How and why (according to some academics e.g. Cook and Graeber) King Alyattes created coins

King Alyattes, the King of Lydia, wanted to have a professional standing army. However, at this time the people of Lydia were mostly subsistence farmers - so they ate what food they grew. So they couldn't take time away from their farms to train as a soldiers. If Alyattes wanted professional soldiers, he was going to have to find a way of feeding them.

He came up with an ingenious plan:

He gave the soldiers these lumps of metal (coins) but didn’t give them to everyone else - i.e. the farmers.

He then told the farmers that they needed to pay taxes but only in those metal coins. Obviously, the farmers didn't have any of these coins, so they had to find ways of getting them, which they did by trading food and other goods with the soldiers - in return for the coins, so they could pay the tax.

Therefore, the coins suddenly had a value.

And everyone else needed to sell things to the soldiers to get the coins to pay their tax.