Precise-weight metal ingots

As regular trade developed, and particularly as the volume of wholesale transactions grew to several carriages or wagons of goods such as expensive fabrics and high-quality metal wares, and as industrial relations reached the stage of contracts for the construction of palaces and fortresses, society started to consider gold to be the universal equivalent (Fig. 9). As Cantillon writes, «gold and silver, and only they, are small in size (with high value — A. G.), of equally high quality, easy to transport, do not produce by-products when they are exchanged, are easy to store, the objects which can be produced from them are beautiful and brilliant, and they can be used infinitely".¹⁰⁴

In other words, this commodity ensured a simple transaction and reduced transaction expenses.

Gold bars used as money were circulated in the form of a standard geometric mass of uniform shape, composition and weight, which was certified by a special stamp on the bar. The production and branding of these bars, naturally, was the prerogative of the highest authorities, that is, sovereigns and high priests. This attests to the fact that they were sufficiently widely exchanged even in long-distant historical times, and that eventually exchange developed into regular trade, which dictated the need for a standard monetary equivalent certified by the higher authorities..

Such ingots were in circulation in Ancient Babylon between 3000 and 2000 B.C. Small bars of solid-weight gold (about 14g) with the Pharaoh’s stamp were in circulation in Egypt around 3000 B. C.; bars without a stamp were worth less, as few people were able to distinguish gold from a counterfeit, but they trusted the stamp of the Pharaoh. Only expert craftsmen and masters of the gold industry could forge the Pharaoh’s stamp at that level of technological development, and each of these men was well-known. Also, the punishment for such forgery was extremely severe.

It is worth noting that the first promissory component appeared in this money and, even then, the first demand appeared not for consumer value, but for exchange value.

The exchange value in the gold bars was the ruler’s legal guarantee of their composition and weight. «In situations when one could only be certain of the authenticity of metal currency by means of a complicated testing process, for which the average person was neither qualified nor equipped, the stamp of a universally recognised government body could serve as a convincing guarantee of the authenticity of the currency… The challenge, which the government took upon itself to answer, initially consisted not so much of producing money as certifying the weight and quality of the materials being used as money everywhere… Pieces of metal were seen as money proper only if they had the stamp of the relevant government body, whose duty it was, as indeed it should be, to attest to the fact that the money did in fact weigh the prescribed amount and contain metal of the proper standard, which is what gave it its value" ¹⁰⁵

"The names of some modern currencies hark back to when they were gold money of precise weight. For example, the English pound sterling used to be equal in England to one pound of pure silver, in William the Conqueror’s time. In this form it was not minted, but acted as accounting money. The pound sterling was divided into twenty parts — shillings, each of which, in turn, was divided into twelve pence, or pennies. It is the penny, in fact, that was minted and in those times was the largest coin (K. Marx). However, in the 13th century, the weight of the English penny was equal to the weight of 32 wheat grains, «rounded, dried and taken from the middle of the ear". ¹⁰⁶

In 14th century Russia, bars of silver in the form of rounded batons with deep diametrical grooves, weighing up to 200g (Lithuania), or batons of triangular cross section weighing 197–200g (Novgorod), or elongated hexagons weighing about 160g (Kiev), having been given the name «grivna», were designed mostly for large accounts and payments. They were used to pay for important trade transactions, indemnities and monetary investments in monasteries, and to purchase large landed estates.

Novgorod grivnas that were split in half acquired the name «poltina» («half»)¹⁰⁷. Russian precise-weight ingots had no stamp or, therefore, promissory component, which signifies an extremely low level of development¹⁰⁸.

Circulation

The consumer value of such an entity was equal to the value of the metal, while the exchange value exceeded it on the scale of the value of the guarantee marked on the stamped area.

In such ingots, a promissory/liability component appeared in addition to the object component, and this was defined by the dual nature of this material commodity in the prevalence of the object component. However, the significance of the promissory component (the Pharaoh’s guarantee of the composition and weight of the ingot), provided for by the property of the ruler, his right to collect taxes, to lead aggressive wars and carry out raids, made owners think about whether it was efficient to remelt ingots — for then the promissory component was lost forever, which entailed a significant loss of value.