Sapiens: A Brief History of Humankind

People are willing to do such things when they trust the figments of their collective imagination. Trust is the raw material from which all types of money are minted. When a wealthy farmer sold his possessions for a sack of cowry shells and travelled with them to another province, he trusted that upon reaching his destination other people would be willing to sell him rice, houses and fields in exchange for the shells. Money is accordingly a system of mutual trust, and not just any system of mutual trust: money is the most universal and most efficient system of mutual trust ever devised.

What created this trust was a very complex and long-term network of political, social and economic relations. Why do I believe in the cowry shell or gold coin or dollar bill? Because my neighbours believe in them. And my neighbours believe in them because I believe in them. And we all believe in them because our king believes in them and demands them in taxes, and because our priest believes in them and demands them in tithes. Take a dollar bill and look at it carefully. You will see that it is simply a colourful piece of paper with the signature of the US secretary of the treasury on one side, and the slogan ‘In God We Trust’ on the other. We accept the dollar in payment, because we trust in God and the US secretary of the treasury. The crucial role of trust explains why our financial systems are so tightly bound up with our political, social and ideological systems, why financial crises are often triggered by political developments, and why the stock market can rise or fall depending on the way traders feel on a particular morning.

Initially, when the first versions of money were created, people didn’t have this sort of trust, so it was necessary to define as ‘money’ things that had real intrinsic value. History’s first known money Sumerian barley money – is a good example. It appeared in Sumer around 3000 BC, at the same time and place, and under the same circumstances, in which writing appeared. Just as writing developed to answer the needs of intensifying administrative activities, so barley money developed to answer the needs of intensifying economic activities.

Barley money was simply barley – fixed amounts of barley grains used as a universal measure for evaluating and exchanging all other goods and services. The most common measurement was the sila, equivalent to roughly one litre. Standardised bowls, each capable of containing one sila, were mass-produced so that whenever people needed to buy or sell anything, it was easy to measure the necessary amounts of barley. Salaries, too, were set and paid in silas of barley. A male labourer earned sixty silas a month, a female labourer thirty silas. A foreman could earn between 1,200 and 5,000 silas. Not even the most ravenous foreman could eat 5,000 litres of barley a month, but he could use the silas he didn’t eat to buy all sorts of other commodities – oil, goats, slaves, and something else to eat besides barley.⁸

Even though barley has intrinsic value, it was not easy to convince people to use it as money rather than as just another commodity. In order to understand why, just think what would happen if you took a sack full of barley to your local shopping centre, and tried to buy a shirt or a pizza. The vendors would probably call security. Still, it was somewhat easier to build trust in barley as the first type of money, because barley has an inherent biological value. Humans can eat it. On the other hand, it was difficult to store and transport barley. The real breakthrough in monetary history occurred when people gained trust in money that lacked inherent value, but was easier to store and transport. Such money appeared in ancient Mesopotamia in the middle of the third millennium BC. This was the silver shekel.

The silver shekel was not a coin, but rather 8.33 grams of silver. When Hammurabi’s Code declared that a superior man who killed a slave woman must pay her owner twenty silver shekels, it meant that he had to pay 166 grams of silver, not twenty coins. Most monetary terms in the Old Testament are given in terms of silver rather than coins. Josephs brothers sold him to the Ishmaelites for twenty silver shekels, or rather 166 grams of silver (the same price as a slave woman – he was a youth, after all).

Unlike the barley sila, the silver shekel had no inherent value. You cannot eat, drink or clothe yourself in silver, and it’s too soft for making useful tools – ploughshares or swords of silver would crumple almost as fast as ones made out of aluminium foil. When they are used for anything, silver and gold are made into jewellery, crowns and other status symbols – luxury goods that members of a particular culture identify with high social status. Their value is purely cultural.