How Greek Coinage Democratized the Character of Money

Author: Michael Hudson

Reforms by “tyrants” introduced coinage, debt forgiveness and a fairer distribution of wealth.

Michael Hudson

Michael Hudson has devoted his career to the study of debt.

“How Greek Coinage Democratized the Character of Money” by Michael Hudson is licensed by the Observatory under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License (CC BY-NC-SA 4.0). For permissions requests beyond the scope of this license, please see Observatory.wiki’s Reuse and Reprint Rights guidance. Last edited: June 3, 2024

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Introduction

There is a school of thought that hypothesizes money was developed by individuals acting by themselves without any official oversight and for no other purpose other than on-the-spot payment of goods and services between private actors. Archaeological evidence shows this is pure fantasy, that coinage was created and controlled by political leaders and civic authorities.

As Aristotle emphasized, coins were a creation of law (nomos). Their study (numismatics) shows how civic governments and their temples shaped monetary policy to promote their major fiscal objectives. In Greece these aims started with the need to provide a medium to pay taxes, fees, and fines for market trade at public games and festivals, and to finance armies and naval construction.

When Commerce Shifted West

When Syrian and Phoenician traders brought Near Eastern commercial and debt practices westward around 750 BC, neither Greece nor Italy had specialized production on anything like the scale of Mesopotamian temples or palaces (or even those of the Mycenaean period). With no tradition of “divine kingship” to promote liberty from debt bondage, Greek and Italian chieftains adopted credit practices in the context of their own control of the land, trade, and religion. Religious cults were under the control of a few aristocratic families who combined sacred, civic, and economic power. Largely through the unchecked dynamics of interest-bearing debt, they concentrated commercial and financial wealth in their own hands, forcing families living on the edge of subsistence into clientage and bondage.

Why Oligarchs Hated ‘Tyrants’

Coinage was struck in Greece and Asia Minor by “tyrants” and reformers who took control of trade and finance away from the autocratic families who had monopolized the land and held its cultivators in debt. Rather than causing debt crises, many of the “tyrants” who introduced coinage were known for canceling debts and redistributing land as part of their sponsorship of standardized economic relations. These populist leaders (often emerging from the minor branches of the leading families) included Pheidon of Argos, Kypselos of Corinth, and Solon of Athens.

Ancient writers unsympathetic to democracy gave a negative autocratic connotation to the word “tyrant.” The term is better translated as “demagogue,” which retains the populist demos root of their policies. What subsequent oligarchies found so “tyrannical” was the assertion of public power over creditors by driving the dominant families into exile, redistributing their land, and canceling the debts that had deprived many clients of their liberty. In doing so, they were following the venerable tradition of Near Eastern rulers who had canceled debts and returned self-support land through Clean Slate proclamations.

‘Tyrannical’ Reform: Minting Coins, Canceling Debts, and Redistributing Land

The civic minting of coins emerged in the wake of this restructuring. An early step was taken by Sparta. One of the most prosperous city-states on the Greek mainland at the start of the 7th century BC, its “Lycurgan” anti-commercial revolution c. 680 BC set it on a radically different path from others by rejecting the use of silver and even copper as money in favor of a fiat iron currency. That is the period’s most obvious example of metallic value not being the key to monetary worth. Plutarch reports that this iron was treated with vinegar so as to make it too brittle to have a useful metallic value on its own as a store of monetary wealth.

Sparta also made the neighboring land that it conquered and assigned to its citizens inalienable so that it could not be forfeited. In Argos, Pheidon (c. 710-670 BC) overthrew the local aristocracy and, along with establishing standardized weights and measures and striking silver coinage, is said to have redistributed land to equalize its distribution. A generation later, Corinth became the richest Greek city-state under Kypselos (ruled 657-625 BC) and his son Periander, who canceled debts, redistributed the land, and exiled the families who had monopolized it. They also reorganized exchange by striking coins. In addition to Pheidon, Kypselos and Periander, “the Phrygian king Midas’s Kymaian wife; Hippias of Athens [the son of Peisistratos; and] Polykrates of Samos” were reformer-tyrants who struck coinage, notes Leslie Kurke. “The first mention of coinage in a Greek text links the ‘staters of the Lydians’ to the ‘cunning-minded fox’ who is presumably the tyrant Pittakos.” Elected “tyrant” of Mytilene, the denunciation by aristocratic writers suggests that Pittakos emulated the policy of other reformers and drove out the old aristocracy, redistributed their lands and canceled debts as well as issuing coinage. From Herodotus and other biographers, one can distill a “portrait of the tyrant as champion of egalitarian justice and opponent of aristocratic overreaching.”

Colin Kraay has described how—like silver money in Mesopotamia—Greek coinage was introduced to standardize payments made to and by the state for its fiscal transactions vis-à-vis the rest of the community.

Athenian Reform

By 594 BC a debt and land crisis had developed in Athens. It was resolved by Solon’s “shedding of burdens” that banned debt bondage for Athenians and made land unalienable to outsiders to block aliens from foreclosing on the land of indebted Athenians. The first Athenian coins are dated a half-century later, minted by the Peisistratids.

Athens was unique in having its own silver mines at Laurion, owned by the city-state and leased to private operators. That helped lay the groundwork for Athenian democracy by enabling it to issue public coinage—the “owls”—standardizing the means for payments and denominating prices for trade in the agora, the marketplace in which merchants rented stalls from the city. Other elements of this civic program included public building and the staging of dramatic festivals to replace the religious cults controlled by the aristocratic families.

Coinage and the ‘Straightening’ of Economic Distribution

Much as was the case when Mesopotamia’s palaces and temples monetized silver two thousand years earlier, classical antiquity’s reformers who overthrew despotic aristocracies and introduced coinage acted as “straighteners,” with tyrants being characterized “as euthunter, ‘straightener,’ the bringer of justice and law,” the same metaphor used by Babylonian rulers who proclaimed misharum annulling rural debts, bringing “straight order” with connotations of distributive justice. “Edouard Will argued some time ago that in the Greek polis nomisma, coinage, had strong associations with fair distribution; it described the relationship between citizens and the city,” notes Sitta von Reden. “Not accidentally nomisma and nomos, law, had the same roots: both were the result of rightful distribution, a conventional standard, something used by custom or convention among a political community.” Kurke points out that the term that Aristotle used for coinage, nomisma, means “currency”—not necessarily money, for which the usual term was chremata. In addition to meaning “law” (nomos) or “rule,” the root nem- meant “to allot, to distribute.”

Kurke describes the pre-tyrant aristocracies as refraining from creating public coinage or standardized prices and markets because they preferred to conduct exchange on a personal basis favoring their own powerful status according to circumstances. “Whether we etymologize it (with Will) as ‘process or result of lawful distribution’ or (with Laroche) as ‘convention,’ the term nomisma points to the political function of coinage, either as a means of effecting redistributive justice or as an institution of consensus,” as the reformers moved to replace the old elite’s arbitrary demands and pricing.

“As the polis used coins for its own payments and insisted on payment in coin,” summarizes Randall Wray, “it inserted its sovereignty into retail trade in the agora… wresting control away from the elite.” Kurke suggests that this democratic dimension is a major reason why civic coinage spread so slowly outside of the Greek sphere despite the flowering of trade in Egypt, Phoenicia, and Carthage for many centuries.

The Role of Coinage in the Military and Intercity Festivals

What catalyzed coinage was the conquest of Alexander the Great (356-323 BC) looting the region’s temples, melting down their statues and ornaments into bullion and putting it into circulation as coinage. Coinage henceforth was increasingly military in character.

Reviewing the American Numismatic Society’s database MANTIS, Francois De Callataÿ finds that “the monetary mass of the Hellenistic world was overwhelmingly issued for military purposes (and it is likely that this statement—obviously true for the Roman world as well, whether Republican or Imperial—needs to be extended into the Classical and Archaic worlds).” And reflecting the fact that Greek cities, kings and leagues produced their coinages more to pay soldiers than for market trade, coinage imagery was primarily chosen “to make coins accepted by the users” by being “related to power and military values such as helmet, thunderbolt, club, shield, and spear. Zeus appears increasingly after the conquests of Alexander,” just as Rome’s Severan emperors would favor the Mars type. Alexander was the first to press coins with his own profile, providing the model for subsequent kings to depict their rule as divinely sanctioned. Another public occasion for the use of coins, Head noted, were the festivals associated with the public games sponsored by the four great Greek temples: the Olympian games, the Pythian games at Delphi, the Isthmian, and Nemean games. (Athens later sponsored the Delian games to offset the first four, all of which were held in the Spartan-dominated Peloponnese.) These games were associated with markets and hence a need for coinage by the temples.

Temples and Coinage

Temples were associated with coinage in two ways: First, their mints struck coins, typically stamped by civic authorities as a guarantee of purity, to pay mercenaries, taxes and for trade, especially at festivals and games. Second, temples lent their votive offerings to their local city-states to strike coins. Examples where temple treasure was lent for coinage include Athens, Syracuse and other Greek cities during the final decade of the Peloponnesian War (414-404 BC), and Rome toward the end of the Hannibalic Wars during 211-205 BC. Much civic coinage thus took the form of a public debt to the temples.

For many centuries the fact that temples were sacred led them to be left intact by conquerors who did not hesitate to plunder private property. However, when the Phocian generals occupied Delphi during 356/346 BC, they seized its treasures to pay mercenary troops. They “melted down money from the votive offerings made of gold and silver, and minted coins and put them into circulation of the various states,” mainly to hire more troops. Most of these coins were later deemed sacrilegious and re-melted, and some were cast into new images and offerings and returned to the Delphi temple. But it soon became normal for Roman generals to bring minters with them to coin looted temple booty on the spot to pay their soldiers (and themselves). This was not an “economic” market exchange for commodity trade.

The accepted position for the past half-century remains that of Kraay: “The issuer in all identifiable cases proves to be the supreme political power in each city or state; there is no evidence in the Greek world for the private issue of coins by bankers or merchants.” The monetary historian C.J. Howgego states bluntly: “There is no certain case in the whole of antiquity of coins being produced by individuals.”

Civic Authority Over the Temples

Greek coinage was produced in the temples, which in turn were administered by civic authorities. Curtius summarizes the transition from temple to civic coinage and credit. In cases where donations were made jointly to the town and its deity, sacred money was under a mixed administration.

“This control exercised by the municipal authorities led, however, to an interference with priestly institutions. The state sequestered the priestly treasures, a sequestration which must have commenced at Athens during the time of the Tyrants, when the priesthood had an annuity conferred upon them, and when the great temple treasury was erected at the expense of the state, to serve at once as a treasury for the state and the temple.…

“Now on the transfer of the temple treasures to municipal management, the money struck thence became state money, i.e., the state took the issuing into its own hands, giving its own credit in the place of that of the priests. But as it was everywhere the endeavor to make the transfer as gently as possible (whence so few traditions of conflicts between states and the priesthoods) during the completion of the secularization, the form in which it was done was concealed, and the treasuries were built like temples, their officers being invested with a sacerdotal character, while the deity was left to all appearance in full possession of her property. Thus it was also with the temple currency; the religious character was left as if it still continued to be issued by the priests, but in token that the circulation of money struck under other than state authority was no longer permitted, and that the money was recognized as the state currency, the initials of the name of the town were placed as a profane mint-mark upon the reverse.… It is the Government countermark to the priestly symbol which was left unchanged; its introduction marks the secularisation of the coinage, which it seems first took place in Kyzikos and Teos.”

“The treasurers of the goddess, therefore, were not merely treasurers of the temple in the narrower sense, but were at the same time keepers of the public treasure,” noted August Boeckh in reference to Athens. After 419 BC, “these several treasurers of the temples, with the exception of the temple of Minerva, were all united in a single board called the ‘Treasurers of the Gods, or of other Deities.’”

The anti-government (essentially anti-socialist) “Austrian” barter theory of money’s origins proposed by Anton Menger 1871 (translated into English to great popularity in 1892) sidestepped any acknowledgement of how money was civic and official from the outset. Despite publication of the research of Boeckh, Curtius, Jebb and Head regarding the primary and positive role played by public institutions in the genesis of money, the “individualist” school conjured up a censorial myth of how individuals acting by themselves might have developed money without any official oversight or purpose other than to truck and barter.

No anthropological or archaeological evidence has been found to support the fantasy of money having originally been developed for on-the-spot payment of goods and services. Most archaic economic relations were on credit, with payment typically being made at harvest time down to medieval Europe in the 12th and 13th centuries. The “Austrian barter theory” was developed by opponents of the rising state regulatory power in the late 19th century. Their ideological aim was to create an origin myth for money—and economic relations in general—that excluded any positive role for the state. That ruled out acknowledging the role played by civic authorities and their city-temples in the development of Greek and Roman coinage.

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