World-building Currencies: How We Pay

When creating a world, one thing to think about is how the citizens of a particular country or region get the things that they need. People rarely rely on their own labor to directly fulfill all of their needs even in a primarily subsistence economy. This requires exchanging goods and services with the others in our communities or surrounding areas. As communities grew larger and networks of exchange grew bigger and bigger, ensuring a fair exchange required agreed upon mediums of exchange.


Money before Cash - Commodity Money


The first true mediums of exchange were not the cash we recognize today, but other forms of commodity money. Commodity money is when a set amount of an item is used as a unit of measure to compare the value of other goods. The trade value of the commodity is based on its intrinsic or inherent value. Commonly used commodities often had stable value because spoilage or consumption by the market for other uses like exports were generally offset by additions into the system.

This is not quite the same thing as barter. Barter is the direct exchange of one good or service for a second one using their value compared directly with one another. For example, a farmer exchanging a turkey to the porter for helping carry their goods to market is engaging in barter. (unless of course chickens are that culture or region’s agreed upon medium of exchange!) In an economy relying on cacao seeds for commodity money, the farmer might exchange 20 cacao seeds or 20 cacao seeds worth of other goods & services in exchange for the porter’s labor.



Exchange in Fantasy TTRPGs


Most fantasy worlds use cash, coins of metal. This is understandable because it is the closest to the currencies we use today, coins are easy to move around, and precious metals are still used as stores of wealth even the days of stocks and Bitcoin. It is also easy for modern players to understand the value of 5 gold coins is more than 5 copper coins, even if most of the currencies we use today are representative rather than based on the commodity value of the coin or bill.


However, most fantasy currencies are built on several assumptions that do not match the history of much of the world. First, humans have a long, established history with other forms of commodity money that do not involve precious metals or coins. Second, the adoption of coins is also not necessarily a linear evolution that is widely accepted by all members of a society once the idea is introduced. Finally, the hierarchy of value (Copper is less than Silver is less than Gold) and the stable exchange rates used in popular fantasy games often do not match the historical reality.



A Practical Example of Assumptions in Currency Evolution



To demonstrate some of these assumptions, let’s look at Korean history. For much of early Korean history, Chinese currencies were used for trade in Korea starting in the 2nd century BCE. There was certainly a desire by the various governments on the peninsula to introduce a local currency for both security and stability, but the first attempts were not yet made until the 11th century and largely failed until the 17th century.


Instead goods were more often used as commodity money. Many may be familiar with the use of rice for trade in certain parts of Asia. However, another commodity with a long history of use in Korea for exchange was the pohwa, a bolt of fabric of a set length. The fabric, made from hemp or cotton of varying quality, could be used to trade goods & services and even pay taxes to the government.

Why not coins?

The popularity of fabric & grain exchange trumping coinage or paper bills because of its multiple utility, better value stability, and small value units than metal currencies. For example, the only real successful currency from this period was the eunbyeong (ŭnbyŏng or hwalgu). It took the form of silver vases of ~375 grams the early twelfth to the mid thirteenth century. Such a large amount of silver made it limited to large value applications in trade and transactions between nobles & the government. A silver famine caused by tributes payments to the Mongol Yuan dynasty destabilized the value of silver, so hacksilver or silver and gold ingots measured in Chinese tael (~37 grams) were legally authorized for large transactions.


Smaller unit value currencies based on coins and bills were too unstable because of a lack of reliable supplies of production materials or poor monetary polices. This created a lack of trust that caused attempts to introduce locally made currencies among the common folk to fail for about 500 years. To paraphrase one farmer quoted by a government official, ‘I can’t feed my family coins or clothe them in paper.’


So what caused coins to catch on?


A series of events simultaneously forced people to rely on trade to survive and increased the usefulness of a cash currency in the 17th century.


First, the Imjin War of the 1590s devastated the countryside, reducing the availability of grain or cotton for making pohwa. Displaced substance farmers also had to rely on wider exchange opportunities like regularly organized rural markets and urban commercial centers to meet their needs. The nobles and Neo-Confucian officials would have normally suppressed these markets, but they came to be accepted as a necessary evil for the moment.


The increased internal trade was maintained by a subsequent increase in productivity during in the 17th century and strong, pro-cash government policy, resulting in the first widely successful coins. The copper sangpyeong tongpo introduced in the 1630s allowed Korean mun cash, to gradually supplant grain & fabric exchange among the common people.


A copper sangpyeong tongpo coin from Joseon Korea.

A sangpyeong tongpo 1 mun coin Photo Attribution: Dr. Luke Shepherd Roberts, available from http://www.history.ucsb.edu/faculty/roberts/coins/index.html.)



How do I apply this to my world?


I mention all of this because it is important to think about what your culture’s people find to be valuable, available, and useful. Gold and silver in Korea were far too valuable to be used by common folk. Instead, it limited to large transactions between nobles, the government, and international merchants. Until internal markets were well established, cash currencies were not stable enough in value to rely on to meet the needs of common people. Instead, commodity money like the fabric or rice were used for small transactions.


The tried and true 100cp=10sp=1gp was introduced into fantasy TTRPGs to create simplicity, so am not encouraging complicating that by introducing multiple competing currencies of varying value as existed in real life. Rather, you could modify the items that exist on the scale to better reflect the culture and economy in your world or the region it takes place in. In a Bronze Age Egypt analogue, it would a better fit for gold to be less valuable than silver or even iron. A culture where metals may be too rare, too common, or not used may instead use special crystals, animals, shells or bones, uniformly shaped pieces of rare wood or stone, seeds, feathers, horn, skins, fabric, and beads to replace some or all of the coins on the list.


Also remember to take into account the effects of magic. Preservation magic may allow the use of organic currencies that would otherwise quickly spoil or allow common items to be specially marked. It may also make currencies based on precious metals irrelevant through spells with replication or transmutation effects unless the world's magic cannot create or alter certain materials.


Don't be afraid to be creative In a setting I created, a currency used to replace gold pieces was bolts of a special yellow-orange fabric colored with a rare & secretly developed dye brewed from a toxic seaweed.

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