Money

One day in the land of Lydia, someone marked a piece of precious metal with a royal stamp. In that moment, the world of trade changed forever. Gold went from being a metal to being the first shared language of wealth.

Before the coin

Before there were coins, people traded with precious metals, but in the form of ingots and rings. The trouble was that every trade meant weighing the metal and testing its purity. It was slow and laborious, and it made trade hard. There had to be a better way.

Lydia found it: a small kingdom in western Anatolia (today's Turkey), rich in gold and electrum from the river Pactolus. Around 630 BC, someone in Lydia marked a piece of metal with an official stamp. That stamp guaranteed its purity and weight. There was no longer any need to weigh and test it every time; you only had to count.

The coin added nothing to the value of the metal; it only made trust easier.

The first standard coin

The first coins were made of electrum, a natural alloy of gold and silver. But the value of electrum was unstable, because its mix of gold and silver varied. Then, around 550 BC, a king named Croesus — whose name became a byword in the West for fabulous wealth — struck the first coins of pure gold with a standard purity. This was the birth of a monetary system that would last for centuries.

When Cyrus the Great conquered Lydia, he did not overturn this system; he adopted it and carried it on. Soon after, Darius the Great struck his own gold coin, the daric, which was known and accepted across the world of its day.

The gold standard

Centuries later, when paper money appeared, people leaned on gold once again. Nations tied the value of their banknotes to gold, in a system that came to be called the gold standard. Each banknote was, in effect, a promise of a fixed amount of gold that could be claimed at any time. By the late nineteenth century, most of the world's major currencies were tied to gold.

Bretton Woods, and a night in 1971

The last chapter of this bond was written in the summer of 1944. In a hotel at Bretton Woods in the United States, delegates from dozens of war-weary countries set up a new order: currencies were pegged to the dollar, and the dollar to gold — thirty-five dollars an ounce, an official promise. For a quarter of a century, the world economy stood on that one sentence.

Then, one night in August 1971, Richard Nixon announced on television that the “gold window” was closing. From that night on, for the first time in history, no major currency in the world was tied to anything real. Today's money is no longer backed by gold, but the legacy remains: in the human mind, gold is still bound to the idea of “real money” — money that no one can print at will. And that brings us to the next hall: why, in times of crisis, do we turn to this same gold?