Historically the Gramatian monetary system had been based on:
- shells as the medium of exchange;
- cattle as the unit of account;
- gold and silver as the primary store of value.
Even today people are reluctant to use a single currency for all these three functions. Here we will tell the story how shells have been replaced by the Mik as the national medium of exchange.
Shortly after Emperor Pimple had united all Gramatian tribes in a single nation, he issued a decree which required all taxes to be paid in shells (smek in Gramatian). His tax system consisted of the following taxes:
- An annual head tax of a thousand shells for every adult citizen of the empire;
- An annual tax of six hundred shells for every adult cow (from three years) one owned, eight hundred for every bull, seven hundred for every ox;
- A thousand shells for every adult horse or elk one owned;
- Two hundred and fifty shells for every adult goat or sheep;
- Five hundred shells for every ostrich one owned.
Pimple’s son and successor Dryton I has refined this system, for instance by differentiating the head tax on the personal wealth of the taxpayer.
Of course, taxation was not a new idea but the new empire merged all preexisting local taxes in a single, simplified system and in general the new tax rates were less than the old ones.
The main issue with the new tax system was that shell exist in different types and sizes. To solve this problem the imperial administration constructed an elaborate table to compare the “value” of different shells. At the fourth revision of this table the tax office clerks found it most convenient to express the value of shells in terms of one specific type of shells, the standard smek (on Earth known as monetaria moneta).
A major consequence of the requirement of paying taxes in shells, was that shells became the common medium of exchange throughout the empire. And government expenditure was done with the collected shells.
During the reign of Emperor Experin (231-156 BC) the imperial treasure introduced the first type of paper money. Rather than paying people with shells, the treasure issued paper notes which people could reimburse for shells. Also this notes were expected at the tax office.
Chief-mathematician and head of the treasure Fescoran decided to denominate this notes in standard smeks, though he called them mik. It is unclear whether this was an accident or a deliberate action. Nevertheless mik became the name of the national currency.