Economy and money in ancient civilizations

Economic and monetary organization in ancient Egypt

History of Coinage

Economic and monetary organization in ancient Egypt

Historical background and Egyptian periods
Early exchange systems and paleo-currency

Historical background and Egyptian periods

This section outlines the economic and monetary organization of ancient Egypt within its historical context. The primary periods are as follows:

Old Kingdom (c. 2575 - c. 2130 BC): A period marked by the construction of the great pyramids, notably those of Giza. This was the golden age of the centralized Egyptian monarchy.
Middle Kingdom (c. 1938 - c. 1630 BC): Political and cultural renaissance after a period of instability.
New Kingdom (c. 1539 - 1075 BC): A period of territorial expansion, military power, and international trade. It includes the reigns of famous pharaohs such as Tutankhamen and Ramses II.
1323 BC. - Death of Tutankhamun: The young pharaoh died aged around 18-19. His almost intact tomb was discovered in 1922, making it one of the most famous of all archaeological discoveries.
Ramses II - Reigned 1279-1213 BC: One of the most powerful pharaohs of the New Kingdom. Known for his military campaigns, his great monuments, and for having probably concluded the first known peace treaty.
1275 BC - Sea Peoples: Invasions or migrations of groups called "Sea Peoples" destabilize several Mediterranean civilizations, including Egypt.
Battle of Xoïs - 1178 BC: Conflict between the Egyptian army and invaders, probably linked to the Sea Peoples. One of many battles at the end of the New Kingdom.
Late Period (664 – 332 BC): The final period of native Egyptian rule before conquest by foreign powers.
Cleopatra VII (69 - 30 BC): Last queen of Egypt, famous for her intelligence, charisma and alliances with Julius Caesar and Marc Antony, and probably also for her nose. Her reign marked the end of Pharaonic Egypt before its annexation by Rome.

By the 5th and 4th millennia BC, Egypt was already experiencing intense commercial activity on a large scale, linking Nubia, Palestine, Libya and the Red Sea regions through maritime, river and land trade (notably by donkey caravans).

Early exchange systems and paleo-currency

With the emergence of the first Egyptian chiefdoms around 3650-3400 BC, the site of Maadi, south of present-day Cairo, became a major center for copper technology and long-distance trade, notably with Mesopotamia via the Syrian coast.

Although this large-scale trade was mainly based on barter, a primitive form of money ("paleo-currency"), made up of prestige items such as semi-precious stones and fossil shells, likely existed. Gold probably already played an important role in these exchanges. The first explicit mention of a currency in Egyptian documents in the middle of the 3rd millennium BC reflects a long maturation linked to commercial practices.

In archaic societies, payments were frequent, not to buy directly, but to settle social obligations like dowries and religious rituals. These transactions required precise pricing and valuation, and primitive societies had privileged, monetiform (i.e., countable) objects to estimate this value. In the case of a dowry, a specific quantity of such an object would be noted for exchange, with the value being fundamentally tied to the individuals involved. This demonstrates that payments existed before the advent of formal monetary systems, but their value was often derived from social contexts.

Returning to Egypt, during the ancient empire, the "shât(y)" originally referred to a specific weight of metal (approximately 7.6 grams of gold or silver). It very quickly transitioned from a physical object to an abstract accounting function used to express value. We can recognize in it a unit of account, though it was not a stamped coin but rather a standardized measure of metal by weight. This represents a crucial step toward the abstract concept of money.

The notion of the shât(y) was eventually abandoned, perhaps due to the risk of fraud, which may explain why the Egyptians were slow to adopt stamped coins, preferring to weigh metal long after their neighbors had begun minting them.

In the Middle Kingdom, silver was rarely used for day-to-day transactions, which were mainly carried out with grain measures and bread quantities. It was over this long period that forms of scriptural money developed, where payments could be recorded in writing or settled by actual transfer of goods.

In the New Kingdom, the monetary system became more complex, integrating various commodity currencies valued in metals (gold, silver, copper), standardized fabrics, cereals and oil. Prices for everyday goods were often expressed in grain or copper, while precious objects were valued in gold or silver. Silver, rarer in Egypt than gold, became particularly prized and was consequently overvalued relative to it. Fabrics, a royal monopoly often granted to temples, were referred to as "cloth measures," confirming the economic importance of these institutions.

By the Late Period (first millennium BC), silver had become the common metal of exchange throughout the Near East. It circulated in the form of ingots, metal coins or rings, which were weighed and marked in temples to guarantee their weight and purity. Although not minted in the effigy of a sovereign, this system provided a reliable means of exchange.

The ancient Egyptians also had a generic term for money, "hedj," which designated any means of payment—metal, grain, cloth, or other goods—serving as consideration in a transaction. Documented examples show that transactions could be settled by combining various products, with their total value expressed in copper units ("deben").

Temples played a central role in the Egyptian economy: they collected and hoarded considerable treasures of precious metals (gold and silver) intended to honor the gods but also to serve as a monetary reserve that could be reintroduced into the economic circuit as needed. This practice of accumulating valuable reserves in temples, such as statues to be melted down in the event of war or crisis, is a recurrent theme throughout history.

The cultivation of linen was a royal monopoly often granted to the temples, and the manufacture of these precious fabrics further confirmed their economic importance.

The ancient Egyptians made a clear distinction between the ideological aspect of precious metals, linked to divinity (gold representing the flesh of the gods, silver their bones), and their practical function a store of value and a standard for other forms of payment.

Thus, although ancient Egypt did not develop a minted currency until the Late Period, it possessed a sophisticated monetary system based on the combined use of scriptural money, precise units of account, commodity-money, and precious metals valued by weight.

A distinction must be drawn between the concepts of "money" and "coinage." "Coinage" refers to minted coins, a concept that appeared later with the Lydians. "Money," however, is a broader concept encompassing units of account and stores of value. By this definition, a sophisticated notion of money existed long before the first coins.

Coins are therefore not a prerequisite for money; indeed, a functional monetary system can be dated to at least the 3rd millennium BCE, and certainly without doubt during the 2nd millennium BCE, particularly under the reign of Hammurabi in Mesopotamia.

It is a mistake to link the birth of money as a concept to the appearance of coins. As outlined in works like "The Origins of Money," the concept of money clearly existed in these ancient monetary systems.

Finally, Polanyi's concepts of reciprocity and redistribution, often applied to ancient Egypt, require nuance. While these forces were present, they did not form an exclusive framework. Pharaonic Egypt had developed a complex economy that integrated sophisticated commercial exchanges distinct from religious and ritual practices, demonstrating a degree of economic autonomy from the ideological sphere.

This is evident in the dual nature of precious metals: while associated with divinity, they were also clearly distinguished and utilized as economic assets. This challenges a purely Polanyian interpretation that views their use as primarily religious or embedded in social relations.

To conclude, the invention of minted coinage served several purposes. As discussed in "The Origins of Money," under point 5:

develop the possibility of economic policy through the use of methods such as devaluations and successive revaluations to reduce or increase imports and exports at lower cost

This suggests that from its earliest days, coinage was a tool of the state. Even the earliest coins, made of electrum (an alloy of gold and silver), shows evidence of this. Analysis of electrum coins from the first issuers, such as Croesus in Lydia, reveals that their gold content was often lower than that found in natural electrum deposits.

This indicates that the issuers already knew how to part gold and silver and were producing debased coins.

From its inception, the power to mint was used not only to certify weight and facilitate trade but also to increase the quantity of currency issued, a form of early economic planning.