These “evolution of money”-type stories always miss the financial instrument that enabled the gold standard to function in the first place: the Bill of Exchange

These “evolution of money”-type stories always miss the financial instrument that enabled the gold standard to function in the first place: the Bill of Exchange. A Hungarian math professor by the name of Antal Fekete offers a much more convincing explanation of the journey from gold to paper money: http://professorfekete.com/articles/AEFMonEcon101Lecture5.pdf http://professorfekete.com/articles/AEFMonEcon101Lecture5.pd... In essence, the Bill of Exchange was required for gold to work as money by it acting as a means of payment between producers. If one producer in the line of production of steel, say the producer who digs up iron ore, requires payment in gold when delivering iron ore to the steel producer, the gold standard does not scale as the division of labor increases, as more gold would be required (for payment of semi-finished goods) for each additional step added. The Bill of Exchange solves this by acting as a means of payment between producers of increasingly finished consumer goods.