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In the Previous Part The series on monetary history described how money actually came into being. For example, cowrie shells were discussed, but also the origin of coins in China and Lydia. The Greeks adopted the technique of minting coins from the Lydians, but what happened next? What was the monetary system of the Greeks like?
Before the Greeks and Lydians came into contact with each other, the Greeks still usedCumbersome methods to make payments, for example by weighing metal with every transaction. Soon after the contact with Lydians, the Greeks adopted the technique of minting coins and from then on, coins were also minted in Greek cities. These coins were mainly made of silver, gold was available to the Greeks to a lesser extent.
This was because the Athenians found ways to separate silver from lead, increasing the availability of Silver increased sharply. The Athenians used slaves to extract silver from the mines, which meant that the silver could also be extracted very cheaply. Thus, a monetary system was created and standardized currencies became the foundation of the financial system. Gold only came into vogue when the Persian Empire under the leadership of Alexander the Great took off.
Because Greek cities had a high degree of autonomy, each Greek city minted its own currency for a long time. On the coin was the symbol that matched the city. This could be a Greek God, such as Athena which appeared on the mint of Athens, while coins were minted on Rhodes with the image of a rose. When Athens reached the height of its power, it was able to force other cities to use only the coins of Athens. Delian League, an alliance initially formed to defeat the Persians, was increasingly transformed into an Athenian Empire and coins from Athens were used in many places.
At the top the coin from Athens, at the bottom a coin minted on Rhodes (sources; Coinweek &Classical Art History)
The area around the temples of the Greeks often became the trading center of the region. The few roads that were built at that time often led to the temples. The coinage was also provided by the Temples, this only later became a monopoly of the city. The temples attracted many visitors and thus became an attractive place for traders. The temples therefore also fulfilled an important economic role for the Greeks.
In the places where there was a lot of trade, people started to specialize in the countless coins that had come into circulation. Merchants started with a kind of exchange office where people could exchange foreign money for local coins. Later, they also started to provide loans and fulfilled the role of banker.
The Spartans looked at money in a different way than the Athenians. It is not possible to say with great certainty exactly what kind of money was used in Sparta. There are sources that suggest that the state had forbidden silver and gold and that one had to pay with large iron bars. For example, it would not be easy to steal money. The rods would also have been placed in vinegar to make the iron brittle, so that the rods could not be used for other purposes. This money was therefore fiduciary, since the nominal value of the bars was much higher than the intrinsic value of the metal.
The Spartan rulers determined that these bars were money. So this was money that was not put into vogue by the free market, but that was imposed from above. The use of these rods would also discourage trade with other cities, so that the power of the aristocratic Spartan rulers would not be threatened by the democratic ideas that were dominant in other cities.
There are doubts the actual use of these bars, as there is too much to be said for thehas little archaeological basis. Not many of these iron bars have been found, making it difficult to assume that people made everyday payments with them. It also seems likely that Spartans used foreign money, such as money from the Persians or other Greek cities. This makes it unlikely that iron bars were preferred over the smaller and convenient coins from abroad, which also represented much more intrinsic value than the bars from Sparta.
However, it is also described that these iron bars are Adopted by other peoples. For example, the iron is said to have been used to keep track of debts in Clazomenae, in present-day Turkey. The bars did not function as money, but as a kind of debt instrument that could always be exchanged for money. So money was more of an accounting system here. The rods were probably also used in Byzantium, the city that was later renamed Constantinople. In this case, the bars would have fulfilled the function of a means of payment. So there is no unambiguous story about the function of the iron bars.
The iron bars from Greece (source; Wikipedia)
The Athenians and Spartans turned out to be too different from each other. Democracy reigned in Athens and a very strong naval force had been built up. Sparta was aristocratic and had a very strong land army. Both powers formed alliances with other Greek cities, creating two great alliances; one that was connected to Athens and one that was connected to Sparta. A war broke out between the two superpowers, which was eventually won by Sparta.
When the Athenians were deprived of access to the silver mines by the Spartan land army, new coins in Athens were henceforth minted with bronze. These coins only had a thin layer of silver to make the coins look real. It may well be that Gresham's Law will then bemade its first appearance. The good silver coins disappeared from circulation and made way for the lesser bronze coins, which caused the quality of the money to deteriorate. The deterioration of the Athenian monetary system goes hand in hand with the decline of Athenian power; the war was lost and the power of the Athenians was over.
It is interesting to see how money developed in Greece during this period. The silver coins of Athens provided a solid foundation for the Greek economy. It is also interesting to note that the quality of the coins was analogous to the economic and political situation of Athens. This is a harbinger of what would happen much more often later. Time and time again, people will not be able to resist the temptation to put poorer quality coins into circulation for their own gain. We will see this in the next part of the series, which is about the Romans.
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On behalf of Holland Gold, Paul Buitink and Joris Beemsterboer interview various economists and experts in the field of macroeconomics. The aim of the podcast is to provide the viewer with a better picture and guidance in an increasingly rapidly changing macroeconomic and monetary landscape. Click here to subscribe.
