Hi,
Welcome to the forum 🙂
So, a good starting point is the Wikipedia article on Milled Coinage: https://en.m.wikipedia.org/wiki/Milled_coinage
In a nutshell, that'll give you a starting point on how milled coinage was born in France (1550s), but improved and more quickly adopted initially in England (1560s) and England/Scotland in the 1630s as they were now in a union of crowns though politically separate nations.
Earlier hammered coins continued to exist as essentially the government didn't really have a handle on their coinage.
A reasonable amount of day-to-day trade was done with bartering. When coins were used, it was more the precious metal weight that a merchant would want.
One of the main drawbacks of hammered coinage was clipping. I.e. cutting parts of the coin off so you could keep a sliver of the metal.
Any merchant would want to keep the newest coins with the highest metal content and give out the oldest coins with the lowest metal content.
E.g. You have two silver coins, both officially worth a shilling. One is a new milled one weighing 6 grams. One is an old clipped one now weighing 4 grams (even though it started at 6g).
You need to give a customer 1 shilling in change. Which coin do you choose to give them?
The older 4g one, 100%. Because if the currency lost it's value, at least your heavier coin has got more silver in it.
And that's basically how it was through the 1600s.
In the late 1600s, governments began to realise the value of having a central bank which, in simplified terms, acts as a lender to the Government & helps create monetary policy. Indeed, one of the earliest was the Bank of England officially founded in 1694.
This change in how money, finance, international trade etc was viewed by the government increased the desire to have a more standardised, stable, and quality currency. One that was harder to forge and unable to be cut. A milled coin with exact dimensions.
In order to do this, the BoE persued a policy of demonitising old money which they did in 1695-96.
This was in part due to the creation of banknotes. What people would do would be hand in, let's say £5 worth of face value hammered & heavily clipped coins, take a £5 note, and then redeem it for £5 worth of new coinage.
So they might hand in 400g worth of old clipped silver shillings, and then redeem them for 600g worth of new shillings. Naturally, the bank didn't like losing 200g of silver hence their push to demonitise the old stuff.
These new central banks allowed for the creation of a national debt. A well-managed national debt is usually beneficial to a nation's economy (in principle, if not always in practise), so were viewed postively.
Nations close to the UK (as it formed in 1707) quickly cottoned on to the idea and began adopting it. But significant parts of the world were under European influence at this time (the powerful & influential empires of Britain, France, Netherlands, Spain, Portugal etc), so the ideas were also adopted there too. Eventually even nations not under direct control of an empire saw the value of running your country like this.
And basically, every country then formed a central bank who then had the same issue the BoE did & thus lobbied their governments to remove hammered coinage from being accepted. Obviously, this was a gradual global change but often a quick switch within the adopting nation.
This move into tying a currency more closely in line with the value of the nation, rather than the intrinsic metal value, drove a demand for secure coins; Milled coins.
This was then turbo-charged in late 1700s & beyond during the Industrial Revolution. Coins & banknotes, rather than bartering, became much more dominant. The desire for ever increasing trust in one's currency pushed for better made, more secure currency. Indeed, large improvements in coin designs (intended to make it harder to forge) occurred in the early 1800s as new inventions allowed for more intricate designs to be produced & higher quality coins to exist.
This would eventually lead to our fiat currency world today where the currency has minimal-to-no intrinsic value, yet we all agree it has a value.
At least, so long as your country is functioning on an internationally accepted level.
Gosh, got a bit side-tracked there. Well, hope it was interesting. Any mistakes are my own, but I think I've got the general overview right if not always exactly right. 🙂
