Trade & Money

In this post we’ll discuss worldbuilding trade and currency, looking at the evolution of trade over time, as well as why the concept of money is an inevitable invention for every civilization.  

Hey everyone, my name is Matthew, at least according to my market valuation, and this post is part of a series where I will be going through a science-adjacent worldbuilding process step-by-step. For today’s discussion, we’ll be looking at trade, discussing how trade begins for early civilizations, the different types of trade, what makes something valuable, and the cultural implications that trading has for the civilizations involved.

Trade refers to the transfer of goods or services from one person to another. Goods, very simply, refer to any item that satisfies a ‘want’, from necessary items like food through to luxury items like cars, experiences like holidays, and even intangible goods like information. Services in contrast refer to an action, usually done by one person so that another person does not have to do that action themselves, such as a barber cutting someone’s hair, or a comedian keeping someone entertained. The exchange of goods and services form the foundation of trade, and a system or network which allows trade to occur is called a market. If an individual is able to conduct trade with another individual, they are said to both be within the same market. In this way, if a person in Australia and Canada each have an item that the other wants, before global services existed, there would be no way for an exchange of goods and services to take place, meaning these individuals do not have access to the same market.

In modern times, trade usually involves money, but trade was present historically before currency was introduced. This basic form of trade not involving money is called ‘barter’, in which goods and services are exchanged directly for other goods and services. A builder may be willing to exchange their service of building a horse-owner a house in return for that person giving them their horse.

Importantly, what makes a good or service worthy of trade is whether it is valuable to others besides the person who can provide it. How much of the good or service is available is referred to as ‘supply’, and how much others want that good or service is referred to as ‘demand’. The value of a good or service is tied directly to it’s supply and demand within a market.

If there is a lot of a particular good or service within a market, then supply is said to be high, and so those within the market will consider the value of the good or service to be lower. If something is rare and either is present in the market in low quantities or enters the market infrequently, then supply is low and the value of that good or service is driven higher. However, the value lost or gained by supply is only relevant if there is a demand for what is to be traded. If lots of people in a market want a particular good or service, the demand is said to be high, and the value of that good or service goes up. If there are not many people that want it, then demand is low, and so the value goes down. With this axis we can see that supply going down and demand going up causes value to increase, while supply going up and demand going down causes value to decrease. In this way, markets often have an ebb and flow of the value of goods and services.

Now let’s look at applying our knowledge of trade to a worldbuilding project. The first instances of trade historically, which as we have already established are bartered exchanges, will take place during the prehistoric period of sapient cultures, and there is evidence on earth of trade taking place as far back as 150,000 years ago, where basic goods like food, tools, and information, and services such as scouting or sex, were exchanged between individuals of the same culture, as well as between cultures that met along their nomadic paths. However, by nature of their migratory lifestyle, the markets established between these prehistoric cultures are fleeting, and for the most part break down once the groups move apart.  

On earth, dedicated trade networks between cultures coincided with their settling down into more fixed locations, as they transitioned out of the prehistoric stone age. As we established when we discussed prehistory, settled cultures that have established agriculture have the huge advantage of food surplus, allowing some individuals to do things other than gather food, such as become merchants and traders, dedicated to setting up markets between their settlement and another.

This is the map of Locus, the fictional world we’ve been building across this series, with its early settlements and civilizations marked on the map. In the early stages of ancient history, it is likely that trade between settlements of the same species would be preferred, as at the very least there would be an understanding of the basic needs of each trade partner. Unfortunately, there is real-world precedent of same-species preference for trade, where some cultures historically have viewed other cultures as not being human, and in these cases, we see a strong trend towards hostility rather than exchange. Hostility that escalates into a complete invasion also often eliminates the need for trade, with the invading civilization intending to seize control of valuable resources for themselves. Often, a much more powerful civilization will invade a weaker one to seize resources, rather than trade with them. As we know from real-life, this occurs even between cultures of the same species, and is likely to be even more prevalent between cultures of differing species.

However, there is also real-world precedent of very early cross-species trade, between humans and our now-extinct close sapient relatives, such as Neanderthals. Even cultures in conflict still see some exchange take place, and unless one culture utterly annihilates another, these exchanges are likely to continue. In addition, providing both civilizations can continue to provide supply of a good or service that is in demand by the other, trade almost universally leads to reduced hostility between those trading, as the value of keeping the trade agreements going often outweighs severing them due to conflict. Of course, this doesn’t mean that trade partners never go to war, or that one won’t exploit the other given the opportunity, only that trade often does provide an incentive for reduced hostilities.

While on Locus we are likely to see some early trade between cultures in close proximity, the two major ancient civilizations in closest proximity to each other are the humans of Norford, and the bear-like Urakan of Senanatgru. Despite being different species, the human and Urakan civilizations share several cultural similarities, perhaps most foundationally sharing a similar diet, allowing them to trade food. They have also both settled in similar locations, both at the mouths of rivers, and both require similar tools to work their area. Even if you’re working with a world that has a single sapient species, then cultural similarities will still play a big role in whether early civilizations are willing to trade with each other.

In the early ancient era, while skirmishes along their borders would occur, neither of these civilizations are powerful enough to launch an invasion campaign against the other, making trade between them almost inevitable. Trade between these two civilizations would begin not yet through dedicated trade routes, but rather through direct exchanges along their borders. Let’s quickly put together a list of major resources each trading partner can provide, listing its supply and demand within the now shared market between our two early civilizations.

At this early stage, trade would still take place through barter, meaning that direct interaction would lead to a secondary exchange of language, ideas, and technology. This cultural exchange is likely to slowly skew the two civilizations to become ideologically closer, and fundamentally more accepting of each other. Barter, however, places a functional limit on how much can be exchanged, as there are only so many goods and services that can be present within a single transaction for other goods and services. The critical turning point for trade therefore is the invention of money.

Money refers to any item or record that is accepted by a market as a payment for goods and services, or as a repayment for debt. Importantly, money can either be commodity money, which has intrinsic value within the market, such as gold, spice, or food, representative money, which has no inherent value itself but instead represents something of value, such as a clay tablet that represents a certain amount of gold, and finally there is fiat money, which has no inherent value except that those within the market agree that it has value, such as the bank notes that many countries use today. The first fiat money on earth began being used in China in the 7th century, while commodity and representative money were used throughout most of recorded history and are what we will be working with on ancient Locus.

Historically, the earliest commodity monies were spice, textiles, and precious metals, and were used as intermediaries for exchanges, as they are easily preserved and quantifiable. In a barter system, one would exchange a good or service directly for another good or service, while in a money system, one exchanges a good or service for either a commodity like gold, or a tablet representative of that gold, and then trade in that money for a good or service later. Not only does the introduction of money simplify and expand the trading process for individuals, but it allows goods to be traded across greater distances, between markets that would otherwise be out of reach of each other.

The earliest long-distance trade routes on earth therefore unsurprisingly traded goods of spice, textiles, and precious metals, which were the relevant currencies to the markets they connected. As we discussed when we placed our metals on Locus, Norford has access to an abundance of precious metals, likely to be the first civilization to smelt gold, silver, and copper, and subsequently refine those metals into commodity money, which we call coinage. Keeping in theme with having the humans of Locus be reflective of real-life humans, their coins will be akin to traditional gold, silver, and copper coins that were used extensively throughout our history, valued according to their weight. As a tabletop player at heart, I’m going to assign these coins values in incriments of 10, with 10 copper coins worth 1 silver coin, and 10 silver coins worth 1 gold coin. Platinum and electrum not included, whatever that is... Of course, things are unlikely to be this uniform, especially early in a civilizations history, but it makes things more user friendly for this project.

The Urakan of Senanatgru have access to an abundance of high-quality coal, useful for the smelting process of metals, but also produce textiles. Coal isn’t particularly easy to handle, and so is likely to remain traded as a good rather than become money, but the fabrics produced can be measured into quantifiable portions and are easily handled and traded, becoming currency in their own right, similar to how silk did historically on earth. The Senanatrgians produce three fabrics that have become currency within their market. First is ‘banu’, which is made from fibrous Gelorium strands, which the Urakani called ‘brugi’, and is both water and cold resistant. ‘Sari’ is made from woven Stralux and Straestus, which the Urakani call both ‘anoma’, incorrectly considering the two organisms to be the same. Sari is warm to the touch and glows slightly, barely noticeable in the day but certainly obvious at night. Finally there is ‘topfa’, a universal descriptor for all furs that have been removed from the animal that grew it, including their own fur.

While the exchange value would fluctuate over time, a square meter of banu would be roughly equivalent to 8 silver coins, a square meter of sari roughly equivalent to 4 gold coins, or 5 banu, and topfa varying depending on the color, with Norford more highly valuing lighter colored white topfa, making all topfa worth half a banu, but dark topfa worth 4 silver coins, while lighter topfa is worth 6 silver coins. The joined market would also introduce representative money, simple clay or wooden tablets that represent a certain amount of copper, silver, gold, topfa, banu, or sari. It is likely that while some spices may circulate within their markets, Norford and Senanatgru would have to expand their scope equatorward, as spices are found more commonly among the tropics. Senanatgru especially would values spices highly, with heavy cultural focus on feasts, and a religious fascination with ingesting unique flora, especially magical flora.

The most abundant equatorial spice found in the western tropics of Locus is made from nuts harvested from the local Crassina trees. The reddish-brown nuts of the Crassina, are ground into a fine powder the local humans simply call ‘Crass’ that has a taste profile similar to garlic and is exceptionally rich in micronutrients. 100 grams of Crass would be worth roughly 1 gold 4 silver coins, 2 banu, or 4 topfa.

Second to Crass in abundance is Aurum, harvested from the dust collected from Aurumoculus, a mushroom-like organism that lives on the forest floor. Aurum is a stimulating hallucinogenic, able to elicit a psychedelic experience for creatures at roughly 1 gram per 1 kilogram, meaning a creature weighing 50 kilograms could expect a hallucinatory experience after ingesting 50 grams. In smaller doses however, Aurum is similar to caffeine, with effects starting within 20 minutes of ingestion, and lasting from 4 to 10 hours, depending on quantity ingested. 100 grams of Aurum would be worth roughly 3 gold 5 silver coins, 1 sari, 5 banu, or 10 topfa.

Crass and Aurum gathered by the human and Silarin settlements would be traded with Norford and Kathochusho respectively, bringing great resources south back towards the equator. Two large human settlements called Balthorpe and Redmark would be established along the trade route, which will come to be called ‘The Spice Road’. Cities built along prominent trade routes, such as Constantinople and Venice, are exceptionally wealthy, often serving as the desired seat of power for empires, and Balthorpe and Redmark will be no different in the coming centuries on Locus. However, remember when I mentioned that cross-species interactions were more likely to be hostile than to lead to trade? Well, the Kathochushians have thus far been isolated from the major eastern civilizations by the great central desert. By the time they encounter traders from the equator however, they will be well established and in an excellent position to expand their influence, consuming the equatorial Silarin settlement and moving on to conquering Redmark, renaming it Sahakuth, taking control of the spice trade for themselves.

This unsurprisingly places the Kathochushians at odds with the northern humans, and trade relations thereon would become strained, especially with Balthorpe, who would appeal to the Norfordians for support in retaking Redmark. But that’s a story for another time.

So, to recap, trade is the exchange of goods and services between individuals, and a system that is in place to allow individuals to trade is called a market. The value of goods and services within a market is determined by supply and demand, with high supply and low demand decreasing value, while low supply and high demand increases value. Trade begins in prehistoric and ancient cultures as barter, meaning that no money is involved, but inevitably trading cultures will develop money in order to facilitate larger exchanges, starting with spice, textiles, and precious metals, carefully measured in order to determine their value as currency.

Join me next time when we will discuss governments and empires, looking at the different styles of early government, their cultural impacts, and why certain cultures are likely to adopt them. And until next time… stay awesome!