Before Money: When Humans Paid With Knives and Giant Stones

SPEAKER_00 0:00 This scrappy bit of paper I'm holding is a £1 note from 1700 England. Or at least my own replica of one. Back then, money in Britain looked like this: a scrap of paper, handwritten, signed by a banker, and somehow people trusted it.

SPEAKER_02 0:18 That's right. No watermark, no hologram, no security features at all. And counterfeiting it, kind of like you've just done, Ollie, could could get you executed.

SPEAKER_00 0:30 Yeah, I'm glad it's not 1700 England. These old notes, you know, they might have been easier to copy, but the punishment was severe, and that's why. But here's the weird part. This only worked because everyone agreed it did, that this scrap of paper was worth a week's or more than a week's wages.

SPEAKER_02 0:49 Yeah, and that just raises a really big question. If that piece of paper counts as money, what actually is money? And more importantly, what did we do before it?

SPEAKER_00 1:01 I'm Matt. And I'm Ollie, and this is what we did before, the podcast that charts the history of everyday life. And in this episode, we're going to explore some of the strange forms money has taken over the years.

SPEAKER_02 1:12 From giant stones that nobody moved to chocolate beans and even knives. Yep, knives.

SPEAKER_00 1:23 So, Matt, we interact with money almost every day. It's one of the leading causes of stress. I don't know if it is for you, but um and obviously, you know, we can we can get it in a physical form, which most of us don't really use anymore. Having like cash in the house is quite a rarity. Um, or it can come as a few numbers on a screen. But throughout history, as we've discussed, it came in many different forms. And of course, there was also a time before we used money at all.

SPEAKER_02 1:52 Yeah, the the the question of what we did before money is a good one because money is one of those things that feels like it's kind of always existed, like society really relies on it. For most of human history, there was there was really no such thing as a coin or a note or a or a bank account, though.

SPEAKER_00 2:10 Yeah, because uh like buying stuff that the way we do in the modern age um hasn't always happened. Um so before we go backwards in time, I'd like to first establish what actually is money. It's the thing I never have enough of. Uh yeah, yeah, same. But beyond that, if we go slightly deeper, um money is just trust. Um, it's not like a thing really at all, it's an idea. So, you know, a ten pound note, for instance, is is just a piece of paper or polymer these days. Um you can't eat it, you can't build a house with it. It's just worth £10 because everyone agrees it's worth something.

SPEAKER_02 2:50 Yeah. Um it's pretty wild when you stop and think about it, because if tomorrow everyone just kind of decided that £10 notes were worthless, they kind of could or would be. Yeah, there's there's pretty much nothing backing it up except collective belief.

SPEAKER_00 3:08 Exactly. And this is the thread that runs through the entire history of money. Um you know, every single form it's taken, whether it's a gold coin or a cow reshell or or a number on a screen, that only works because a group of people looked at it and went, Yeah, all right, I'll accept that.

SPEAKER_02 3:24 Yeah, which which kind of means that the history of money is really the history of trust. And humans, it turns out, have trusted some very strange things.

SPEAKER_00 3:34 Yeah, and there have been well clearly many times when humans have literally gone, nah, we don't collectively believe this has value anymore. Otherwise, we would have stuck with all the same forms of money forever, right? So at some point, uh these ancient shells were just people just went, nah, they're they're worthless now. And it's like, what do you do at that point? I always worry about this because you know, if we ever end up in like a post-apocalyptic world, some crazy nuclear fallout or something happens, money could quickly become worthless. All this stuff that we've strived for um could just vanish into thin air and not mean anything to anyone. It's true.

SPEAKER_02 4:13 And also, you know, not to mention, um, in kind of cashless society, if people say that the numbers on your screen don't m mean anything anymore, it's even less so than cash or whatever, right? In Fallout. Have you played the Fallout games before? Yeah. Yeah, I think what their currency look, bottle caps, aren't they?

SPEAKER_01 4:33 Oh, are they?

SPEAKER_02 4:34 I guess at some point decided, I don't know much about the law, but I'm pretty sure it's um bottle caps that they decided on using as currency. So, you know, that might be what we settle on.

SPEAKER_00 4:44 There have just been so many forms of money that why not bottle caps? And before we get into talking about this scrappy banknote that I've been waving around, or life before money ever existed, um I really want to highlight this amazing form of ancient currency, knives. So in ancient China during the Zhao dynasty, uh, which is roughly 600 to 200 BC, coins weren't round, they were shaped like tiny little knives.

SPEAKER_02 5:12 Knives. Can you elaborate a little bit more on that?

SPEAKER_00 5:15 Yeah, so they were like little bronze knives about the length of your hand, and they had a ring at the end so that you could string them together. Um, and they are called, which I love, knife money.

SPEAKER_02 5:27 It's a very literal naming convention. But surely, you know, a sharp blade, how do you carry that around without stabbing yourself?

SPEAKER_00 5:36 Yeah, just like sliding into your pockets slightly wrong. I yeah, I did wonder whether they had sheaths or something that you had to that would be just a pain though. So the thing is, people didn't actually use them as knives. Um, they they were becoming symbolic of knives. So this the shape almost certainly came from real knives and tools that had been used in earlier trade. But at some point we went from trading actual knives to objects that looked like them that were symbolic of them. So they were tokens shaped like knives.

SPEAKER_02 6:07 It sounds like the earliest example of shrinkflation. Uh so money literally, money itself evolved from actual tools into just these tiny representations of tools, then.

SPEAKER_00 6:19 Yeah, it was useful at one point and then it turned to be completely useless ornaments essentially. But because it was made of bronze, it did have some like inherent value, but the bronze wouldn't necessarily have been enough to add up to its face value, so whatever you could trade it for. Um but we don't have like a sub surviving price list, which we do have for um cocoa beans, which we'll get into later. But um so you know, for that reason it's quite hard to say how many knives it would cost for like a loaf of bread, for instance.

SPEAKER_02 6:51 Would you need like standardized sizes? You know, I'm thinking of like five, ten, twenty Ps, you know, is that kind of the thing that there would have been for knives these little knives as well?

SPEAKER_00 7:03 Yeah, it's it seems as though that was the case. So all of the knives would have been subtly different in some way. So unlike today's coins, which are kind of made to be like uniform, like exactly identical, one knife might, you know, would look a little bit different to another, but perhaps the size was what was representative of their value. So a big knife may symbolize higher amounts than a small one, for instance. And it wasn't just knives that um this happened with, there was also spade money, which is coin shaped like little garden spades, which is basically the same idea. Originally, actual spade-shaped tools had value because they were useful for farming, and then they gradually shrank and became currency.

SPEAKER_02 7:44 So in in kind of like the m the modern day, at least for kind of white-collar workers in in in cities, it's like as if we started using tiny decorative iPhones as coins or something like that.

unknown 7:56 Yeah.

SPEAKER_02 7:56 Um I'm not sure.

SPEAKER_00 7:58 I think that would be quite nice actually. Nice little flair, nice little touch. Just keyrings, basically. Yeah, exactly. Well, the knives, because they can be joined together, do sound like keyrings, don't they? But what's interesting is you can see this exact same principle at work throughout history. So things that were inherently useful, tools, food, livestock, whatever it is, gradually become symbolic of value rather than being directly valuable themselves. And that transition from useful object to symbolic token is basically the invention of money.

SPEAKER_02 8:27 Right, yeah. I suppose it it all came down to probably the same idea. It's a lot easier to carry uh a small token of a knife or a spade around rather than big a load of knives and spades to trade with people.

SPEAKER_00 9:43 Yeah, and and slightly less um aggressive looking when you you come wielding knives and spades. Yeah. Give them some chicken. Yeah, are you taking it by force or are you offering to buy it? Take my knives. Yeah, it de-escalates very quickly. But Matt, this whole episode is what we did before money. So before we get into other strange forms that it's taken, what did we do before it became a thing? Because the textbook answer is barter, isn't it? So this idea that you've got some fish, I've got some wheat, and then we swap them. Like really simple.

SPEAKER_02 10:20 Yeah, or I've got some knives and you've got some chicken. Give it to me, hand it over. I'm not sure if that's bartering, and I wouldn't suggest you do that in the modern era, by the way. No, that still happens. Yes. Do people do people take chicken at knife point? I don't know. Um I'm sure it's happened. But it this bartering idea seems to make logical sense. And I I seem to remember being told about this in school history classes, right?

SPEAKER_00 10:51 Yes, yeah, and and it's not exactly wrong. So bartering would have been a form of trading, but um economists and anthropologists have actually pushed back a bit on this idea that barter was like widespread and really common, like the this everyday system that every uh everyone practiced.

SPEAKER_02 11:08 Right. So school was kind of wrong.

SPEAKER_00 11:11 Yeah, we found that out a few times on this podcast. I think that school isn't always right. Like um, and also there was something I was looking into for another episode, which was the vomitoriums that were supposedly in Henry VIII's uh era of England. So we learnt about these places where um particularly opulent and rich people would eat to the point of being sick, they'd go to the vomitorium, throw up, and then carry on eating. It was the height of indulgence.

SPEAKER_02 11:40 Oh, I think I have heard of this, yeah.

SPEAKER_00 11:42 Yeah, apparently it's a load of nonsense that didn't happen. But anyway, uh away from the school point, um, the problem with barter specifically is something called the double coincidence of wants, um, which sounds like a like a romantic comedy, uh, but it's actually a massive logistical headache.

SPEAKER_02 11:58 It also kind of sounds like something we'd say during our phase of being needlessly verbose.

SPEAKER_00 12:04 Yeah, we used to loved like uh writing these essays for our teacher, which were just full of crazily verbose words, just pointlessly uh overcomplex. I don't know what they thought of us.

SPEAKER_02 12:16 Yeah, I I seem to remember us both handing in essays that were three or four times the word count, and we would have absolutely used double coincidence of once somewhere in those. So um, what does this entail then?

SPEAKER_00 12:33 Okay, so uh let's say you're a farmer and you've got loads of eggs and you need a new pair of shoes. So you go to the shoemaker and you say, I'll give you twenty eggs for a pair of shoes. But the shoemaker doesn't want eggs, he wants firewood. So now you've got to go and find someone who has firewood and wants eggs, and then bring the firewood to the shoemaker. So you've got to do another trade. But maybe the firewood person doesn't want eggs either because they they want fish and and so on.

SPEAKER_02 13:02 So you're just running around the village trying to set up a chain of increasingly annoying swaps just for some eggs.

SPEAKER_00 13:10 Exactly. Yeah, it's it's like when you're trying to organise a group holiday and everyone's got different dates available, except this is a little bit more life or death. Like it's not a holiday, it's it's whether or not you're eating dinner.

SPEAKER_02 13:21 It kind of just sounds like life was like the majority of quests in RPGs.

SPEAKER_00 13:26 Yeah, I remember this one quest chain from The Legend of Zelda. Basically spans the entire length of the game, and eventually you give uh I can't even remember what the item was, it was so long and boring.

SPEAKER_02 13:37 The whole game could have been solved with some sort of currency system.

SPEAKER_00 13:42 Thankfully, that was just a side quest.

SPEAKER_02 13:46 Um, but this is well, not Legend of Zelda, but this example is presumably why people started using something as like a common medium of exchange, right?

SPEAKER_00 13:56 Yeah, exactly. And and this is where it gets interesting, really, because the first things that people used as money weren't coins and or notes or you know, anything like that. They were just things that everyone in a community agreed had value. Um, we know that the invention of money was likely prehistoric. So as you can imagine, you know, there's a lot of conjecture here. It's hard to pinpoint exactly what they were doing. But it is believed that cattle were one of the earliest things that people agreed had value. Uh, in many ancient societies, your wealth was literally measured in cows. The Latin word for money, pecunia, comes from percus, meaning cattle, and it's where we get the word pecuniary, uh which is another word I've never used it before, but it's another word for monetary, basically monetary.

SPEAKER_02 14:43 I thought you said you were verbose. Yeah, not that verbose. No, to be fair, I hadn't used this word either. Um but you know, when someone says they're they're a cash cow or something's a cash cow, yeah, they're being more etymologically accurate than they realise, actually.

SPEAKER_00 15:00 Yeah. And salt was another big one. Um Rome Roman soldiers were supposedly sometimes paid in salt, which is where we get the word salary from, and also the phrase worth his salt.

SPEAKER_02 15:13 Yeah, I'm not sure if this one's like a a legend or not, but I think it's generally accepted that there were there were periods where people were paid in salt sometimes.

SPEAKER_00 15:23 Um, although with the Romans, there is a bit of debate whether it was that there they were paid so they could buy salt or whether they were paid in salt. So yeah, there's a bit of legend mixed in there. Well, particularly for the Roman story.

SPEAKER_02 15:36 Imagine either way, getting your monthly payslip and it's just a bag of salt. It sounds a bit like the idea of like getting coal for Christmas to us now, but but actually, obviously, salt was incredibly useful. It's it's not like the fiat money that we have today, and it's largely just you know a concept and conceptually backed by things. Salt was known as white gold.

SPEAKER_00 16:02 It wasn't just seasoning, right? Um, so it was super important because it helped to preserve food and prevent spoilage and just generally good for like electrolytes, things like that. Um, and it was actually hard to come by. So um, if you weren't in a coastal town, for instance, near the sea where you could just evaporate it, you would have had to be mining for rock salt, which was a lot of effort, or you'd have to wait for it to come on long distance trade routes.

SPEAKER_02 16:28 I think the salt trade was a a huge thing, right? So for the Romans, there is debate about whether they were paid in salt, as we said before. But there is plenty of evidence that it w really was used for money by other civilizations, like the salt bars used in Ethiopia, like solid slabs or blocks traded in West Africa as well.

SPEAKER_00 16:50 Yeah, um, but these commodity currencies had obvious problems. So with cattle, they you know they die, uh, which isn't ideal. Salt could uh well dissolve in the rain, things like that. I don't know how often that happened, but salt didn't last forever. Um, if you were trading with grain, that could rot, and you can't exactly put a cow in your pocket and go to the market. It depends on the size of the cow, uh size of your pockets as well. It's like the knives, they shrunk the cows down over time.

SPEAKER_02 17:22 Yeah, yeah, pygmy cows that you take to market. Um long extinct. Yeah. But you know, also when you have the choice to kind of either eat or spend your money, that's kind of a problem. It's hard enough to kind of balance your spending through a month or a week. Um, so I think it's actually kind of good that you don't have that choice with like a £10 note and takes that choice away and you can't eat yourself poor accidentally. Um that's why eventually people move towards things that were durable, portable, and you know, hard to get hold of.

SPEAKER_00 18:05 Yeah, which brings us back to some of the strangest currencies in human history. So uh one of my favorite examples of this of early money comes from the island of Yap in Micronesia. Micronesia is in the western Pacific, right? Uh yeah, it's a tiny island, and the people of Yap used enormous stone discs as currency, which are called rhystones. And how enormous are we talking? Enormous. Like some of them were three to four meters across and they weighed several tons. So um imagine like a stone wheel taller than your living room ceiling.

SPEAKER_02 18:42 Yeah, I we just we were talking about cows before. This is even less portable, so yeah, it's not exactly pocket change.

SPEAKER_00 18:52 No, and and the amazing part is that they they didn't actually ever move them. Um so you didn't physically hand over a rye stone when you bought something, ownership just changed. Uh, this was this sort of happened through public agreement. Everyone in the village knew who owned which stone, and when a transaction happened, they'd all just collectively go, right, that one's yours now.

SPEAKER_02 19:16 Yeah, that's oh that's Dave's big rock over there. Yeah. Well, it's it's kind of like having the deeds to a house or something, I guess. It sounds like it's basically like a verbal ledger.

SPEAKER_00 19:27 Yeah, and there's this famous story. Um, it might be slightly embellished, but it's too good not to mention, which is about a rice stone that fell into the sea during transport. And the canoe with it on capsized and the stone sank to the bottom of the ocean. And the people of Yap decided it's still counted as money because everyone knew that it existed still, even though no one could see or touch it.

SPEAKER_02 19:51 That's amazing. That's that sounds a bit like how sort of divorced from the physical money that we are now. It's like, oh yeah, no, that money that's in the bottom of the ocean, that's mine, I'm rich. Yeah, yeah. It doesn't have to actually be physical just like now for them to trust it. And that is actually a a really good point that you know we just trust that it's there, or we just trust that the money is in the bank system.

SPEAKER_00 20:18 Yeah, the the rice stones are like a just a s a really good example of what money really is. It's not the object that matter matters, it's the shared belief.

SPEAKER_02 20:27 And you do wonder how often people just forgot who the stone belonged to. It it was I don't know. I I'm assuming it was quite important to them, but I can imagine there might have been some arguments about it. It was it sounds like it was based on like an oral tradition.

SPEAKER_00 20:44 Yeah, so rather than being written down, they would have just said it out loud. And I I think they had better memories than we do, right? Uh in the in the modern day. There must have been some occasions where it's like, wait, was that did Dave get that the other week or is it still Ben's?

SPEAKER_02 20:57 There must have been some some punch-ups over those stones for sure. That's my stone. So um from giant stones to something slightly more portable and delicious. Cocoa beans.

SPEAKER_00 21:13 Uh yeah, we spoke about these in our episode with Spencer Hyman and what we did before chocolate, but um in the Aztec Empire, cacao beans were at actual everyday money. Uh they weren't just a luxury item or a trade good, they were literally standard currency, and prices were surprisingly precise. We can actually look at some like price lists, ancient price lists. So records suggest a turkey egg cost about three cacao beans. Um, if you wanted to buy a rabbit, that was around 30. And the Aztecs took this really seriously. Cacao beans were collected as tribute from conquered territories and they were stored in royal warehouses, and they were basically the backbone of the economy.

SPEAKER_02 21:55 Presumably there are kind of the same downsides as using salt for money. Uh like this food is even more delicious, right?

SPEAKER_00 22:03 Yeah, the the temptation to eat your wallet must have been intense because cacao in by the Aztecs also was used to make like a bitter chocolate drink that they really, really loved, and we also spoke about that. Um, so you've got this currency that's also a delicious beverage, which is a bit of a conflict of interest, but it kind of reminds me of like that you know, having to find the balance between pleasure and like saving and and and being responsible with your money uh reminds me a little bit of this time that we had I think it was £10 between us, like ten pounds in the whole world left. Because we had just, I think, been uh away on holiday. Yes. And we'd spent all our cash without realizing. And and we had no way to get home because we weren't in Guernsey, we we had flown ab abroad. Yes. And instead instead of thinking what we could wisely do with that last ten pounds. We decided to quell the anxiety and just spend it on cinema tickets. Do you remember that?

SPEAKER_02 23:07 Yes. Yeah, I remember we couldn't we knew we couldn't afford our train. Um so we just went to the cinema and then we sat through through the movie, really enjoyed it, just completely turned this out, and then two hours later we we walked out and we were just like, ah, we're bankrupt. Oh no.

SPEAKER_00 23:28 Yeah, so imagine the temptation if we could just eat or drink our money.

SPEAKER_02 23:32 Yeah. Yeah. And the other thing that this must have been prone to was counterfeiting. With cacao beans, you could you could do one of two things, really. You could empty like the bean and fill the shell with dirt or clay and seal it back up, or even just make fakes from wax or clay, dough, or even like avocado pits.

SPEAKER_00 23:58 Yeah, you do wonder like what the issue of counterfeiting it is. It's like, well, it's still a bean and it still represents money, but I guess it's inflation and flooding the market. Um but counterfeit chocolate money does sound quite brilliant in a criminal sort of way, doesn't it? Yeah, it does.

SPEAKER_02 24:14 I suppose the other thing is it it genuinely doesn't have the use anymore. And I mean, we we can maybe look at it from the inflation point of view with today's money, but because our money doesn't also have a use, theirs did, and if you're flooding the market with stuff that's literally just dirt or a rock or something, then it's like, ah, oh, most of these cacao beans aren't really worth anything. That's a horrible cup of hot chocolate that you're gonna make.

SPEAKER_00 24:45 Yeah, that's true. So even thousands of years ago, wherever there was money, there were people trying to fake it, uh, which is a theme that actually runs through the entire history of currency, isn't it?

SPEAKER_02 24:55 Yeah, some things never change. So if we fast forward quite a bit to Britain in the late 1600s, there's one of the most incredible and kind of unbelievable chapters in the history of money.

SPEAKER_00 25:13 Yeah, so the Bank of England was founded in 1694, and it immediately started issuing banknotes. And now, obviously, when you picture a banknote today, you're probably thinking of like a colourful, intricate sort of piece of whatever it's printed on, security features, holograms, the lot. Very hard to counterfeit, like and very official looking, right? Yeah, I wouldn't know where to start, and I've I'm not gonna try.

SPEAKER_02 25:40 Um I've given myself a disclaimer, oh, I wouldn't know how to start counterfeiting money.

SPEAKER_00 25:47 I've never tried it. Um the first Bank of England notes, they were nothing like that. They were basically handwritten IOUs on plain paper, and a cashier would literally sit there and write something like, I promise to pay the bearer on demand the sum of £50. And that is it. Yeah, that's it. Handwritten. Um eventually they did start printing um portions of it, but still there was quite a lot of handwriting uh that went on on each individual note, and then obviously a signature as well, and maybe like a serial number type thing scrawled on. And the amount um may have been filled in by hand in the early days and maybe printed later, but no colour, no artwork, no no watermark. Watermarks did come eventually, but those initial ones um didn't have them, and they sort of look like a receipt from a shop more than they than than they did money. Like this is from 1700s Cornwall. Um, and you can sort of see that there's some printed uh elements on it, some printed portions, but also some scrolling, some scribbles. This is a legitimate uh well, it's not legitimate, this is I've printed I've counterfeited um one from from ancient Cornwall.

SPEAKER_02 27:00 Yeah, so for the benefit of people um who are only listening to the podcast, yeah, it is literally just basically a piece of toilet paper with some with some writing on it. Um and you know, we look at it now and it's like that's insane.

SPEAKER_00 27:18 People did just accept these, right? Yeah, they did. Um it's amazing if you just imagine someone in 1700s London handing you this sort of scrap of paper uh which is barely decorated and handwritten signed by some banker and it says this is worth 50 pounds. You know, that was roughly a year's wages for a la labourer at the time, and you just you just take it because you trusted that the Bank of England would honour it.

SPEAKER_02 27:43 And you mentioned this I promise to pay the bearer line. That's still on the notes today, isn't it?

SPEAKER_00 27:50 Yeah, it's printed on every Bank of England note, and that the wording that we've got today is a direct descendant of those handwritten scraps uh from back in the 1600s, 1700s. Uh, it was a literal promise back then, though, uh, that you could go into the bank and exchange the note for gold coins. Now we just keep it more as like a tradition.

SPEAKER_02 28:09 I always used to wonder that. Like I would be fascinated by um pound notes and things when I was a kid, and I'd see that line. I was like, I promise to pay the bearer 10 pounds. I'm like, no, this is ten pounds. This is the ten pounds, yeah. Exactly.

SPEAKER_00 28:24 That's what I always used to think.

SPEAKER_02 28:25 So what? If I I could get 20 pounds, I could get another okay. It was mind-blowing. So the the idea was that you could walk into the bank and exchange the note for gold coins, and it's now a tradition. That tradition kind of means nothing now.

SPEAKER_00 28:41 Well, it does still mean something. It means the government backs the currency, but you're not getting gold for it anymore. Because Britain came off the gold standard in 1931. So this note again is backed by trust. Everything just comes back to trust. Always. Um, but here's the thing about those early handwritten notes because they were so simple, counterfeiting became absolutely rampant. Yeah, I mean, you've just done it.

unknown 29:08 Yeah.

SPEAKER_00 29:10 I have a printer though, to be fair. I was able to just print it from my home printer and get a picture off the internet. So I do have it a little bit easier than like people from those days.

SPEAKER_02 29:21 Yeah, you didn't get inkjet printers in the 1600s, but um, but I imagine it wasn't that hard to copy when it was just a handwritten note, or you know, they didn't have all of these security features that we have now. So if you knew somebody who could print it um or something similar, I I imagine that you could get away with it a little bit easier. It wasn't that difficult.

SPEAKER_00 29:45 Yeah, I don't think people were doing it daily and it wasn't just like everybody, but it it wouldn't have been so hard, not nearly as hard as today. And the punishment was really severe. So banknote forgery was punishable by death. And that's not theoretical either. There were there were hundreds of executions for it in the 1700s.

SPEAKER_02 30:03 Jeez, and it you know, fraud is still seen pretty negatively today. Um and when people do it, it's it's not looked upon positively, but we don't, you know, we don't execute people for it now. I guess the fact that it was so easy to do, um, and obviously at just a different time, the the punishment kind of had to be severe to try to prevent everyone doing it.

SPEAKER_00 30:31 And that's why eventually the Bank of England had to introduce these printed notes with the complex engraving, the watermarks, the serial numbers, uh, which are you know the security features we now associate with money today. Um, because well, I guess they didn't want to keep slaughtering the population. Um, so it kind of helped with that. But for decades, the nation's currency was basically the honour system written on a piece of paper.

SPEAKER_02 30:52 Your printed version actually, um, if we were still using this paper, you they'd still be able to trace that you did it because modern inkjet printers you won't even see, but they um every printer will put it a tiny little um pattern of ink dots in a certain place that you don't even notice. But oh really? Yeah. So they will be able to identify your exact printer from that piece of paper if they wanted to. Yeah. Um so as you said, but the nation's currency was basically the honor system written on a piece of paper. That's not quite scrappy bits of A4, though, right? They did at least use more durable material than that. This was like rag paper made from cotton and linen rags rather than wood pulp, and it was much stronger. Slightly fibrous and had like an uneven texture.

SPEAKER_00 31:53 Yeah, exactly. So good counterfeiters would have needed to get their hands on this material specifically, unless maybe they were doing business in like a noisy, dark, busy place or something and could get away with like quickly exchanging it. But you'd be able to feel the difference uh between the materials if you were anybody who'd ever handled money like that. Um but what made these even easier to counterfeit in a way was the fact that each sheet was formed individually in a mold. So there were these subtle inconsistencies and they weren't perfectly uniform. So actually, you know, differences between notes wouldn't have been so pronounced because all notes had differences.

SPEAKER_02 32:29 And even with all the modern security features that we have now, counterfeiting never fully went away.

SPEAKER_00 32:36 It just got harder. Exactly. That arms race between the people making money and the people faking it has been going on for as long as money has existed. Fake cocoa beans, forged handwritten notes, all the way up to modern counterfeit rings. Uh it basically never stops. But actually, before those handwritten banknotes, England had an even stranger form of money, and this one lasted for centuries.

SPEAKER_02 33:00 And we're talking about tally sticks?

SPEAKER_00 33:03 We are talking about tally sticks. So for hundreds of years, from around the 1100s, the English treasury used pieces of wood as financial records and sometimes exchanged them like actual money. Pieces of wood.

SPEAKER_02 33:17 So this isn't like wood being used because it has implicitly got value and could be used later in building or something like that, but as something representative of value, right?

SPEAKER_00 33:30 Yeah, exactly. So uh basically what you did was you'd have a stick, usually hazelwood, and you'd carve notches into it. And the size and shape of the notches represented different amounts. And a big notch might be a pound, a smaller one might be a shilling, and a tiny nick is a penny.

SPEAKER_02 33:48 Okay, yeah, and I think hazelwood was one of them, but I think they could be made from willow, or they could even be made from bone or ivory or bone. Yeah, not just wood, um tally sticks were we're talking specifically about these ones, but tally sticks were something that could be used in prehistoric times even made of bone and ivory. So this is we're talking specifically about um Britain in kind of slightly more modern era, but this isn't a new concept. And it's kind of like a a wooden receipt in this context, yeah?

SPEAKER_00 34:26 Yeah, and the really clever thing is once the notches were carved, you'd split the stick lengthways right down the middle, and one half went to the government, and the other one went to the person who'd paid their taxes or maybe was owed money or something. And the two halves would fit together a bit like a jigsaw, and the grain of the wood meant each split was unique, like a fingerprint.

SPEAKER_02 34:48 It's genius, actually, isn't it? So you couldn't forge it because you'd need the exact other half of this wood to prove that the record was genuine.

SPEAKER_00 34:58 Yeah, exactly. It's it's a really elegant anti anti-counterfeiting system. Like no two splits would have ever been the same. And the longer half, the stock, was kept by the person the money was owed to, which, by the way, is where we get the word stock, as in stock market. Your your stock was literally your half of a stick.

SPEAKER_02 35:19 So the word stock that we use in finance today has been going for quite a long time, and it comes down to this, right?

SPEAKER_00 35:26 Yeah, stockholder, stock exchange all comes from people holding half a stick. That's just one of those facts that will permanently change how you see a word. Yeah, and these tally sticks were actually used for ages. They were used by the English Exchequer until 1826, uh, which is really quite a long time for what's essentially a piece of notched firewood. Yeah, and and then what what happened to it all? Yeah, this is this is kind of the best bit. So in 1834, someone decided to burn the old tally sticks in the furnaces beneath the Palace of Westminster, and the fire got so out of control it burned the Palace of Westminster to the ground. I wasn't aware of this. Are you joking? No, no, no. The Houses of Parliament that we see today, the iconic building that we all know, was rebuilt because someone decided to incinerate a load of medieval accounting sticks and got a bit overzealous. Guy Fawkes would be proud. Yeah.

SPEAKER_02 36:24 But there's one form of ancient money that we haven't spoken about yet, and it might be the most widespread of them all. Yes, cowrie shells. Yes, cowrie shells. So these small, smooth, glossy shells, mostly from a species called the the money cowrie, were used as currency across Africa, South Asia, and East Asia and the Pacific Islands, and we're talking thousands of years of use across multiple continents. Some historians even consider them the most widely used currency in human history.

SPEAKER_00 37:00 Wow, in human history. Yeah. Um and they actually tick all the boxes of good money, don't they? They're durable, uh, they don't rot or break easily, they're portable, thankfully, so nice and small. Um and they're quite hard well, they're hard to counterfeit because they're naturally occurring objects with distinctive shapes. Yeah. And then they've got a relative scarcity as well, uh, you know, especially if you were far from the coast where they were harvested.

SPEAKER_02 37:27 Yeah, yeah, yeah, totally. And in places like West Africa, cowory shells were in use as a currency well into the 1800s, even. European traders actually imported massive quantities of them from the Indian Ocean to use in the slave trade, and they flooded markets with shells and deliberately destabilized the local economies.

SPEAKER_00 37:51 Oh god, yeah, that's a much darker chapter in the history of money. Although there's plenty of darkness to money, I think, that we we're not going to explore today. But um, yeah, currency has always been a tool for power, and when you control the supply of whatever people are using as money, you control the economy.

SPEAKER_02 38:10 Yeah, which is essentially kind of what central banks do today, just with less ocean involved. Or shells. Yeah.

SPEAKER_00 38:18 Um but the Cowry Shell thing also shows how money doesn't need to be issued by a government or stamped by a mint. It can be anything as long as people well, as long as enough people agree on it.

SPEAKER_03 38:30 Mm-hmm.

SPEAKER_02 38:30 Yeah, definitely. I mean, we won't go into it in this episode, um, as it maybe doesn't count as money, but there was, I think, the Dutch with tulips, there was the tulip bulb thing where people went crazy over them, the value skyrocketed, and then the value crashed. Um, so yeah, as long as everyone sort of agrees that something has value, it has value.

SPEAKER_00 38:50 Yeah, like um I like trading card games, I don't play uh anymore, but if you have a look at a card called Black Lotus from Magic the Gathering, a lot of people who've never played Magic the Gathering will know of this card. There's one listed on eBay right now, and it's had 58 views today, so people are looking at it, and it's got an approximate value here of 117,000 pounds. That's crazy. That's obscene, isn't it? And and it is just a piece of old card. Um and it's not even a mint condition, that it's got a slight imperfection, and but and people just agree that it's worth that, so people will buy it at that.

SPEAKER_02 39:32 It doesn't have to implicitly have value because the materials or the use of the thing it is like exceptionally good. It's just that the consensus is that it represents value.

SPEAKER_00 39:44 Yeah, and actually a lot of the time that the value just it doesn't make any sense to me for an old card. But anyway, um we've talked about food, shelves, stones, sticks, scraps of paper, magic the gathering cards. But at some point someone sat down and thought, what if we just made small metal discs with a stamp on them?

SPEAKER_02 40:03 Yeah, coins. Yes, coins. And and that somebody was in Lydia.

SPEAKER_00 40:09 Yeah, Lydia, modern day Turkey. Around 600 BC, the Lydians are credited with minting the first standardized coins. They were made from electrum, which is a natural alloy of gold and silver, and stamped with a lion's head.

SPEAKER_02 40:25 Oof. Well, um, sounds like the coins themselves were quite valuable if they were made of uh an alloy of gold and silver, but um this was such a good idea then that obviously it spread everywhere.

SPEAKER_00 40:38 Yeah, and really quickly, within a couple of generations, the Greek city-states were minting their own coins, then the Persians, then the Romans, and the concept was just way too useful. Um, because the genius of coins is standardization, um, that's why people gravitated towards it. Before coins, if you were trading lumps of silver, you'd have to weigh it out every time. Uh, is this lump really worth what you say it is? But with a coin stamped by a recognized authority, that's basically saying this contains a specific amount of metal and you can trust it.

SPEAKER_02 41:09 Yeah, exactly. So this is kind of the time when a coin was worth the the material that was in it, which isn't the case now. And people were were kind of shaving bits off the edges of coins, right, to get that value.

SPEAKER_00 41:23 Yeah, they shaved bits off the edges. Coin clipping was a massive problem for centuries. They would shave tiny amounts of precious metal off the edge of these coins, melt them down, and then keep the profit, which is actually why coins eventually got milled edges. You know, if you um place your finger around the coin, you can feel those little ridges around the rim. They were an anti-counterfeiting measure, so you could tell if someone had been filing bits off.

SPEAKER_02 41:48 Ah, so so yeah, next time you're fiddling with a coin, uh, if you even use them that often these days, but those ridges, which we don't even think about, they're there because of mm medieval people basically scamming the system with um like a file.

SPEAKER_00 42:05 Yeah, so they they've caused a ripe old problem through history, those scammers. Um and this whole period is fascinating because you can watch money slowly becoming more abstract. First you got cattle, which is obviously useful, then it's shells and metals, less directly useful, but still physical objects with some inherent value. Then coins, still metal, but now the value is guaranteed by a stamp rather than the metal alone. And then it's paper, but like no inherent value at all, just a promise. And now it's just m numbers on a screen. Yeah, numbers on a screen. That brings us right forward to the modern day because if you think about it, what we use as money today would look absolutely insane to someone from any previous era of history.

SPEAKER_02 42:50 Yeah. So you tap a piece of plastic on a small machine and invisible numbers move from one place to another, and then you own a sandwich.

SPEAKER_00 43:02 Yeah. And the numbers themselves aren't even stored anywhere physical, they're just in a network of computers that exist in multiple places simultaneously.

SPEAKER_02 43:11 Yeah, and that plastic card is linked to a bank, but you've never been to the bank. You opened the account on your phone and you just trust that those numbers are correct.

SPEAKER_00 43:22 Yeah, it does sound mad when you lay it out like that. Uh like most of the money we use today we never ever physically see or touch, or even the people who handle our money. You know, we've we've just developed this entirely virtual experience.

SPEAKER_02 43:35 Yeah, it's it's really strange when you think about it. You can see the timeline, but we've become so divorced now from the things that made money worth something. Whether it's physical as cash or virtual as numbers in your bank, the US dollar and and many other currencies, as we mentioned with the pound before, are no longer backed by the value of something physical like gold. Um you mentioned before that with the British pound you could go and exchange it for gold. Um there was this something was called the gold standard. The gold standard, just like that's just when something's good, isn't it? It's the gold standard. Yeah, well, we do use that meaning for the term, like if if something is the thing that serves as a point of reference that other things should be compared to, but like this podcast being the gold standard. We're the gold standard of all podcasts. But um, in the past it it meant that the currency represented a fixed quantity of gold. So the US dollar actually was a promise of a certain quantity of gold, i.e., gold was the thing with value, it's just easier to pass around dollars instead.

SPEAKER_00 44:47 The paper money has a meaningful value then. And I guess you couldn't easily create dollars out of thin air without the gold reserves to match it either. Um so how does it work now?

SPEAKER_02 44:58 Well, the US dollar and Many other currencies like the pound are known as fiat money, which it this means, and I'm no expert on this, but it means it's not tied to gold or any other physical commodity. The value comes from trust in the US government, the strength of its economy, and the fact that it's just widely accepted for payments.

SPEAKER_00 45:24 So, really, what we said at the start about the value of money just being something people could decide doesn't exist anymore, well, that really uh wasn't that much hyperbole.

SPEAKER_02 45:34 Yeah, I mean we're several steps away from the whole this thing is equivalent in value to this other thing.

SPEAKER_00 45:43 Not to mention the fact that there is uh a lot more debt that exists in the world, well uh at least seemingly, than there is actual money to pay off that debt.

SPEAKER_02 45:52 Yeah, yeah, we've really complicated things. Uh I think this is largely a result of fractional reserve banking and the idea of loaning money with interest as well.

SPEAKER_00 46:03 Yeah, so if if I need £10, you offer to give it to me, but the deal is that I'll give you 12 back in the future. Like, where does that two pound come from? Uh and not to mention governments can just print money, uh, which obviously devalues the money that already exists.

SPEAKER_02 46:19 Yeah, it was it was tougher when you had to have the gold reserves to back it because then it's like, oh, okay, if everyone wanted to cash in their dollars, yeah, we wouldn't be able to give them the gold. Um so although it's a whole other level of abstraction, you can kind of see the idea of cryptocurrency for all its faults. We are talking about an yet another step away from this abstraction. Um it's true that it's money that's created by computers just solving maths problems, um, and that money only exists on some distributed digital ledger, and the value can swing by thousands of pounds in just two days. The the currencies do aim to increase and not decrease in value and uh not just be creatable on a whim by a government, at least something like Bitcoin, some others uh are different. You know, when you own a Bitcoin, you own that, not the promise of one and not something loosely backed by one. So I I I'm not, you know, I'm not a crypto bro, but you can kind of see the idea and why.

SPEAKER_00 47:35 Yeah, it's like a digital version of going back in time, like uh digital gold. Uh but at le you know gold though is tangible and has a real use. This is still an abstraction, right?

SPEAKER_02 47:47 Yeah, yeah. Bitcoin or or any other currency, it seems, has value these days because we agree that the fact it's scarce means it has value. Um and when you put like Bitcoin next to a a rhystone at the bottom of the ocean that everyone agrees is money, they're not that different in principle.

SPEAKER_00 48:10 Yeah, and like we've sort of established now across the episode is that they just like pretty much all forms of currency, they they entirely uh rely on collective belief. So the stone is valuable because the village agrees it is, um, and same with the tally sticks, and Bitcoin is valuable because enough people on the internet agree it is.

SPEAKER_02 48:30 Um the only real difference is that nobody's ever burnt down parliament with a Bitcoin, yes. Not with the physical one, but uh there's still time for it to happen. Yeah. So if we look back at everything we've covered, so from barter to cattle, salt, rhizones, cocoa beans, knife money, cow richells, yeah, tally sticks, banknotes, coins, and now digital numbers, there's one constant. Yeah, trust. Yes. Every single form of money in human history only worked because a group of people agreed it had value. Whether that was a village on a Pacific Island or the entire global financial system.

SPEAKER_00 49:20 So taking into account everything that we've covered in this episode, I do wonder whether maybe in a hundred years people look back at us and think, oh, they used to carry plastic cards around. How quaint.

SPEAKER_02 49:32 Yeah, and they had to physically tap them against a machine, like cavemen.

SPEAKER_00 49:38 Yeah, exactly. And maybe we'll have evolved past the need for money, perhaps in the future. Maybe we'll be using the neural links in our in our brains to pay with our minds. Oh, I hope not.

SPEAKER_02 49:50 Um but you know, maybe maybe I'm just being kind of like a trogler diet. Yeah.

SPEAKER_00 49:58 People with cowie shells are probably like, oh, I I hope we never uh start this coined thing. I I love the shells. Yeah.

SPEAKER_02 50:06 And a phrase I often hear is that we're in um an attention economy in in you know the modern internet. And maybe the act of giving attention to something would be able to be used as credit for something else. That's a pretty dystopian, horrible idea.

SPEAKER_00 50:22 Well, that isn't that exactly what we do with social media. We give our attention to to line the pockets of rich billionaires.

SPEAKER_02 50:30 That's true, that's true, and we don't get much for it. And I guess actually, there's that browser brave that aims to give you something back for your attention. And I think that's actually literally they call it brave uh attention tokens or something. Oh, really? Um so but the idea is nice in a way, it's like the the advertiser's money would actually physically go to the person who's giving attention a little bit. I don't like this idea of you just have to give attention to advertisers and stuff to be able to afford things.

SPEAKER_00 51:00 No. And then there's ideas like the movie in time, where in a world uh where mortality is like a solved problem, so we don't we don't age and die anymore, perhaps time, like your time on earth, is a currency that you can buy and sell.

SPEAKER_02 51:17 A few years ago, I'd have seen a movie like that and thought it was just like a cool idea, but you can almost imagine it being real in the not so distant future.

SPEAKER_00 51:28 Yes, but however we'll be transferring value or things that symbolize value to each other in the future. Next time you pay for something and barely think about it. Remember that you're participating in one of the oldest and strangest ideas humans have ever come up with a shared hallucination that makes the world go round. Thanks for listening to what we did before. I'm Matt. And I'm Ollie. Please subscribe to the show. It really helps us out. And leave us a review if you enjoyed it, and we will see you next time.