
were gold and silver coins, respectively, originally minted by the Persians. The Caliphate
Caliphate
The term caliphate, "dominion of a caliph " , refers to the first system of government established in Islam and represented the political unity of the Muslim Ummah...
s in the Islam
Islam
Islam . The most common are and . : Arabic pronunciation varies regionally. The first vowel ranges from ~~. The second vowel ranges from ~~~...
ic world adopted these coins, starting with Caliph Abd al-Malik (685–705).
Coinage of the Republic of Venice
The Coinage of the Republic of Venice include the coins produced by the Republic of Venice from the late 12th century to 1866. After this date, the mint of Venice.-History:...
the ducat
Ducat
The ducat is a gold coin that was used as a trade coin throughout Europe before World War I. Its weight is 3.4909 grams of .986 gold, which is 0.1107 troy ounce, actual gold weight...
, its first solid gold coin. Other coins, the florin
Italian coin florin
The Italian florin was a coin struck from 1252 to 1533 with no significant change in its design or metal content standard. It had 54 grains of nominally pure gold worth approximately 200 modern US Dollars...
, noble
Noble (English coin)
The Noble was the first English gold coin produced in quantity, having been preceded by the Gold penny and the Florin earlier in the reigns of King Henry III and King Edward III, which saw little circulation....
, grosh, złoty, and guinea, were also introduced at this time by other European states to facilitate growing trade.
Beginning with the conquest of the Aztec and Inca Empire
Inca Empire
The Inca Empire, or Inka Empire , was the largest empire in pre-Columbian America. The administrative, political and military center of the empire was located in Cusco in modern-day Peru. The Inca civilization arose from the highlands of Peru sometime in the early 13th century...
s, Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
had access to stocks of new gold for coinage in addition to silver. The wide availability of milled and cob gold coins made it possible for the West Indies to make gold the only legal tender in 1704. The circulation of Spanish coins led to the creation of the unit of account for the United States, the "dollar", based on the Spanish silver real
Spanish real
The real was a unit of currency in Spain for several centuries after the mid-14th century, but changed in value relative to other units introduced...
, and Philadelphia's currency market later traded in Spanish colonial coins.
The crisis of silver currency and bank notes (1750–1870)
In the late 18th century wars and trade with ChinaChina
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, which sold many trade goods to Europe but had little use for European goods, drained silver from the economies of Western Europe
Western Europe
Western Europe is a loose term for the collection of countries in the western most region of the European continents, though this definition is context-dependent and carries cultural and political connotations. One definition describes Western Europe as a geographic entity—the region lying in the...
and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Coins were struck in smaller and smaller amounts, and there was a proliferation of bank and Demand Note
Demand Note
A Demand Note is a type of United States paper money that was issued between August 1861 and April 1862 during the American Civil War in denominations of 5, 10, and 20 US$...
s used as money.
In the 1790s Britain suffered a massive shortage of silver coinage and ceased to mint larger silver coins. It issued "token" silver coins and overstruck foreign coins. With the end of the Napoleonic Wars
Napoleonic Wars
The Napoleonic Wars were a series of wars declared against Napoleon's French Empire by opposing coalitions that ran from 1803 to 1815. As a continuation of the wars sparked by the French Revolution of 1789, they revolutionised European armies and played out on an unprecedented scale, mainly due to...
, Britain began a massive recoinage program
Great Recoinage of 1816
The Great Recoinage of 1816 was an attempt by the British Government to re-stabilise the currency of Great Britain following economic difficulties precipitated by the French Revolutionary Wars and the Napoleonic Wars.-History:...
that created standard gold sovereigns and circulating crowns, half-crowns, and eventually copper farthings in 1821. In 1833, Bank of England notes were made legal tender, and redemption by other banks was discouraged. In 1844 the Bank Charter Act established that Bank of England notes, fully backed by gold, were the legal standard. According to the strict interpretation of the gold standard, this 1844 Act marks the establishment of a full gold standard for British money.
There were 113.00159 grains
Grain (measure)
A grain is a unit of measurement of mass that is nominally based upon the mass of a single seed of a cereal. From the Bronze Age into the Renaissance the average masses of wheat and barley grains were part of the legal definition of units of mass. However, there is no evidence of any country ever...
(7.32g) of gold to one pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
. The exact equivalent was that 1869 sovereigns could be minted from 40 pounds troy of crown gold (11/12 fine).
The U.S. adopted a silver standard
Silver standard
The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. The silver specie standard was widespread from the fall of the Byzantine Empire until the 19th century...
based on the "Spanish milled dollar" in July 1785. This was codified in the 1792 Mint and Coinage Act
Coinage Act (1792)
The Coinage Act or the Mint Act, passed by the United States Congress on April 2, 1792, established the United States Mint and regulated the coinage of the United States. The long title of the legislation is An act establishing a mint, and regulating the Coins of the United States...
. This began a long series of attempts for United States to create a bimetallic
Bimetallism
In economics, bimetallism is a monetary standard in which the value of the monetary unit is defined as equivalent both to a certain quantity of gold and to a certain quantity of silver; such a system establishes a fixed rate of exchange between the two metals...
standard for the US Dollar, which was to continue until the 1930s. Because of the huge debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
taken on by the US Federal Government to finance the Revolutionary War
American Revolution
The American Revolution was the political upheaval during the last half of the 18th century in which thirteen colonies in North America joined together to break free from the British Empire, combining to become the United States of America...
, silver coins struck by the government left circulation, and in 1806 President Jefferson
Thomas Jefferson
Thomas Jefferson was the principal author of the United States Declaration of Independence and the Statute of Virginia for Religious Freedom , the third President of the United States and founder of the University of Virginia...
suspended the minting of silver coins. The US Treasury
United States Department of the Treasury
The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue...
was put on a strict "hard money" standard, doing business only in gold or silver coin as part of the Independent Treasury Act of 1846, which legally separated the accounts of the Federal Government from the banking system. Following Gresham's law
Gresham's Law
Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." It is commonly...
, silver poured into the US, which traded with other silver nations, and gold moved out. In 1853, the US reduced the silver weight of coins, to keep them in circulation.
Representative money
Drafts for metal held on account were first issued in the first century BC in EgyptEgypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
.
In modern times, it was Stockholms Banco
Stockholms Banco
Stockholms Banco in Sweden was the first European bank to print banknotes. The bank was founded in 1657 by Johan Palmstruch and began printing banknotes in 1661...
that in 1661 first issued banknotes that were intended to be fully redeemable for copper coins; while initially popular, the bank eventually could not redeem all the notes it had printed, and ceased operations in 1664 after a bank run
Bank run
A bank run occurs when a large number of bank customers withdraw their deposits because they believe the bank is, or might become, insolvent...
.
National banks later guaranteed the redeemability of representative banknotes put into circulation, though rarely to the extent of having the promised amount of metal on hand for all currency in circulation.
By 1865, however, the system appeared sufficiently stable to create the Latin Monetary Union
Latin Monetary Union
The Latin Monetary Union was a 19th century attempt to unify several European currencies, at a time when most circulating coins were still made of gold and silver...
, establishing a common system for gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
and silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
coins used in several European countries.
Gold standard
After the Bank of England collapsed in 1696 the Queen sought for a solution and commissioned Isaac Newton to solve the currency problem. As a result of his analysis of the situation he developed the gold standard. This was a voluntary system eventually abandoned in 1971 when President Nixon closed the gold window in response redemptions of US$ for gold.The newly unified German Empire
German Empire
The German Empire refers to Germany during the "Second Reich" period from the unification of Germany and proclamation of Wilhelm I as German Emperor on 18 January 1871, to 1918, when it became a federal republic after defeat in World War I and the abdication of the Emperor, Wilhelm II.The German...
introduced a common currency, the German Goldmark
German gold mark
The Goldmark was the currency used in the German Empire from 1873 to 1914.-History:Before unification, the different German states issued a variety of different currencies, though most were linked to the Vereinsthaler, a silver coin containing 16⅔ grams of pure silver...
, beginning in 1873; this currency was based on a strict gold standard, with banknotes redeemable for gold coins. Other countries rapidly followed suit, and by 1900 was accepted by all major economies.
Digital metal currencies
In the Information Age a whole new level of digital gold currencyDigital gold currency
Digital gold currency is a form of electronic money based on ounces of gold. It is a kind of representative money, like a US paper gold certificate at the time that these were exchangeable for gold on demand. The typical unit of account for such currency is the gold gram or the troy ounce,...
has developed centered around gold.
External links
- E-Gold
- Global Digital Currency Association
- The Indomitus Report - Digital gold currency special report
- Strike the Root - Interview with Jim Davidson (August 2002)
- What is digital gold?