Some 2,400 years ago, the Greek philosopher Aristotle (384–322 BCE) believed that “when the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use. Key Concept: How did money come into being? Salt bars, for example, were used as money in Ethiopia and Eritrea until well into the 18th century. But “money” is not the same thing as “coin,” which in turn has to be distinguished from “currency.” Money refers to anything that may serve as means of exchange and of storing wealth. In all three regions, under the illusion that money is an essential part of the human condition, people began to define happiness as the possession of a as large a quantity of coined money as possible. In all three regions, the invention of coined money had a considerable impact upon the development of society. Coins came into being in three different places at three different times: Asia Minor in the 6th century BCE, India in the 5th century BCE, and China in the late 3rd century BCE. The distinction between intrinsic and extrinsic value in the case of gold and silver derives from their use for coined money. This chapter explores how the use of silver and gold as a means of exchange, as well as the invention of coined money, have created a distinction between intrinsic and extrinsic value of which modern engineers need to be aware when considering any new applications of material. In other words, the extrinsic value attached to it by means of memories and feelings far exceeds its intrinsic value deriving from a certain quantity of gold or silver of which it is made. A ring may be an heirloom, an object passed from one generation to another within the same family, which means its value might be defined primarily in social terms rather than economic terms. However, human sentiment also can increase the extrinsic value of gold. After being used for thousands of years for jewelry, gold is now used in electronics, as well as medicine, which has increased its extrinsic value. This chapter discusses how coined money introduced the conceptual distinction between intrinsic and extrinsic value. The coin thus circulates at a value higher than that of the metal from which it is made. Coined money is based on the idea that the quantity and quality of the metal in the coin is guaranteed by some authority, often that of the state. When in the 6th century city-states in Greece began to strike coins in large numbers, the metal they chose was silver, with gold coming into use on a large scale only in the 4th century BCE. Coins were invented in three different places at three different times, but the earliest coins were in fact struck not in gold and not in silver, but in a naturally occurring alloy of both, known as electrum. Complex societies, such as those in ancient Egypt or Mesopotamia, used both gold and silver as money (standard of value and a means of exchange) but not as coins. Despite the occasional use of silver in medicine, or of gold in dentistry and the production of stained glass, the primary use for both metals was the manufacturing of jewelry, sacred vessels (such as liturgical vessels used in the Church), and coins (made with gold and silver because of their high luster, pleasant colors, and tarnish resistance). Until the late 20th century, there were very few “technological” applications of precious metals. “Gold is money everything else is credit.” -John Pierpont Morgan Abstract
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