In the most famous of books on economics, Wealth of Nations, published in 1776, Adam Smith wrote that “there is at this day a village in Scotland where is not uncommon, I am told, for a workman to carry nails instead of money to the baker’s shop or the alehouse.”
Smith goes on to speculate why metals have been the money of choice for many countries. According to Smith:
[M]en seem at last to have been determined by irresistible reasons to give the preference for this employment to metals above every other commodity. Metals can be kept with as little loss as any other commodity, scarce anything being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be reunited again, a quality which no other equally durable commodities possess, and which more than any other quality renders them fit to be the instruments of commerce and circulation. The man who wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must have been obliged to buy salt to value of a whole ox, or a whole sheep at a time. If, on the contrary, instead of oxen or sheep, he had metals to give in exchange for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for.
There is some evidence that nails served as money in one of the nineteenth-century French coal fields. Nails were perhaps a convenient form of a metallic currency, functioning without the service of a mint, and putting the metal in a form that was equally serviceable as a medium of exchange or as a practical commodity.
