The tradition of pricing stocks in fractions with 16 as the denominator takes its roots from the fact that Spanish traders some 400 years ago quoted prices in fractions of Spanish Gold Doubloons. A Doubloon could be cut into 2, 4, or even 16 pieces. Presumably, it was too difficult to split those 1/16 wedges any further, or prices today might be quoted in 32’nds! Using fractions as a means of quoting prices was popular for a couple of hundred years thereafter, and as the NYSE is more than 200 years old, there’s the link!
If you really want to get specific, the Spaniards counted on their fingers (as did everyone else, for the most part!) and did not include the thumb in the ‘low end’ process because it was used to keep track of the quarters. Two thumbs = doubloon. Both hands = doubloon, in eight pieces (pieces of eight!). You could manage all sorts of good slave deals from this mathematical base (other deals, too, of course).
Well, the Spaniards formulated all this as a simplification of the decimal method used by the rest of Europe which was derived from the old Roman way of doing things – which was taken from the Greeks – which was taken from the Persians – who got it from the Chaldeans. That takes us back to about 5000 BC and an interesting coin called the Dinar – which was parsed into tenths.
According to the Hammarabi Code, the Dinar was worth today’s equivalent of about $325 (ie., an ounce of gold – only it weighed slightly more). Within their agricultural economy, it was a piece of metal (more easily transportable) equal in value to a bushel of wheat, which, according to the Code, weighed 1 Stone (the Sumerian Standard), which, by our standards, weighed about 60 pounds.
To Sumerize (pun), an ounce of gold was equal to about 60 pounds of wheat in value. This was established since it was obviously easier to carry a bag of gold to the other side of the empire to exchange for a large quantity of, say, wool, than it was to caravan several tons of wheat for the same purpose. And so on.
The whole process probably dates back even farther, but the Code of Hammarabi is basically the oldest known documentation of such things.
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Contributed-By: DJS Highlander