Articles - Why Mint Coins

Why did the Greeks mint coins?

-Dmitri Apostola

Someone tosses a penny into a fountain, another hears the echoes of clinking coins as they eye a candy bar, and yet another puts quarters into a soda machine. We do not often stop to wonder how it is that we have coins, any more than we wonder about the discovery, mining, and molding of the aluminum that contains the soda. It stands to reason that just as humans did not always understand the process of mining ore and making materials out of it, humans did not always possess coins. Yet they did come into existence, and coins would not have been made if they did not provide some sort of purpose to the people who minted them. Unfortunately, these makers of coins did not leave records that survive as to why they began this tradition. We may only conjecture the reasons why they began to mint coins. This paper is an attempt to summarize many of the arguments that have been given for the creation of coins in the Greek world.

Ancient sources dealing with the creation of coins were invariably written hundreds of years after the first coins were made, sometime in the 7^th century B.C., (LÌvy, pp.18-19) and were often based on how they saw coinage working in their own day. Herodotus claims that the first coins were made by the Lydians, who thusly first made retail goods (Herodotus, 1.94). They received gold dust in the form of electrum from the river Pactolus (Herodotus, 5.101). Modern scholars believe, however, that it was the Ionian Greek states who first invented coinage. (LÌvy, p.19 and Kraay, Archaic and Classical Greek Coins, p.43) The first European Greek polis to adopt coinage was the trading community on the island of Aegina (Kraay, Coins of Ancient Athens, p.1). The ancient geographer Strabo cited the historian Ephorus as saying that it was Aegina that first coined money (Strabo, 8.6.16), under Pheidon of Argos, a man whose historical dates are in much dispute (W. W. How, J. Wells, their commentary on Herodotus 6.127.3). Strabo connects this coinage with international trade, for the quality of the land on Aegina did not suit farming, and as a result they then turned to trade (Strabo, 8.6.16).

We receive a similar message from Aristotle. Being a philosopher, he felt the need to put trade into the realm of civilized people and nations that enact transactions by voluntary deeds and not unjust means, such as theft, false witness, or murder (Aristotle, Ethics, 1130b-1131a). As a result, we need to put his analysis into question, as he attempted to put his explanation of the founding of coinage into the context of the broader philosophical statements that were his true purpose. Aristotle would not place the making of coins for retail trade, for he felt that barter was suited enough for that purpose (Aristotle, Politics, 1257a5-a30). Instead, he purported that when the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use.” (Aristotle, Politics, 1257a31-a34) As it was too difficult to carry around the various necessaries of life” they began to trade in something that was intrinsically useful and easily applicable to the purposes of lifeÙiron, silver, and the like.” (Aristotle, Politics, 1257a34-a39) Stamped money, coins, came into being to save the trouble of weighing and to mark the value” of the bullion that was originally traded (Aristotle, Politics, 1257a41). The stimulus to make coins was clearly put in terms of international trade.

The philosopher Plato, whose statements we must put under the same watchful eye as those of Aristotle, claimed that coins were the result of retail trade. In his discussion of the gathering of people to form a city, Plato begins to put the basis of this on the necessities of life, such as farming, clothing, and housing, and providing for those needs (Plato, The Republic, 369b-370e). However, since he feels that it is hard to found a city where it has all of the various goods required for its many tasks, those goods that cannot be produced must be gotten through international trade (Plato, The Republic, 370e-371b). Plato had his interlocutors Adeimantus and Socrates theorize about the foundation of coinage:

In this city itself, how will they exchange what they have produced with one another? It was for just this that we made a partnership and founded the city.”Plainly,” he [Adeimantus] said, by buying and selling.” Out of this well get a market and an established currency as a token for exchange.” (Plato, The Republic, 371b)

Plato makes his claim for currency not as part of international trade, but rather for retail trade. It was only in reference to the city that currency came into being, and it is concurrent with the foundation of a marketplace, where everyday goods are bought and sold.

These ancient ideas survived until very recently. Historian G.F. Hill, writing in 1906, associated the international spread of Aeginetic coins to the prevalent weight-standard of the day, their coins being used in trade either conforming to the general weight-standard or converting the local to this new standard (Hill, p.5). J.G. Milne, in 1939, placed the first use of stamped valuable money on the shoulders of merchants, who would use it as bullion and get the best price they could for it. Jean-Philippe LÌvy, as late as 1964, attributed the earliest known coin to an unknown person named Phanes, doubtless a banker,” apparently unfazed as he called bankers money changers” in his previous paragraph (LÌvy, p.21). LÌvy put the minting of coinage alongside large-scale trade” and interest-loan debts” with peasant farmers (LÌvy, p.21).

On the whole, however, modern scholarship rejects the idea that the creation of coins was due to either international or retail trade, or that it was primarily a personal endeavor at first. LÌvy begins to unravel his own argument for bankers or traders as the first coiners, when he noted that People had thought of facilitating exchange by using a third commodity as an intermediary device,” because barter became difficult when trying to compare the worth of two unlike objects (LÌvy, p.15). That third commodity, such as valuable metal or tripods (LÌvy, pp.16-18), could set an agreed upon, absolute value to something which had a relative value, such as a sickly or a healthy animal (Martin, p.275). That valuable metal also had the benefit of permanence, since organic materials such as cattle or grain were perishable goods.

If the issuing authority of the coin or stamped lump of metal is the person who is also trading, then the third commodity, the metal, which is meant to set a value that all parties can agree upon, does not help with the transaction. If a trader does not trust his trading partners word about the value of his cattle, why would he trust that trading partners lump of metal? He would not; so there would be little point in stamping a lump of metal for anything but personal accounting. One modern idea about the development of coins is that Coinage shifted responsibility for the guarantee of value in exchanges away from the immediate parties to transactionsÙand thus made it easier for strangers to do business.” (Martin, p.274) The idea runs that states stamped coins, not individuals, in order to guarantee that third commodity.

Retail trade can generally be discounted as the purpose of minting coins. Unless the archaeological record is skewed beyond recognition, very many Greek states did not mint coins, and those that did mint coins were not originally making small denominations (Kraay, Hoards, Small Chance and the Origin of Coinage,” p.89). Even once coinage had been established for two centuries, by the early 400s B.C., only the most advanced cities used coins in retail trade (Kraay, Hoards,” p.89). Given this great disparity between states actually minting coins, and those who do mint not creating smaller denominations even once coins had been established, retail trade could not have been the cause of coins being created.

Trade on the international level is another problematic idea. A coin is worth more than the bullion it is made of; at the very least, its value is increased by the cost of minting (Kraay, Hoards,” p.90). In a closed system, such as a polis, a coin only reflects an agreed upon value. The coin itself can be debased of its metallic value, but as long as the polis agreed that the debased coin is still worth the same as the former coin, there is no change in its value to the people in that city (Levy, p.21). The premium, that value which a coin has over its bullion value, could have been a reason itself for coining, as a government could create more wealth by doing so (Martin, p.259). Unfortunately, since its value is only agreed upon by a polis, when it moves outside of its immediate trading area (or a trading bloc), the coin reverts to its value as metal (Kraay, Hoards,” p.90). Therefore, to use a coin in international trade means that the merchant will be losing money.

It is thusly unsurprising that most Greek coins did not travel outside of the immediate area of the citys trading bloc, which was usually a narrow sphere (Kraay, Hoards,” pp.79, 84). Even those poleis that had their own silver mines, such as Athens, and which appeared to export their abundant silver (Kraay, Hoards,” p.88 and Milne, p.3), did not do so until far after the original creation of coins (Kraay, Hoards,” pp.80-81. He asserts that by 490-480 B.C., they were being exported, and a date of about 550 B.C. can be given for the original mintings at Athens. See also Kraay, Archaic and Classical Greek Coins, pp.56-61). Aside from traders who could use a citys coin in bilateral trade (such as paying port duties), and would therefore accept such coin in trade (Kraay, Hoards,” p.90), there appears to be little reason why a merchant would willingly lose the premium on a coin. International trade does not appear to be a reason for the appearance of coins.

An argument brought forth by M.I. Finley among others would have the creation of coins due to a peculiar political pride that Greek cities possessed (Finley, p.166). He noted that metallic money did not need to be put into coin, and in fact their neighbors in the Arabian peninsula did not coin metal for centuries (Finley, p.166). The Greeks, he argued, hated to debase their currency and treated forgery as a treasonous affair (Finley, p.167). Finally, the coins themselves were needlessly detailed and artistic,” which would serve no purpose in the actual use of the coin (Finley, p.167). But as Thomas Martin observed, It seems impossible to believe that more than fifty percent of all Greek city-states had such poor self-images or severe identity crises that they forebore minting coins.” (Martin, p.262) The minting of coins must have been for a greater reason than simple political pride.

The primary idea concerning the creation of coins today centers around the idea of increased government spending (Martin, p.258). Among these may be included a surplusÙdivided among the citizensÙthe pay of mercenaries or soldiers, salaries paid to experts, and expenditure on public works.” (Kraay, Hoards,” p.89) Concurrent with the creation of coinage the city-states saw an increase in the growing splendour of the temples,” (Kraay, Hoards,” p.89), huge projects such as the building of an aqueduct, and larger sacrifices and festivals.” (Martin, pp.268-269) Since democracies and oligarchies could not force the population to do any of these as a monarchy might have been able to, the governments had to pay to have the work done (Martin, p.269). C.M. Kraay argued that at this point, the government would wish to assure itself that the amount it spent was the amount that it would then receive again, and the assurance of this took the form of converting bullion to coin (Kraay, Hoards,” p.90). Thomas Martin felt that it would further enhance the role of the âliturgy, and allow prosperous individual citizens to build up wealth in the form of coins, which would then be redistributed in the form of public works or sacrifices at festivals. Since no one person could from their own lands provide all of the necessary food or materials, coins would allow them to buy what they could not produce, and perform these huge liturgies in order to enhance that persons clout in their community (Martin, pp.272-276). These arguments run into problems when faced with Finleys argument: why make coins, if governments in the Middle East that were exponentially larger than Greek city-states managed to survive without them?

The answers are still unclear; lacking a document that explicitly tells us why a certain city began to mint coins, we may only guess at the reason. Ancient scholarship has not aided us; the philosophers and the geographer were wrong in their assessments, for trade could not have been the impetus for minting coins. The reasons, at first, had to be a local affair, some motivation in the polis. Whether it be a money-making scheme by the government, a way to pay for public expenses, a pride in ones city, or some other reason, the answer to the beginning of coinage lies locally.

BIBLIOGRAPHY

Aristotle, Ackrill, J.L., trans. Ethics. London: Faber & Faber, 1973.

Aristotle, Barnes, Jonathan, trans. The Politics and The Constitution of Athens. Cambridge: Cambridge University Press, 1996.

Finley, M.I. The Ancient Economy. Los Angeles: The University of California Press, 1985.

Herodotus. Waterfield, Robin, trans. The Histories. Oxford: Oxford University Press, 1998.

How, W. W. and Wells, J. A Commentary on Herodotus. http://perseus.csad.ox.ac.uk/ cgi-bin/ptext?doc=Perseus:text:1999.04.0028&query=page%3D%23435&word=Pheidon.

Colin Kraay. "Hoards, Small Change, and the Origins of Coinage," JHS 1964

----------. excerpt from Archaic and Classical Greek Coins.

----------. Coins of Ancient Athens. Newcatle: Corbitt & Hunter Ltd, 1968.

LÌvy, Jean-Philippe. Biram, John, trans. The Economic Life of the Ancient World. Chicago: The University of Chicago Press, 1964.

Martin, Thomas. "Why did the Greek Polis Originally Need Coins?" Historia 1996

Milne, J.G. Greek and Roman Coins. London: Methuen & Co. Ltd., 1939.

Plato. Bloom, Allan, trans. The Republic of Plato. New York: Basic Books, Inc., 1968.

Strabo. Falconer, W., trans. The Geography. London: Henry G. Bohn, 1856.