Is Gold, Money? History Says, YES!

Precious metals like gold and silver have long been revered as currency and wealth accumulation tools.

Florence, the historical capital of Italy’s Tuscany region has a storied past around money and gold coinage dating back thousands of years. A major milestone here was the creation of the Florentine florin (3.5 grams and 54 grains of fine gold) in 1252. It holds the distinction of being the first European gold coin produced in sufficient quantities for European commerce since the 7th Century.

The gold florin provided the Florentines’ a recognizable currency for facilitating global trade, all at a pivotal time in Europe’s emergence. It’s rise mirrored the ascendancy of the “bourgeoisie” class, trade and industry expansion, robust banking and finance markets, and the burgeoning art and architecture scene. Much of this was heavily influenced by the powerful Medici family, the Italian banking family, and political dynasty.

Lira (plural lire) is the name that reflects several currency units. For example, the Venetian lira was employed in Italy by the Venetian Republic. By the 16th century, a number of Italian states minted lira coins that varied considerably in weight.

Florence and Genoa introduced gold coins in 1252 with the former coin emerging as the standard European currency. With the powerful and broad influence of Florentine banks, the florin quickly rose to become the major trade coin of Western Europe.

The influence of these coins on the international currency market is well documented given the major presence of bank branches throughout Europe. It reflected a broad scale market economy that included many stakeholders including money-changers, guilds, furriers and silk manufacturers.

The weight of the original 1252 florin equaled the value of one lira in the local Florentine money. And while the florin’s gold content remained constant, its increased value rose to seven lire for one florin by 1500.

The florin then saw wide acceptance across Europe, igniting international commerce throughout the continent. Its impact on global economic growth held great significance which no doubt led to its mention in Dante’s classic known as the Divine Comedy

In 1849, the British government released a 2-shilling version of the florin. Valued at 1/10th of a Pound Sterling, it remained in circulation in the British currency system until the country made the move to decimalization in 1971.

Then there was the Dutch florin — known as the guilder — which existed until The Netherland’s currency ended in 2002 with the advent of the Euro. This in effect ended the florin’s long, recognized reign as the world’s ‘gold standard’ of everyday use.

Today, here in the U.S., there are a number of states that accept gold as legal tender. Nevertheless, questions remain in many circles as to whether it’s really a form of money

With respect to this theme, check out this infamous exchange in 2015 between then Arizona congressman Ron Paul and Federal Reserve Chairman Ben Bernanke.