For years, critics of the Church have attacked the Nephite “coinage,” mentioned in Alma 11:3-19, claiming that this in itself makes the Book of Mormon fiction [See Allen Wyatt’s blog, “Coins in the Book of Mormon.”]. Really, I don’t see what the fuss is about.
Money can take on many forms. Of course, some things work better as money than others. For example, while both gold and cattle have historically been used as money, it is easier to divide a bar of gold into smaller parts while retaining its value than it is to split up old Betsy. 😉
Like most societies, the Nephites used precious metals which, of course, can be divided into smaller constituent parts of various weights, with their value varying with that weight. The names of various world currencies attest to this fact: The British currency is still called the pound, even though they abandoned the gold standard in 1931. And, of course, the Israeli currency is called the shekel, from the biblical weight–and money.
Thus, I think critics make a mountain out of a depression by attacking the Book of Mormon on the grounds that Nephite currency are not true coins. If those metals carry value according to weight and have inscriptions then, for all practical purposes, they are “coins.”
Money has three functions: 1. It is a medium of exchange, 2. It is a measure of value, and 3. It is a store of value, i.e., it has value per se. I would like to comment a bit on the second and third functions of money, as they are closely related.
If a currency cannot retain its value, it cannot serve as a measure of value. One cannot steal second base if it moves too much or too fast. And, if it cannot store or measure value, it cannot serve as money. For example, when the German Reichmark underwent hyperinflation during the 1920’s, people started using it as “kindling” for their furnaces, rather than as money. This caused a collapse of the German economy that led to the rise of Adolf Hitler.
Today, many people worry about the US dollar’s value. Although its inflation rate has held pretty steady at three or four percent over the last 25 years, the long-lived nature of small inflation can detract from money’s value as easily as shorter-lived “runaway” inflation. Today, the dollar has only 1/2 the purchasing power that it had in 1983, and four percent of its value a century ago. To prevent further decay, many people advocate a return to the gold standard. There is a problem with that, though.
While gold-backed money averages zero inflation over time, whenever a motherlode is discovered, a spike in inflation happens (The UK had 6% inflation after the California gold rush.), and, as gold is being exhausted, a nation suffers deflation and economic contractions caused by credit crunches (When the US “demonetized silver in 1873, it aggravated a steep deflation, which caused severe depressions during the 1870’s, 1880’s and 1890’s.).
The Nephite money, on the other hand, may show an antidote. Because it consists of a “basket” of metals (gold and silver), it mitigates both types of price spikes, as the metal not in motherlode or exhaustion mode acts as a brake on both inflation and deflation.” Nobel laureate Milton Friedman calculated in his book, Money Mischief, that, had the USA not “demonetized” silver, that both the deflation after 1873 and the inflation following the Klondike of 1896 would have been only half as severe.
The fact that Nephite money is both inflation- and deflation-proof makes it an ideal primer for economic policy, in my opinion.
How could Joseph Smith had known?
Yeah, Joseph was on the money….
I understand that the relative values of the curency – being 1,2,4 and 7 make it the most efficient values possible. Making change is such a system would be the easiest possible.
This is a fascinating insight, to me.
Are there any examples of such “dual standard” currencies functioning in the real world? If so, was this the rationale for them, or was it more a happy accident. And, if not, why not?
Greg asks:
“Are there any examples of such “dual standard” currencies functioning in the real world? If so, was this the rationale for them, or was it more a happy accident. And, if not, why not?”
Actually, this “dual standard” is somewhat common, as both gold and silver have been accepted as money, even before recorded history. Note that ancient Israel, Greece and Rome and others all had both silver and gold money. However, I know of no premodern nation that actually fixed the values of silver to gold as a ratio.
But I do know of two from the 19th century: France (Which fixed silver value at 1/15 of gold) and the USA (with a 1/16 value). In his book “Money Mischief,” Milton Friedman claims that France’s inflation rate from 1896-1910 and the deflation rate from 1870-1896 were only about half that of the UK.
Really, the UK represented a change from ancient practice.
The UK’s adoption of a “monometallic” standard came from Isaac Newton’s stint as “Master of the Mint” (sort of Ben Bernanke’s equivalent). While price spikes were more likely than under a “bimetallic” standard, by making making gold coins “unclippable” (that is, one cannot without detection shave pieces off of coins, then make new ones from the shavings), he limited possible inflation to the maximum gold production.
Hi Eric!
You said: “Yeah, Joseph was on the money….
I understand that the relative values of the curency – being 1,2,4 and 7 make it the most efficient values possible. Making change is such a system would be the easiest possible.”
Indeed. Kirk Holland Vestal and Arthur Wallace (1981) had pointed this out in their book, “The Firm Foundation of Mormonism” [LA: LL Co.]. Their reasoning, to my mind, seems iron-clad.
I am even willing to go beyond this. This very ease in calculating change also makes maintaining the gold/silver “basket” of Nephite money in proper balance–thus helping to keep prices stable.
Hi all of you,
it was very interesting to read your opinions, so here goes another view and also some questions.
First – all metals, including the precious ones, are worthless unless you fix some exchange price for it. In this case we have the price fixed on barley (practically unknown in precolombian cultures; I know, you’ll say Arizona etc. etc., but if you fix some exchange, it has to be the very common one because everybody has to know it and use it, what was not case on the vast majority of America’s territory; true – it is also mentioning “every kind of grain” – what means that all grains should be the same on weihgt – volume – price scale and this is at least strange, if not impossible. Than we have another detail. We have this two metals, where gold is almost exactly twice as heavy as silver (19.32 to 9.6 – 12, depending on purity of silver). It means that on the same weight scale the golden “coins” would be a half size of the silver ones. All of you practicaly omitted the lesser “coins” as shiblon, shiblum and leah. So 1 silver onti = 1 ezrom, 2 amnors and 4 senums, or 8 shiblons, 16 shiblums and 32 leahs and also any ather possible combinations to fit in one onti. There are a lots of them, you just try. If we add also relation of 1 gold antion = 3 silver shiblons, does it seams to you still so easy and simple? As we know already for centuries, the easiest and most practical system is the decimal one, what is aknowlidged also by the fact, that even you guys, Americans, use it as your monetary system, being this the only one in use in States, because everything else is still in these postdiluvian unpractical scales, so difficult and unexact to transfer.
Second – to keep the parity between the gold and silver stable, you need to be careful to keep the same proportional amount of metals in circulation, because if this balance is broken, the price of any of them will change.
Third – as the value was fixed to an agricultural product, it is not true at all that its value is stable. In good years you can have a plenty of “barley” and nobody is interesting to buy it and consequently its value on market inevitably goes down, so its equivalent in metal suffers the same… In bed years – evidently the process goes in opposite way…
Forth – all this requaiers very good infrastructure of metal mines, coal mines, metal funditions etc., and here goes my question. Could anybody help me to locate some site corresponding to any of these industries? In Europe you can still locate the ancient Roman mines metals industry sites and it is actually very interesting to see whole mountains looking like the famous swiss cheese. I will appreciate any information, and also – some coins found?
Thanks.