Title: Editorial: Precious Metals

Author: Bob Schmidt

Date: 06 November 2018 17:42:19 +00:00 or Tue, 06 November 2018 17:42:19 +00:00

Summary: 

Body: 

In days of old, when money was more than just numbers on computers, it was common for people receiving coins in exchange for other services or goods to assess the quality of the coins before deciding their worth. Coin clipping was common, since the materials used were routinely silver and gold, so a sliver of a gold coin might have been enough ‘small change’, but the purity of the coin’s composition is harder to determine than by just looking at it.

In mediaeval England, precious metals were analyzed in small earthenware pots (usually by melting). This would determine if a sample had been debased, i.e. mixed with some material with a much lower value. This practice of assaying was commonplace, but more interesting here is that the pot itself was called a ‘test’.

It would certainly not be a method used for assessing coins on a trade-by-trade basis, but instead on a sample. The modern-day English verb ‘test’ is derived from this usage. I’m struck by the parallel with software testing; precious metals were effectively put into a sort of crucible to determine their actual value. Only if the material passed ‘the test’ would a merchant accept it, based on an assayer’s assessment.

My analogy breaks down in the face of currency standardisation and fiat money, which is the practice of deliberately making coins and other ‘money’ out of materials which have no intrinsic value. The monetary value is ascribed by a promise – usually made by a government – and the widespread belief that the promise is good. Part of the reason that fiat money became so popular in England was that currency debasement was so widely practised by the government in Tudor times.

I’m pretty sure there's another analogy hiding in there, but un-picking it will have to wait for another time!

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