Greetings all;
I was thinking about economic history, and how as a civilization advances, so does their economic structure and practices. It lead me to ask the question,
"Has any society on Golarion developed past commodity money, and if not, why not?"
If I may expound on a little bit of fantasy RPG economic history; most fantasy RPGs operate on a basis of commodity money, and from their medieval fantasy roots, that makes sense. Metal coins are the common currency denominations, with gold being the standard (hence the term, gold standard,) with trade goods still being useful as full-value commodities (cows, marble, silk, etc.)
The top value trade good is, and has always been, gemstone. Even in the games I play, if a player/party comes into a large sum of money, the common answer to the question, "How do we carry all this money around?" is always "Gems. They're light, maintain consistent value, and are accepted everywhere."
In previous editions of our game worlds, this made sense. Gems are a good high-level money system. They are scarce enough to avoid inflation through heavy influx, difficult to counterfeit, durable, and have general acceptance.
Where this model starts breaking down a little bit is in Pathfinder, on Golarion, specifically. Even though this system does work as stated above, there's one large variable that I feel hasn't been taken into account.
Abadar.
It's my observation that many nations Golarion display quite a few advancements in civilization, from the adoption of democracy, to the invention of black-powder weapons and firearms, to commanding vast naval fleets and governing far-away colonies. Yet the economic model hasn't moved beyond commodity money.
It has been stated that temples of Abadar offer financial and civil services to their community such as banking. The head of these temples are referred to as Bankers and Archbankers. If you were in such a community, especially a large city, and had access to Abadar banking services, why wouldn't paper money develop? Why wouldn't people start leaving all their heavy gold in the bank vault in exchange for promissory notes ratified and notarized by the Archbanker? Such notes would then start being passed person to person around the city, and they wouldn't even need to go back to the bank to cash them back in for their gold value; they would just retain their value. And you've just invented the bank note.
What's the next logical step? If the church is organized enough, all the Archbankers in all the temples across all cities could agree that each others' signed notes have value, then you've taken your city-wide banking model nation-wide (or larger,) where someone can use bank notes written in one city in a different city. This leads to the need for better control of these bank notes, resulting in them all being fabricated in one area so they can be ratified by the same governing body; at this point, you're basically printing money, and you're off to the races.
I can see some criticism for this model in Golarion; particularly, the frontier areas. If someone doesn't have access to a temple of Abadar, this banking system doesn't work for them. But to me that's normal; throughout history, whenever settling frontier land or first establishing foreign trade, high value commodities (like precious metals) were still the standard. Once a person got away from that "financial environment" and could return to civilization, they could return to the use of their modern banking system.
Has anybody introduced legal tender into their games? Is it paper money? Is it something more exotic, as allowed by the magical fantasy realm, that's simply not possible in our world, for example dragon scales? Are there any other reasons that I can't think of why this would be implausible?
I think next time my players enter a large city, they'll find the local citizens using bank notes.
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Here are a few suggestions as to why paper money hasn't become popular on Golarion:
Technology: The printing press is a complex machine, and only powerful/wealthy organizations/people possess them. Certainly, the church of the god of wealth would be able to afford them, but producing these machines would be difficult and resource heavy. Given how volatile the IS region is, I can see why they wouldn't want to make that kind of investment.
Geopolitics: Some countries would not allow their currency to be regulated by the Abadaran faith. Nirmathas, for example, considers Abadar to be Molthune's patron deity, and they would not trust Nirmathi money being in the same hands of a faith that encourages their enemy. Cheliax and Taldor would be too resistant to relinquishing that power (despite the fact that Absalom has them by the coin purses anyway.)
Faith: 1. Feasibly, there are LE and LG churches of Abadar out there, and they might squabble and skulldugger around the prospect that one's currency is worth more than the other, and suddenly exchange rates become a concept, and that subsequently becomes less efficient than the gold coins. 2. The Abadaran faith is known for its love of law, and a love of arguing it. The bureaucratic gridlock that would ensue during the moneymaking process would cripple both the church and the printing.
Destruction: Paper money is much more easily damaged and, in a wild rough-and-tumble world like Golarion, it's conceivable that the money would be destroyed faster than it could be printed. Paper bills work in our soft fleshy hands, but what about the clawed hands of a lizardfolk? Or the hard and rocky hands of an Oread? The slimy hands of grippli? Making them magically tough is a solution, but then you drive up the cost of production.
Magic: With access to extradimensional magic (from the humble Bag of Holding to a Magnificent Mansion) storing vast wealth becomes less of a problem. To wit, if someone has so much gold that they are having trouble storing it, they are almost certainly wealthy enough to spend some on a demiplane on which to store it. You know those quarter dispensing belts? Link one of those to the demiplane somehow and bam, there's as much of your fortune as you need, whenever, wherever.
Fraud: The spell fabricate would lead to devastatingly easy counterfeits. Yes, it takes a moderately powerful caster to use the spell but, after that, all they'd need is a bunch of paper and ink (super cheap) to make notes of any value. The spell requires "the original material, which costs the same amount as the raw materials required to craft the item to be created". It would take 1gp's worth of gold to make 1gp, because it is its own value. Ink and paper are coppers a piece, and making them into 100gp notes would be ludicrously profitable. Magic and unique inks could certainly counter these forgeries, but that would take time, money, and effort the church could not realistically afford all across the world.
In a previous campaign I had rather irregular paper money, though it wasn't paper but something much more durable and harder to forge, such as dragonskin with magic runes on it (like a higher level Arcane Mark). Its value started at around 1000 gp simply because of cost of production and verification, so it wasn't much use to the man in the street, and was generally for prearranged contracts between large institutions like countries or merchant houses.
Essentially, it grew from magically notarised and authenticated contract notes between merchants. Rather than a contract to deliver x tons of silk and y tons of ivory, it was a contract to deliver z tons of gold.
PCs generally didn't see much of it; just 3 times, I think:
a) when they were paid for a job
b) when they retrieved a note from a bandit gang, per instructions
c) when they ransacked a castle and were disappointed that the loot was going to be hard to cash.
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Because I'll take pretty much any opportunity to recommend Daniel Abraham's phenomenal five-volume series, The Dagger and the Coin, I herewith highly recommend Daniel Abraham's phenomenal five-volume series, The Dagger and the Coin. Anyone interested in economies, banking, and means of exchange in the context of fantasy worlds will be thrilled to read these, as will anyone who likes high politics, religious strife, psychologically complex characterization, and bold endings. Plus, you know, daggers. And dragons.
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I use promissory notes for big transactions in my game, but haven't moved on to full on fiat currency yet; however I could see it being possible if it were backed by Absalom for example. My banks do use fractional reserve banking, however, so that will probably disappoint my players if they rob a bank at some point.
Agreed with others. Bank of Abadar does have promissory notes but only for large values of money. They wouldn't have the capacity to conduct transactions for all the transactions that take place on Golarion.
Beyond that, paper currency probably isn't a thing on Golarion because it's made on hopes dreams and wishes that don't even really make sense in the real world. That particular diatribe aside, their probably isn't a widespread use of bank notes on Golarion because most people probably don't have enough money to bother worrying about it. When the majority of the population probably only has a few dozen coppers at a time, paper money isn't a necessity.
Also promisory notes are often likely often to be much like a check, a transaction between 2 people. It would not be fun to discover a cache of checks written out to people who lived 50 years ago and never got their money, and would hold no value to the adventurers.