Before hard currency, people of the world struggled to trade goods and services for value. After all, it was difficult to determine how much a quantity of grain was worth compared to that of an animal.
To add to the complexity, this type of commodity trading was cumbersome. Such items were not portable, and so communities found it difficult to do business further afield than their own backyard.
The trade revolution
Lydia was part of an ancient kingdom, located in what is now western Turkey. The region was rich with gold, giving the kingdom great wealth and power and allowing them to build—and pay—a great army, which they employed in their never-ending war with the Greeks.
It was the Lydian King, Alyattes, who first minted gold into coins, circa 600 BCE. The stater, as the coin was known, bore the image of a lion and sometimes an ox, each a symbol of strength, perseverance, and triumph.
The birth of retail
As a tradable currency, the stater was not only valuable, but it was portable. Better yet, it came to be accepted in places beyond Lydia as it had a standardized value based on its weight. This made it possible for anyone who possessed these coins to trade them for various types of valuable goods, both at home and afar, allowing commerce to prosper throughout the Mediterranean world.
The Lydians are credited with being the first to establish shops where people could purchase a variety of goods. Arguably, the stater was the catalyst that brought about this commercial revolution, transforming civilization, and ushering in a new age of prosperity.
Following the fall of Lydia and the defeat of its king, it wasn’t until 1250 AD and the invention of the Florin that a comparable form of currency appeared in Europe. Some fifty years after that, paper money made its debut.
Why are coins so important?
Before the Lydians, there were many attempts at developing a currency system, but for many reasons, none of these systems had any lasting success.
Take the barter system, for instance. Standardizing the value of one thing over another was impossible. You couldn’t carry most things as the items traded were large or only had value in a certain, sometimes unwieldy quantity. Some, like farm animals, came with risks; plus, they had to be fed and cared for, so while this was a viable commodity on one level, it wasn’t appropriate for every human need.
Then came cowrie shells. They were portable and came in many sizes, but there was no standard value attached to them. As something the average person could collect on the seaside, they were largely worthless and untraceable.
As a coin, the stater was far superior and quickly became better-known. Made from a metal alloy of gold and silver called electrum, the stater was the first state-sanctioned currency. This indicated that the government was willing to accept the coin as payment, giving it a quantifiable value. Fractional staters were minted in different weights, representing values that were one-third, one-sixth, one-twelfth, and smaller.
Following the success of the stater, many cultures began making their own electrum coinage, though none had quite the same impact as the Lydian stater on the way we think about money today.
About: Mr. Rory Brown is a Managing Partner and Co-Founder of Nicklaus Brown & Co. Rory Brown is also the co-founder of Lydian, which gained him recognition by Ernst & Young as Financial Services Entrepreneur of the Year, and was a member of the INC 500 for multiple times. He is currently most passionate about delving into the history of money and how our modern currency has evolved into what it is today. In his spare time, he can be found pouring over the history of the Lydians - the first people to have used gold and silver coinage.