The way to understand these coins is this: these societies had already been using metals – measured by weight – to define abstract, notional units of value for accounting purposes and in some cases physical transactions. This is important to note: money in the abstract sense (and debt, for that matter) come first and coinage comes second. In practice, what a coin was simply a pre-measured amount of precious metal, stamped by the authorities to attest that it was the amount it claimed to be.

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[I]n most pre-industrial settings, a gold coin of any size is an impractical unit of exchange for ‘regular people.’ Instead, what your aurei or ducats or florins are for is facilitating the storage is substantial amounts of wealth and enabling large-scale transactions by merchants and elites, either of bulk goods or luxury goods. They could also, of course, function notionally as units of account (like the Greek talent or the Carolingian livre). Day to day currency was almost invariably minted in silver or copper (or copper-alloys).

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But part of the reason these coinage systems work they way they do is that they operated in societies in which a lot of economic activity was non-monetary or at least, non-coinage. And here, we should go back to our ‘money’ vs. ‘currency’ or ‘coinage:’ remember, money came first. So let’s say you live in a small community – like a peasant village working beneath a large landholder’s manor – and you need to transact some things, but you don’t have any actual silver because coins are scarce and valuable (and being a subsistence farmer, you grow most of what you need yourself), how do you do it? Well, one way is to do it ‘on accounts’ – you need wool and so when the shepherds come down from the hills, you trade for some of their wool during the shearing with a family you know and both you and they make a mental note that you owe them for the wool. You might express that amount of debt in silver (as a unit weight – see how we get to coinage as a pre-measured weight of silver?) but there’s no reason to measure out silver (even if you had any) because you see these folks every year and next time they’ll ask you for some grain and so on.

Note that this is not the same as the concept of ‘barter’ – there is, in fact, a notional ‘money’ intermediary, it’s just not a physical coin or bill, its expressed as an account, a purely notional unit of value.

Meanwhile, that small farmer also owes ‘taxes’ or rents to the state or the Big Man who owns their land – the line between ‘rents’ and ‘taxes’ in pre-modern states is very fuzzy – are also likely to be paid in kind. What that means is instead of paying in coin, a certain slice of the harvest or a certain amount of grain or a certain numbers of days of corvée labor is owed. That obligation too may have a notional monetary value, enabling fines or repayments for services to be docked against tax liability, once again removing much of the need for a physical currency.

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The result is that the basic normal condition of the pre-industrial countryside is generally non-coinage (if not non-monetary). “Monetizing” the countryside (an awkward term which really means ‘currency-izing’ the countryside) is typically something states have to intentionally do. The reason a state might want to do this is simple: the big advantage coinage has is to make transactions with unfamiliar parties (people you can’t trust to pay you back later) easier and the state often does a lot of business with unfamiliar parties, especially if it operates at scale. Consequently, it is often good for the state to be able to collect taxes in silver so that it can pay for goods and wages in silver. This is, of course, especially true if the soldiery the state relies on expects to get paid in silver [...]