by Kabir Sehgal
Fourteen types of coins have been discovered from the reign of Peisistratus. The variety of symbols found on the coins, from horses to wheels, suggests they were made by different issuers. But the coin depicting an owl is most famous because of its staying power. It was issued almost continuously for several hundred years, until the silver mines were tapped out. In 525 BC, the image of a gorgon like Medusa, an emblem associated with Athena, was added to the front of the tetradrachm. After a few years, the gorgon was replaced with an image of Athena, and her bird, the owl, on the other side. Most of these owl coins were made at the Athenian mint, which was a large building adjacent to the agora, an open area used as a marketplace.
During the Peloponnesian War, Sparta blocked passage to the silver mine at Laurion, so Athens almost drained its entire silver supply. It minted coins made from the gold of the Nike statue at the Acropolis. The shortage worsened, and Athens issued owls made from bronze and coated in silver. Smaller denominations of owls were issued because there was less metal to use.
In addition to state-led debasement of its coins, there was the problem of counterfeit owls. Athens prohibited cities not fully under its control from issuing owls. The decree wasn’t fully obeyed, so Athens dispatched commissioners to its distant provinces like Egypt to enforce the law and administer a penalty of ten thousand drachmas for violations.
With the kingdom of Alexander the Great the owl coins were supplanted with coins bearing images of Hercules and Zeus. Alexander’s coins also replaced the gold Daric, which had been introduced by Darius the Great around 520 BC and circulated throughout the Persian Empire. The successors of Alexander the Great set up more than twenty mints from Macedonia to Egypt. His coins achieved international circulation and helped to expand his influence throughout the region. As evidence of his reach, his golden staters are among the oldest coins found in Britain.61
However, owl coinage was revived in Athens in the third century BC. Inscribed on them were the initials of Athenian officials administering the issue, and the month of issue. Economic historian Peter van Alfen notes that in 42 BC, after the Battle of Philippi, waged to avenge the death of Julius Caesar, the production of owl coins was halted, since Rome had become the dominant power. Rome’s hard money had become the coin of the realm.62
In parallel with the monetary doctrines, metallists contend that owl coins were intrinsically valuable, made from precious metal. The state merely legitimized what already functioned as currency. Chartalists acknowledge the owls’ intrinsic value: These coins would have little worth without their base metals. However, seigniorage shows that the coin’s value derived from something more than metal. The additional value stemmed from the state, which issued owl coins and enforced their use as acceptable means of payment. Athens issued guidelines for which coins were acceptable in the agora. That it banned counterfeit owls demonstrates that the government recognized that a principal source of value was people’s faith in the currency. People had to believe that the coins were authentic legal tender. Widespread questions regarding the legitimacy of coins could lead to concerns in the agora, a currency crisis, or even the destabilization of power.
Moreover, state expenditure introduced an abundance of coins into circulation. It’s estimated that millions of coins were issued during the fifth through third centuries BC, making coins one of the first mass-produced items in history. The mass issuance of coins coincides with Athens building its fleet to combat the Persians around 480 BC. Coins were needed to pay soldiers for several conflicts, such as the Peloponnesian War. The state also paid more than sixteen thousand drachmas for building the Parthenon temple. It paid jurors and citizens to attend the Assembly, where matters were debated. Even a couple of obols were paid to citizens for going to the theater for religious activities. State spending put more money in people’s hands, including those of foreigners, which created the demand for more goods and services.
Over time, soldiers, workers, and citizens took these smaller coins, their movable fortunes, to the agora, which became a center of life in Athens.63 Coins were an invitation to buy and sell at the agora. They were symbols of civic pride and represented the values of a land ruled by laws. After all, the Greek word for coin, nomisma, is similar to the word for law, nomos, which eventually led to the modern English word for coin collecting, numismatics. Coinage stimulated the marketplace: more money, more people, and more goods. Merchants actively monitored the supply and demand of their goods and adjusted prices accordingly. Nonmerchants and illiterate people who previously relied on brokers and other representatives were now empowered to trade for themselves. No longer was there a need for scales and weights to assess the intrinsic value of basic goods (though the agora still had scales for larger goods). Coins became the standard of value against which almost everything was measured, including other commodities like wheat and barley. But now soft, intangible items like time and labor could also be valued with the same monetary standard.
Credit abetted the adoption of coins. Scholars have debated whether banks, or trapezai, in Athens were more than just moneychangers and pawnbrokers. Yet banks, shops, and temples all issued loans. Classicist Edward Cohen notes that banks were given a prominent position in the agora, recognition of the vital role they played in the economy. Loans were often received in the form of coins, creating more demand for hard money. There is evidence that trapezai extended large amounts of credit to facilitate trade, which introduced more goods and dynamism into the marketplace. For instance, perfume vendors held large inventories and relied on bank credit to stay solvent. Banks also issued loans to help prospectors acquire mining rights and to abet military campaigns. Cohen says that the largest loans were made to finance ships, and were secured against their cargo. Despite credit flowing through Athens, it had become a coin-based economy.64 There wasn’t an easy way to transfer wealth without handling coins, and payments for tolls, custom duties, and rents were mostly made in coins.65
Coins were shaping not just the agora but also the larger Athenian society. Instead of a top-down redistributive system, in which people relied on the central power, aristocracy, or even onerous family relationships, coins had a democratizing effect. Money helped form a web of interdependent relationships without the lingering gratitude-induced obligations of the gift economy.66 Anthropologist Jack Weatherford writes in The History of Money that coins may have even augmented democracy.67 In addition to Solon’s reforms to cancel debts, the leader broadened the criteria of those who were eligible to serve in public office. Wealth became a determining factor, not just whether someone was from a noble family.68
Athenians exhibited entrepreneurial qualities, but to consider Athens a bursting market economy would be to distort the past through a modern economic prism. Moreover, to consider coinage as the only catalyst for liberal reforms is too narrow. In The Economy of the Greek Cities, Léopold Migeotte writes that changing demographics, increasing urbanization, and better transportation routes also played roles in economic growth.69 Nevertheless, money was a democratizing force.
Some notable Greek philosophers didn’t see it that way. Plato and Aristotle were suspicious of money and the marketplace. They discussed the differing forms of money, which convinced some scholars that chartalism and metallism originated from their philosophies. Plato thought money stoked greed and corruption and wanted to ban gold and silver.70 He thought that trade and a retail economy would lead to “deceitful habits in a man’s soul that would sow seeds of distrust among the citizenry.”71 He advocated for strict market regulations. No, he doesn’t appear to be a metallist.
But was he a chartalist? Economist Joseph Schumpeter seems to think so, referring to Plato as the “first known sponsor” of what was later considered chartalism.72 But again, that might be imprudently viewing the past through a more contemporary economic prism. Yet Plato does make a distinction between token money and what he calls real money, or between what one would call soft money and hard money. He says the state issues token money and
decides its form and initial value. Therefore, token money will be accepted only within the jurisdiction of the state and not the realm of other states. Real money, hard money, is the currency of the marketplace and can be exported and used in transactions with foreigners.73 No doubt he would be surprised with the role of the US dollar, which is token money but hoarded the world over in the form of the hundred-dollar note and acceptable as official payment in other sovereign nations, such as Panama.
Plato’s pupil Aristotle noted that at least historically, money was “valuable in itself, might easily be passed from hand to hand for the purposes of daily life, as iron and silver, or any thing else of the same nature.”74 Schumpeter credits Aristotle as an originator of metallism and for influencing generations of economists.75 However, it’s not clear Aristotle was a metallist.76 He writes that money is man-made, has a use value, and “owes its existence, not to nature, but to law… and it is in our power to change it and make it void.”77 He acknowledges the role of the state, the law, as key in determining the form of money. If the law changes, so might the form of money. By that logic, money could be soft or hard.
Aristotle was more moderate and matter-of-fact in his analysis of the market than his teacher Plato. But they sound similar when considering the ethical implications of money. Aristotle acknowledges that money facilitates different types of exchange. He describes how eventually man entered the market only with money, looking to buy goods and sell them at higher prices, like a shrewd speculator. Aristotle discredits this type of exchange as unnatural because it was “people taking things from one another.”78 He also condemns usury, the lending of money at high rates, as “reasonably detested… the most contrary to nature.”79 Using money to make money only encourages man’s insatiable desire to acquire more. They both believed greed wasn’t good.
When in Rome
While coinage had a democratizing effect in Greece, it could also be used by authorities as a political tool. During the Roman Empire, to keep up the pace of exorbitant spending, rulers minted more coins and increased the supply of money. At the same time, they reduced the amount of metal within coins, which made the currency less valuable and contributed to depreciation. Roman history highlights a lesson about hard money: Issuers can manipulate the value of money to serve political ends. It’s a lesson that plays out even today.
Roman coinage began around 300 BC. Early coins were inspired by the design of Greek coins, and some were even made in nearby Greek towns to facilitate trade.80 The coins in circulation were the bronze as, the standard monetary unit, and the silver didrachm. Though the standard conversion rate was one didrachm for ten asses, the values of the component metals fluctuated in the market. Say silver appreciated considerably above the official face value stated on a coin. People would hoard it, removing it from circulation. And bronze coins, which were undervalued compared to their official face value, would be left as the circulating coins of the realm. This phenomenon is known as Gresham’s law: Bad money drives out good money.81 And it was a recurring phenomenon throughout the Roman Republic and Roman Empire.
After vanquishing Pyrrhus and the Greeks, Rome started to solidify itself as the paramount power of the region. It began to mint its own coins in mass quantities around 269 BC. The mint that produced most Roman coins was atop Capitoline Hill, a secure location to protect against enemies. The mint was adjacent to a temple for the goddess Juno Moneta, whence the words money and mint likely originated.82 There are several myths regarding how Juno earned the name Moneta. One legend has it that a voice from the temple warned about an earthquake, and the only way to stop it was to sacrifice a pig. Another is that invaders from Gaul alarmed the geese inside the temple, alerting the Romans, who stopped the invaders. The common thread in both stories is that the goddess was a voice of warning; the Latin verb moneo means “to warn.” In addition, it makes sense that the monetary units would be closely associated with this temple, since it’s where other official weights and measurements were kept, such as the pes monetalis, the “monetal,” or Roman foot.83
During the Second Punic War, fought against Carthage from 218 to 201 BC, Rome faced financial difficulties since sustaining the military required vast resources. The regime therefore minted debased silver coins, reducing the metal content from 98 percent pure silver to 36 percent. The end result: more coins to pay soldiers even though each coin was worth less. Despite winning the war and becoming the predominant regional power, much of the value of Rome’s hard money had been lost, and coins of more value were hoarded.84
So Rome started over. Around 211 BC, Roman authorities introduced the denarial system of coinage, which included the silver denarius and the bronze as. Denarius comes from a Latin word that means “containing ten”; one denarius was equivalent to ten asses. The conversion rate eventually changed to one denarius for sixteen asses. The system was composed of four coins made almost completely from pure silver: (1) the denarius, which was the biggest in size, weighed 4.5 grams and had the largest value; (2) victoriatus (three-quarters denarius); (3) quinarius (half denarius); and (4) sestertius (quarter denarius). Many early denarial coins bore an image of the goddess Roma in a winged helmet and the inscription ROMA. Eventually, coins incorporated various other inscriptions and deities.
Julius Caesar left his stamp on Roman monetary history by using the gold treasure he pillaged from Gaul to increase the quantity of the aureus in circulation; they had previously not been issued extensively. These new coins helped Rome cope with a financial crisis in 49 BC during Caesar’s ascension to power, since coins were needed to pay the military. By expanding the supply of money and preventing people from hoarding mass amounts of coins, Caesar’s reforms helped the economy recover.
Caesar’s eventual successor, Augustus, who came to power in 27 BC, faced a similar problem of an economy in need of more money, suffering from deflation, and enduring a depression. Augustus used loot captured from Egypt to spend lavishly on civil projects and enhanced welfare programs. The precious metals from distant lands were melted and paid to soldiers. He followed Caesar’s monetary policy, minting more coins at a furious pace until 10 BC. In time, interest rates dropped from 12 to 4 percent, and the economy recovered. Caesar’s and Augustus’s economic policies were successful and instructive to future Roman leaders.85
One of Augustus’s successors, Emperor Nero, reigned during a prolonged depression in AD 62, and a fire blazed through Rome in AD 64, causing even more damage. Classics scholar Mary Thornton sees similarities between Nero’s initiatives and those of President Franklin D. Roosevelt—she suggests Nero created a “New Deal for Romans.”86 Nero increased food subsidies for the public and spending on civil projects like canals.
President Franklin Roosevelt expanded government spending during the Great Depression, but he also changed the implementation of monetary policy through his gold policies and the gold purchase plan, which was purposefully directed at devaluing the dollar.87 Nero also took an activist approach to monetary policy and worked to expand the money supply. Nero followed the economic playbook of Caesar and Augustus; he enlarged the supply of coins and tampered with their value. He reduced the worth of the denarius by 15 percent, diminished its silver content from 97.5 percent to 93.5 percent, and lowered its weight from 3.9 grams to 3.4 grams. He reduced the aureus by 10 percent and lowered its weight from 8 grams to 7.2 grams.88 His actions expanded the money supply by an estimated 7 percent. In the end, debasing hard money was a monetary policy that helped put the economy on a path to recovery.
The reign of Nero was a turning point in Roman monetary history. Money was losing its intrinsic worth, yet Romans increasingly transacted in these debased coins. However, foreign territories like India refused debased coins, so Rome exported silver, gold, or nondebased coins to facilitate trade.89 The city of Rome didn’t produce many goods. They had to import items, which created a trade deficit that had to be financed, a further drain on the state’s coffers. Furthermore, Nero recognized that his coins wer
e more than just minted metal. They were a symbol of value and an instrument of propaganda. Early Nero coins bore an image of the emperor at age sixteen, the year his reign began, alongside his mother, Agrippina, the power behind the throne. Later coins show him with a beard and crown, as he became his own man.90
The Roman Empire grew in influence and expanded its borders to the Middle East and North Africa, covering more than four million square miles. Its many captured treasures enhanced not only Rome’s income but also its spending. Seized metals were melted and minted into coins to pay the burgeoning military. The surge in state spending also financed the hefty bureaucracy and subsidies for the poor.91 In the second century AD, the Roman budget swelled to more than 200 million denarii per year.
However, profligate spending eventually put downward pressure on the economy. The monetary policies imposed in response to the financial crisis of AD 238 effectively made the denarius disappear, especially as the supply of silver was greatly diminished. The state needed more money, so in AD 214 it created another coin altogether, the antoninianus, which was named after its originator, whose name was Antoninus. Bad money forced out good money. People hoarded the denarius for its higher intrinsic value, and it was effectively removed from circulation. Hoarding contracted the supply of money, which forced Roman authorities to issue even more debased antoniniani. By AD 270, the antoninianus was minted with only 2.5 percent silver. With less “good” money in the system, there was an increase in barter and social debt transactions. To compensate for the diminished value of coins, merchants marked up the prices of goods, eventually sparking aggressive inflation. The economic malaise led to public outcries, including a strike by mint workers in AD 271.
