Chapter energy and technology the enhancement of skin

5.7. Money and markets

In the last section I mentioned money as a hidden driver of great affairs, such as the Crusades, even though religious faith was ostensibly the cause of some of them. Money – in some form – was a necessary precondition for trade and markets. Markets were necessary to provide goods and services not provided by slaves (even when some of the goods were produced with slave labor.) And even slave markets – like most markets – required a medium of exchange.

When and how did “money” come into existence? The medium of exchange in primitive markets could have been some familiar and standard commodity, like sheep or goat skins, or olive oil, or cacao beans, or coconuts, or ivory, or salt, or even cowrie shells {Weatherford, 1997 #5513}. When you think about it there were few storable commodities of general use that had long enough lifetimes and that could be accurately quantified. Measurement of weight was a major problem in ancient times. The discovery that made Archimedes most famous was the law of specific weight, which enabled him to determine that the gold crown of the tyrant Hieron II (of Syracuse) had been adulterated with silver. According to legend he was in the bath when he realized how to solve the problem without destroying the crown, and ran naked into the street shouting “Eureka” (“I have found it”).

To make a long story short (long in the historical sense) markets were very local, amateurish, and inefficient for thousands of years, until exchangeable gold, silver, copper or iron coins were invented. Gold was probably the first and especially important because the metal is malleable, can be melted at a reasonable temperature, and was occasionally found in nature in relatively pure form, as nuggets or dust. Jason was a character in Greek mythology. But the “golden fleece” was an early method of recovering fine particles of gold from a flowing stream using a sheepskin. The particles of gold stick to the lanolin in the wool. Of course gold was also decorative, and gold jewelry was a sign of wealth.

Like gold, both silver and copper were occasionally found as recognizable nuggets. But as demand increased, the metals had to be mined and smelted, from sulfide ores at first, where heat alone was sufficient to drive of the sulfur and purify the metal. It seems that copper was first found in Egypt, but was carried by traders from many other places, especially along the “ring of fire”. In any case, the spread of copper tools and ornaments occurred roughly at the times of various documented migrations of tribes. The origin of the more sophisticated carbo-thermic smelting technology for oxide ores can only be guessed. But that technology, when it did appear, led to the “iron age”. Archeological evidence (consisting of rust associated with decorative beads) suggests that iron for decorative purposes was known before 4000 BCE. Other uses, e.g. for spear tips, were becoming widespread around 1300 BCE. Ultra-pure iron, as exemplified by the so called “Ashoka’s tower” in Delhi, India, was produced in small quantities in a few places around the world before the Christian Era (BCE). But in those days pure iron was perhaps even more precious than gold.

Mines were strategically important, since the first “industrial metals”, notably bronze and brass, could be made into weapons for armies and the armies could be paid in coins. The coins had to have fixed weights and fixed purity to be acceptable. The legendary inventor of gold coinage was King Croesus of Lydia, a small but prosperous Greek city-state in western Turkey. This happened about 560 BCE.³ The problem of standardization was solved by monopolizing the process and stamping an image of a lion’s face on the two sides of the coin and forbidding anyone but the king to produce coins. Coinage (and trade) spread rapidly after Croesus’ landmark innovation and it was accompanied by a huge increase in regional trade. Lydia, itself, was an important center for cosmetics production. Lydia’s independence was short-lived; it’s wealth made the city a target for the Persians, who conquered the city in 547 BCE.

The next major economic innovation was credit.⁴ It was innovated by the Order of the Knights of the Temple of Solomon (“Templars”) during the twelfth and thirteenth centuries. Credit was offered to members of the feudal nobility who needed cash to buy arms and transport their soldiers. The Templars’ own funds consisted of gifts and endowments from their initiates, at the beginning, and later from the lands and castles of the Crusaders who did not return with enough loot to repay their loans, or did not return at all. In fact the debt burden from financing the Crusades triggered a shift away from ecclesiastical to secular power in Europe.

The shift was very sudden. Secular power prevailed over ecclesiastical power when Philip “the fair” of France destroyed the Templars – who were supposed to be the Pope’s private army – in a single stroke: one day of lasting ill repute: It was Friday the 13^th of October in 1307. King Philip destroyed the Templars because he couldn’t pay his debts to them. He (and most of the French aristocracy), were heavily in debt to the Templars. He erroneously expected to find a literal pot of gold. What his agents probably found was titles to a variety of castles and villages held as security for loans outstanding. Frustrated and furious, he took it out on the prisoners. Captured Templars were accused of horrible crimes and burned at the stake.

Philip “the fair” (he was blonde) then took control over the Papacy itself, and moved the Vatican from Rome to Avignon, in France, where it stayed for over a century. But, without a central secular authority, Europe disintegrated into a number of competing but essentially independent principalities ruled by barons and a few bishops. In time the descendants of the Holy Roman emperors collected some of these principalities, by conquest or marriage, into larger more cohesive political and territorial units. Thus emerged the precursors of modern European nation states: England, France, Spain, Austria, Sweden, Poland and Russia. Other groups of principalities, territories, such as Germany and Italy, remained decentralized until the 19^th century.

When the Popes moved back to Rome in the 15^th century, after leaving Avignon, the Renaissance was under way and unstoppable. Both Venice and Genoa were already great maritime and financial powers and had trading colonies all over the Mediterranean and Black Seas. Other Italian city-states, especially Florence and Siena were important centers (and financiers) of commerce. The first banks, created in the 14^th century to fill the vacuum left by the departure of the Templars in 1307 were family affairs: the Bardi, Peruzzi and Medicis of Florence, the Grimaldi, Spinola and Pallavicino of Genoa, the Fuggers and Welsers of Augsburg, and so forth. When the Templars disappeared, the need for their financial services did not. These banks, together with the Spanish “conquistadores” who followed Columbus’ voyages in 1492, financed the age of discovery and the Italian Renaissance.