How Money Conquered the World
- didiermoretti
- Apr 10
- 7 min read
Updated: Apr 28
Around 600 BCE, in the sun-drenched hills of Lydia (modern-day Turkey), King Croesus's ambition and mineral wealth birthed a revolution: standardized money. What began as a practical fix for trade would reshape societies, turbocharge commerce, and redefine value itself. This tale of a modest invention’s outsized impact proves that even kings can stumble into world-changing ideas—though Croesus might’ve preferred stumbling into a less conquerable neighbor as we shall see. (1)
Shells, Metals, and Salt
Before examining Lydia's innovation, it's worth noting that humans had been engaging in primitive monetary exchanges long before Croesus minted his first coin. Archaeological evidence indicates that as early as 3000 BCE, Mesopotamians used standardized weights of silver as a medium of exchange. The ancient Chinese traded in miniature bronze replicas of tools, while Pacific islanders exchanged massive stone wheels. Shells, beads, cattle, and salt (2) all served as early forms of currency across different civilizations.
What made these items "money" was collective agreement on their value, but each system
suffered from serious limitations. Cattle die, shells vary in quality, and unmarked lumps of precious metal differ in weight. Salt—literally valued by weight in ancient economies—proved reliable until the inevitable rain, rendering daily transactions a soggy gamble. As one ancient Babylonian merchant presumably complained, "Try making change for a cow." Plus, no one wants to carry their wallet on a leash.
Coining a New Era
What distinguished the Lydian invention was its elegant solution to these problems. Around 600 BCE, in the capital city of Sardis, the Lydian kingdom began producing small, uniform metal lumps stamped with official symbols- royal IOUs backed by spears and divine right.. These earliest coins were made from electrum – a naturally occurring alloy of gold and silver found in abundance in the Pactolus River, which flowed through the Lydian capital. The coins were meticulously minted with consistent purity and weight, making them a reliable medium of exchange.
King Alyattes, father of the more famous Croesus, appears to have initiated this monetary revolution. His son, however, refined the system by separating electrum into its component metals and issuing pure silver and gold coins around 550 BCE. These coins, bearing the image of a lion and bull, represented something revolutionary: a state guarantee of weight and purity.
Croesus understood something profound
about human psychology and trade. By stamping his royal emblem onto standardized pieces of precious metal, he created a powerful trinity: intrinsic value (the metal itself), authority (the royal stamp), and convenience (portable, divisible units). In doing so, he eliminated the need to weigh or assay metal during each transaction – a cumbersome process that had hindered commerce for millennia.
The commercial revolution sparked by standardized coinage rippled through every aspect of Lydian society. Herodotus reported with great amazement on the unprecedented Lydian custom of allowing women to choose their own husbands. This wasn't merely a cultural quirk—it represented economic liberation. Women's ability to accumulate coins gave them independent control over their dowries, allowing them to wield greater influence in marriage negotiations. This economic agency directly translated to social autonomy—a stark departure from the patriarchal unions prevalent elsewhere. Money, it seems, was already beginning to reshape social relationships in ways its inventors could never have anticipated.
From Commerce to Conquest: A Fatal Turn
The Lydian innovation soon made Croesus fabulously wealthy – so wealthy, in fact, that his name became synonymous with extravagant riches. "Rich as Croesus" remains in our lexicon today, a testament to his legendary affluence. Just like the Phoenicians, Croesus' wealth came from trade rather than from conquest. Yet, despite his mercantile success, Croesus, like so many rulers before and after, succumbed to the siren song of territorial expansion. He poured his wealth into the two bottomless wells of conspicuous consumption so common among kings: opulent buildings and formidable armies, ultimately sacrificing his hard-earned prosperity on the altar of kingly ambition.
In a famous episode in Greek history, Croesus consulted the Greek oracle of Apollo to ask what chance he might have in war against Persia. The oracle replied that if he attacked mighty Persia, a great empire would fall. Croesus took the prophecy as a propitious one, and he attacked the Persians. The empire that fell was the great mercantile empire of the Lydians, proving that even the inventor of standardized money could make catastrophically poor investment decisions.
The Monetary Contagion
Standardized coinage proved irresistible, spreading rapidly across city-states and empires alike: Greek city-states, each with distinctive coinage, the Persians, utilizing it for empire-wide trade and taxation, and by 500 BCE, the Indian subcontinent. In addition to traders, rulers loved coins—their face on a coin was power they could pocket.
China independently developed its own coinage around the same period, suggesting that the conditions for monetary innovation were ripening globally. By 300 BCE, most major civilizations had adopted some form of standardized currency. The world had gone monetary, and there would be no going back.
This monetary revolution didn't just transform global trade networks—it fundamentally altered daily life and social structures. Perhaps nowhere was this transformation more evident than in ancient Greece, where the effects rippled through labor relations and social hierarchies. Before the arrival of coins, poor Greek peasants would work on the farms of rich landowners. They would agree to work for a season or a year, and the landowner would agree to give them food and clothes and a place to sleep. In the decades after coins arrived, that changed. Poor people became day laborers, clocking in for the day and walking away with coins—an early version of the gig economy. No more year-long stints for room and board—just clock in, grab your drachmas, and go. (3)
Money's Magic: A Shared Delusion
Money is probably the best shared fiction humans have ever created, a fiction so convincing it can make people do things they'd never do for God, king, or country—like invest in tulips or NFTs shaped like cartoon apes.
As Yuval Harari points out, "money is the only trust system that can bridge almost any cultural gap, and that does not discriminate on the basis of religion, gender, or ethnicity. Thanks to money, even people who don’t know each other and don’t trust each other can nevertheless cooperate effectively." (4)
By creating a common language of value, money enabled societies to quantify and compare previously incommensurable things. How many sheep equals one house? What's the value of a day's labor compared to a bushel of wheat? Money provided answers, crude but functional, to these previously unanswerable questions.
This quantification of value transformed human relationships and institutions. Taxation became more efficient and predictable. Justice systems could specify monetary penalties for offenses. Complex contracts could be written with specific valuations. Labor could be compensated with precise amounts rather than vague reciprocity.
Perhaps most significantly, money enabled the accumulation and mobilization of capital on previously unimaginable scales. Massive projects – temples, roads, aqueducts, armies – could be funded through the pooling of monetary resources. The abstract nature of money meant that value could be stored, transported, and deployed with unprecedented flexibility.
Money's Darker Side
Money's power to reshape society wasn't universally positive, of course. The same invention that liberated trade also created new forms of inequality and exploitation. Debt – a concept that exists only in a monetary economy – became a mechanism for social control. It allowed creditors to exert profound influence over the lives of those ensnared by financial obligation, sometimes to the point of near servitude. Ancient texts from Mesopotamia to China are filled with lamentations about usury and the suffering of debtors.
The abstraction of value through money also facilitated a psychological distance between actions and consequences. It became easier to quantify human life and labor in monetary terms, potentially reducing personhood to economic value -such as the widespread use of slave labor in the Roman Empire. As the philosopher Aristotle would later observe, money has the tendency to become an end in itself rather than a means to human flourishing - a concept modern financiers have embraced with unrestrained enthusiasm.
While we shape money to suit our needs, it quietly shapes us in turn. Brain scans reveal a disconcerting truth: the anticipation of cash triggers the same neural fireworks as a cocaine hit. Nothing triggers humans quite like money.
While food motivates dogs, the mere idea of financial gain sends humans into a neurological frenzy—proving that humans will perform impressive tricks for increasingly abstract rewards, unlike dogs who at least have the dignity to demand actual treats. (5)
The adoption of precious metal coinage created new geopolitical pressures. States needed access to gold and silver, leading to resource wars and colonial expansion. The insatiable European demand for precious metals, to fuel their monetary systems, drove colonial expansion, such as the Spanish conquest of the Americas.
From Croesus to Crypto
While Croesus would hardly recognize Bitcoin or contactless payments, he would surely appreciate their purpose. As we expand from physical coins to digital tokens, from national currencies to decentralized ledgers, we continue the grand monetary experiment that began in those sun-baked Lydian hills.
The irony is hard to miss: the more abstract money becomes, the more real its grip on our lives. Croesus lost his wealth and his kingdom to Persia, but his monetary invention outlived them both—proof that the most enduring empire is the one built on ideas and beliefs.
And perhaps the final joke is on us: for all our efforts to command money with apps and algorithms, it’s still calling the shots—just now from the cloud
Previous Article: Early Globalizers: The Phoenicians
(1) This article borrows from several books: "Money: The True Story of a Made-Up Thing" by Jacob Goldstein, "Coined: The Rich Life of Money and How Its History has Shaped Us" by Kabir Sehgal, "The Ascent of Money: A Financial History of the World" by Niall Ferguson, "The History of Money" by Jack Weatherford, and "Sapiens" by Yuval Harari.
(2) Roman soldiers were paid a salt ration, the salarium - from which the word salary originates. See "Salt", by Mark Kurlansky.
(3) Borrows from Chapter 1, The Origins of Money - "Money: The True Story of a Made-Up Thing" by Jacob Goldstein
(4) "Sapiens" by Yuval Harari
(5) Borrows from Kabir Seghal's "Coined: The Rich Life of Money and How its History has Shaped Us"
