Continueing on with the Meekonomics Project this is part 2 of Chapter One; A Brief History of Money
Once upon a time there was a caveman named Zork. Zork was very good at clubbing rabbits as they ran out of the thicket of bushes near his cave. He would sit for hours perched on a rock just above where the rabbits lived waiting for one of them to emerge and when they did; “BAM!” Zork’s life was very boring, some days he would grow very tired waiting for the rabbits to come out and would instead go off in search of blueberries to satisfy his hunger. Zork liked blueberries but he was colour blind and not very good at finding them. I guess you could say to Zork they were really just berries. Every so often he would eat some that tasted funny and get sick.
One day Zork met Kronk. Kronk was very good at finding blueberries and for some reason he never got sick on them but he very rarely ate meat because he just wasn’t very good with a club. Zork and Kronk made a deal. If Kronk would give Zork a basket of blueberries Zork would club a rabbit for him. And thus was the first transaction of goods ever made. Of course Kronk was a terrible basket weaver but we’ll get to that in a minute.
Pre-historic trade was based on the exchange of goods of equal value. Long before Adam Smith observed the division of labour people were specializing in what they do best and trading their skill and expertise in one area for the results of someone else’s. Pre-historic trade made for a better society as a whole but no one individual really profited in this scenario. As a result of their little deal Zork got
sick less often and Kronk was able to get stronger by the addition of more protein in his diet; who’s to say one profited more that then other?
It wasn’t until Kronk realized that his other neighbour Urg was a particularly skilled basket weaver who had trouble keeping warm at night that anything close to profit entered into the equation. Kronk made a separate deal with Urg. For every rabbit skin I give you, you make me a basket. This allowed Kronk to deliver more berries to Zork for which Zork gave him more rabbits which he ate and then turned into more skins for Urg. By working both sides of the transaction Kronk was profiting more from the arrangement than either Zork or Urg and the rabbit skin which neither Kronk, nor Zork had much use for became a kind of currency to further facilitate trade in other goods.
Essentially that’s what currency was in the beginning. A raw material that could be passed easily through a number of individuals from its source to an end user who may be two, three or several hundred people removed from the person who first produced it. By slowing down the flow of that “currency” one individual could profit by demanding more of what they produced before allowing it to continue on or speed it up by requiring less.
In order for a commodity to gain the status of currency it must be rare, uniquely useful and small enough to be stored and transported
over large distances. Perhaps the first raw material to be traded in this way was a black volcanic glass known as Obsidian.
Obsidian was used by stone-age cultures and early civilization beginning at around the end of the last Ice-Age. It was desirable before the advent of metal because it could be fractured into a sharp edge or point and used as a blade both in the household or as a weapon.
The earliest Obsidian mines date back to approximately 14,000 BC and are to be found in South East and Central Turkey with traces of the material showing up all along trade routes throughout the middle-east. By 6500 BC it is believed that Obsidian from central Turkey had found its way over land all the way to Egypt, had crossed the Mediterranean to Cyprus and travelled down the Euphrates and Tigris Rivers to the Persian Gulf. It`s no coincidence that this is also the region known as the Fertile Crescent which gave rise to agriculture and some of the earliest city states. Obsidian blades would have been an essential tool for early farmers both for harvesting crops and fending off wild animals.
Although Obsidian is still used today in surgical tools due to its superior hardness and ability to hold an edge better than steel, it`s
ability to be traded as currency collapsed as other materials were discovered which were more abundant and easier to use. Obsidian lost one of the three ingredients required to achieve the status of currency in the pre-historic world, its uniqueness and thus became vulnerable to advances in technology. Had it not been for the discovery of another mineral necessary for the expansion of agriculture the entire economy of the Fertile Crescent may well have been destroyed before it really got going; that new mineral was salt.
My next installment will walk through the growth and dominance of salt cartels from ancient Egypt through the middle ages right up to the Hapsburg Dynasty of Central Europe.