Tuesday, February 17, 2009

COINS OF THE ANCIENT MEDITERRANEAN WORLD

COINS OF THE ANCIENT MEDITERRANEAN WORLD
AN WHERE WE ARE HEADING TO

When bartering, it is a laborious process to establish the values of various goods in relation to each other. How many visits to the cinema are worth one car? How many apples will it cost the farmer to settle his dentist’s bill? And what happens if the doctor does not like the apples? What is really needed is a conversion table setting out the value of goods in terms of other goods. We would always need to carry in our heads a complicated conversion table giving the value of every item in terms of every other item. This is another case where money has an advantage: since everything is exchanged for one and the same unit of measurement- money-people can better compare prices and work them out easily. When all goods are bought and sold against the same medium of exchange, namely money, it becomes easier to set prices and to compare them.

WHAT EXACTLY IS MONEY?
An odd question at first glance. Of course, we all know what money is. Money is a generally accepted medium of exchange. In addition it can be put aside for later, i.e. used for saving: money is also a store of value. But as so often in life, it is all a bit more complicated. Let us put it to the test and ask: how much money do you have right now? Do not just count the cash in your pockets or your purse. Money also includes credit balances on postal, wage and other accounts that you can use to make payments. The money on these accounts is called deposit money because payment is effected simply by transferring a deposit from one account to another.

MONEY MAKES LIFE SIMPLER
When people still provide for themselves, they did not need money. Things for everyday use they made themselves. If people made more than they needed, they swapped the surplus for other goods. In small, close-knit communities that worked quite well, and there was still no need for money. But bartering has one disadvantage: many things are perishable and soon become impossible to trade. People engaging in bartering therefore came to prefer commodities that could survive the passage of time undamaged and were much sought-after. We need money to buy what we want and to pay for what we buy. We buy physical goods ranging from bread-rolls to our dream house. We also pay for services, like the calls we make on our mobile phone or holiday bookings. Thus did money come into being.
In the course of history many commodities have served as generally accepted medium of exchange- or money: shells, salt, tea, blankets, cigarettes, precious stones, silver, and gold.

WHY NOT USE COMODITIES
Seashells, animals’ teeth, rare stones or even bricks of dried tea have all been used as money in different cultures. Theoretically, any material can serve as money as long as it fulfils three conditions. Firstly, it must be accepted as a means of payment by everyone doing business together. Secondly, people must have confidence in the value of the chosen material. And finally, the material must be scarce since only a scarce good has any value. That is why sand is hardly suitable as money, whereas gold and silver, for example are. Money must be scarce, but not excessively so. In an efficiently functioning economy there must always be enough money available to ensure that the goods on offer can be bought and sold in unhindered trading.

About the cover: the one and e eagle, reminiscent of the American symbol, is from the tetra drachma of ptolomy l of Egypt, one of Alexander the Great’s generals. The head shown is that of Hercules, from the tetra drachma of Alexander the Great, though some have suggested it may be a portrait of Alexander himself. This booklet was researched and written by John p. Mulcahy.

The coins we use as money today have a history that goes back 2,700years. Ancient peoples used metals, especially gold and silver, to mint coins. Rulers soon learned to standardize their coins and define them in terms to fixed quantities of gold and silver, thus establishing a rate of exchange between the two metals.

The usefulness of early forms of money was often restricted by its inconvenient size, limited geographic fluctuations in the supply and demand for metals. In ancient times, the greatest stimulus to trade came when rulers such as Alexander the Great and the Roman emperor Augustus established uniform coinage systems that were widely recognized and accepted. Today, most currency is paper money, and coins are passed as small change. Still, coins have many of the same features that they had in ancient times. For example, modern coins have a government-approved design and value stamped on them, like the earliest coins did. Many nations still follow the Greek and Roman custom of recognizing famous people by placing their portraits on coins. Even the eagle, which appear on the back of the U.S. quarter, can trace its use as a symbol back to the coins of the ancient Mediterranean.
Most historians think the city-states of Greece and kingdoms of Asia Minor invented the first coins in the 7th century B.C. The kingdom of Lydia, in present-day Turkey, stamped lumps of precious metals with an official seal to guarantee their weight and purity. Lydian metal, stamped with King Croesus’ seal, become something everyone accepted. Pubic confidence in the king’s money gave trade a great boost.
These Lydia coins called STATERS, were first made of electrum, an alloy of gold and silver. About the size of a finger nail, these first coins were valuable. But, the mix of gold and silver was unpredictable, making some electrum staters worth more than others. Eventually, the Lydians stabilized the stater by minting two versions, one gold and one silver. This change produced the world’s first bimetallic standard.
The front of Croesus’ coin is stamped with a growling lion’s head facing the head of a horned bull. In ancient Mediterranean cultures, the bull was a symbol of strength and heroism. The lion may have been Croesus’ tribute to an ancient symbol of a maternal divinity.

The Greeks Catch on
By 630 B.C., the Greeks city-state of Aegina was stamping coins. Like the Lydian stater, the Aeginetan STATER carried the image of an animal, but instead of the loin and bull, Aegina used the sea turtle. The choice of the turtle may have been based on Greek myth or on the obvious facts that turtle abounded in the sea surrounding Aegina, and still do today. The back of the silver turtle starter had a simple design, making it one of the first coins to have a design on both sides.

The Athenian Tetradrachma
In the early 6th century B.C., Athens began making silver coins in small denominations that were convenient in everyday trade. One of the of the best know coins of this period is the Athenian TETRADRACHMA “Drachma” “meant handful” and came from the Greeks practices of using small copper and iron splits, measured by the handful, as money. A tetradrachma was worth “four handfuls.” These Athenian coins were also among the first coins in the region to have a design on both sides. The designs usually represented important religious, political or commercial matter.
The front of the tetradrachma shows the goddess Athena, for whom the Athens was named. Greek mythology said Athena gave the city its chief source of wealth, the olive tree, and Athenians remembered that when they designed their coins. The image of the goddess of wisdom and strength appears on the front, the first prominent representation of the human from on a coin. On the back, branches of the olive tree hang above the wing of the owl, Athena’s symbol.
The Athenian tetradrachma was the first coin to become “international” money. It was used widely in the trade among the Greeks and other peoples of the region.

Athenians Commemorate victory at marathon
The Athenians were one of the first to commemorate a military victory on their coins. Following the victory over the Persians at marathon in 490 B.C., the Athenians modified their tetradrachma to include a crescent moon between the owl and olive branches. The moon reminded Athenians that Darius, king of Persia, withdrew his forces under a waning moon.

The “Ponies” of Corinth Gallop Into Coinage History
Although the Athenian tetradrachma was the region’s first international money, it was inconvenient for everyday use because it could not be exchanged for fractional coins. The city-state of Corinth was the first to issue coins in denominations and was also one of the earliest to have designs on both sides. The winged horse Pegasus was on all Corinthian coins, which is why they were called “ponies.”

The New Coin Economy
By the mid-6th century B.C., the economies of the Greeks city-states had become quite sophisticated. Lydia, Aegina, Athens, Corinth and others were all making coins and improving them. Designs became more refined, their implicit guarantees made them acceptable in a widening geographical area, and the issuance of different denominations made them more useful.
Croesus had introduced bimetallism and his small silver coins were commonplace in market throughout Asia Minor. Cyrus the Great, the Persian conqueror of Lydia, minted coins based on the Lydian example and spread them through out his empire.
By the time of the Persian wars, coins had become the most common of money in the Mediterranean world. In the 5th century B.C., silver Greeks coins were the principal medium of exchange used by trading states, occasionally supplemented by Persian gold. In the 4th century B.C., Corinthian silver “ponies” were as widely accepted as the Athenian tetradrachma. Once bronze coins were introduced, they quickly became the preferred money for small denominations and everyday trade.
The result was a thriving world of trade in the Mediterranean. But it was still a small world, and there were still limits to both the geographic acceptance and commercial utility of coins. Trade was also disrupted by political disorders and wars.

THE ADVENT OF A NEW ORDER

The Macedonian Empire
In the mid-4th century B.C., the Greek city-states were brought under the rule of Macedonia, whose influence eventually spread to the rest of the Mediterranean world. The tetradrachma and staters of two Macedonian kings – Philip 11 and his famous son, Alexander 111 (the Great) – became the top international money of its time. The coins of Philip and Alexander were so popular that they were copied and counterfeited for centuries.
Philip worked to stabilize his Macedonian coinage system at a ratio of ten-to-one for gold and silver, a standard that set the exchange rate between gold silver for many year.
Alexander the Great was a military genius and more. He also standardized the money system for Macedonia and most of the countries from the Indus River to Naples. The stimulus to trade was astonishing.
Alexander kept the gold coins of his father but issued many more of them with the backing of captured Persian metal. He redesigned them, however, to reflect his unique preferences. The front of Alexander’s silver tetradrachma bears the head of the head of the young Hercules (some suggest it is a portrait of Alexander), while the back bears the image of Zeus holding a scepter and an Eagle. The scepter has long been a symbol of the ruler, while the early Greeks believed that the soul of a dead king took the form of an eagle to watch over his kingdom. Others regard the eagle as Zeus in the animal.

Images of Mortal Men Placed On Coins
After Alexander the Great’s death in 323 B.C., his generals divided his empire among themselves despite the break up of Macedonian Empire, Alexander’s currency was still the standard everywhere, except in Egypt, where Phoenician coinage was the standard.
Lysimachus, the general who took Thrace (in modern-day Turkey and Greece) risked the wrath of the gods by being the first to authorize coins bearing the image of a mortal – Alexander the great. His head, adorned with a ram’s horn, the symbol of his strength, appears on the front, while the back carries the goodness Athena. She is seated and in her right hand is a tiny image of Nike, the winged goddess of victory.
Ptolemy of Egypt, another former general, also broke with tradition and became the first to mint coins with the image of a living mortal, himself. Assured of his power, he adopted the title king and placed his portrait on the front of his silver tetradrachmas. The eagle on the back is a symbol of his leader ship.


The Roman Republic
The first metallic money of the Romans was the AS, a copper rod one Roman foot long and ½ inch in diameter. By customs, one hundred cooper rods were valued at one cow. Eventually, the As evolved into the shape of a coin and it bore simple designs, such as the head of a Roman god on the front and the prow of a ship on the reverse, a symbol of Rome’s reliance on maritime power.
About the time of Alexander’s death, Rome began making silver coins. The as was reduced in size and value to a convenient half ounce. By the end of the 3rd century B.C., the Romans issued the silver DENARIUS, which became their principal coin.
Similar in both size and value to the Greeks drachma, the silver denarius accompanied the roman legions as they conquered the Italian peninsula and invaded Spain and Gaul. Though Alexander and his successors had tolerated the continuing existence of many local coins, the Romans melted down those symbols of competing power and turned them into Roman coins.
In the 1st century B.C., Rome accumulated a large gold reverse and Julius Caesar authorized minting of gold AUREUS, which became the principal monetary standard for the Roman Empire from Augustus to Constantine. Initially, the weight of the aureus was established at 40 to the pound

Caesar Augustus Brings In the Roman Empire
The story of Roman coinage at its heights begins with one of the greatest leaders of antiquity. His name was Gaius Octavius, but he is better known as Augustus, the name given him by the Roman senate in 27 B.C. He ruled from 31 B.C. to 14 A.D.
Under Augustus, the aureus became popular as far away as India and was supported everywhere by the prestige of Romans armies. He took the authority to mint the denarius away from the senate and stabilized its exchange rate with the aureus at 25-to-1. In Augustus’ time, the denarius’s was apparently the usual pay for a day’s labor, probably a twelve-hour day.
The Augustan coinage system also included other lesser denominations. The smaller denominations were minted under the authority of the Roman senate and stamped with the letters SC (senatus consulto) which assured the pubic of the coin’s quality. This official authorization also gave value to these coins –the metal itself was virtually worthless. The seal of the Roman senate is similar to the official message on the dollar bill: THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE.

Coin Used as a Political Tool an Idea Uniquely Roman
The aristocratic head of Augustus dominates his entire coinage, while the reverse depicted important events. Roman portrait coins acquainted the people with a ruler’s image and showed who was in power at a given moment. These coins also served as mini- newspapers, carrying information about wars, architectural triumphs and other achievements to the far corners of the Empire.
The “cistophoric” tetradrachma of Augustus illustrate how Roman coins were used to sway public opinion. Struck around 28 B.C. this coin bears the figure of pax,
the Roman goddess of peace, and the caduceus she holds is a symbol of free commerce and the modern symbol of medicine. Next to the goddess is a Middle Eastern symbol, the cista mystica (magic box). Roman coins frequently carried symbols with special significance to a region to promote their acceptance among the local people. The cistophoric tetradrachma championed Augustus’ role as the leader who freed Asia minor from the yoke of arbitrary government.

Jewish coins
Roman rulers departed from their usual practice when they permitted the Jewish high priest in Jerusalem to mint small bronze coins, apparently for local circulation only.
However, the most famous Jewish coin, the silver SHEKEL, was made during the Jews’ first revolt against Roman rule. The coins, which were used for temple dues, bear inscription such as “Jerusalem the Holy” and “Shekel of Israel.” From their earliest appearance to the present day, Jewish coins have carried images of inanimate objects of religious significance. In design, Jews have adhered strictly to the commandment that “thou shalt not make unto thee any graven images.”


The Collapse of the Roman Coinage System
The Augustan coinage system restored price stability and stimulated trade in the Mediterranean. However, neither Augustus nor his successors could provide enough acceptable gold and silver coins to the farthest parts of the Empire. Deflationary trouble began. That was followed by excessive spending by several emperors and catastrophic inflation that helped undermine Roman coinage.
By the 3rd century A.D., even the craftsmanship and design of Roman coins had deteriorated. Finally, all confidence was lost in Roman coinage. Many people in the Western Roman Empire now reverted to a system of barter and the primitive weighing of metals which had existed a millennium before.

SPERM WHALES’ TEETH IN FIJI ISLAND
There was a time when sperm whales’ teeth, because of their relative rarity, were used as currency in the Fiji Islands. When the Islands became a British colony, new money was introduced in the form of notes and coins. Since the authorities wanted the new unfamiliar currency to be accepted and to circulate among the population as quickly as possible, they looked around for something to portray on the notes and coins that would convince the Fijians of their value as a means of exchange. What they chose were sperm whales’ teeth.

WHERE WAS PAPER MONEY INVENTED?
The Chinese are considered to be the inventors of paper money. The first forms of paper money emerged in China in the 7th century. In Europe paper money was at first used only as temporary makeshifts – when there were not enough official coins in a besieged city. The first proper banknotes in Europe were issued in the 17th century.

CAN BANK NOTES BE REDEEMED IN GOLD
In the early days this was actually possible: although the banknotes that were in circulation alongside gold coins were practical, they were ultimately only proxy for the precious metal. Central banks were under obligation to redeem banknotes in gold upon request and to back its banknotes by gold. But since then the role of gold has changed considerably. Banknotes have been declared legal tender, the obligation to redeem banknotes in gold and the gold backing requirement have been abolished and coins that no longer contain any precious metal have been put into circulation.


HOW WILL THE VALUE OF MONEY BE PRESERVED WITHOUT
IT BEING BACKED BY GOLD
In the days when paper money had to be backed by gold, gold was its anchor. Since the gold output rose only slowly, there was hardly any danger that there would suddenly be too much gold and thus too much paper money in circulation. Today central banks undertake to increase the amount of money in circulation in carefully measured quantities. In this way they can ensure that the value of money is maintained. This undertaking on the part of central banks plays the anchor role. The transition from gold to paper representing a deposit of gold also marks the change from material value to exchange value. A gold or silver coin has a value even if no amount is stamped on it, whereas a banknote is only made of paper. The amount printed on a note, its exchange value, is much greater than the material value of the paper. The exchange determines what that piece of paper is worth when exchanged for goods. Nowadays most money no longer has any material value whatever, as it exists only as deposit money held on account at banks or post office.

WHERE WE ARE HEADING TO → ∙∙∙
GOODBYE TO CASH?
Gold and silver coins still had a material value. This is no longer the case with present-day notes and coins. Their value is set by the issuer; they are therefore merely a medium for conveying information about this value. Such information is independent of its medium. It can also be conveyed electronically. At present a number of forms of electronic money are being developed in direct competition with central bank cash. Will such money supersede cash? Whether and how quickly new forms of money catch on will depend on how much confidence those who subscribe to the systems that are being offered have in them and the number of people who use them. Nowadays, most goods and services can be paid without cash. But for small purchases coins and notes are still important because they are practical. In a number of business transactions it is traditional to pay in cash, e.g. for second-hand cars or on the livestock market. Although a cashless society would be technically feasible at the present time, cash still plays an important part in our everyday life. In fact, the use of cash in developed economies is continuing to decrease while the developing and third world countries are still making use of cash but there is strong indication that the reverse may be the case as development continues.


REFERENCES
John P. M. (2004) Coins of the Mediterranean world. Federal Reserve Bank
Information Department Philadelphia.
Swiss National Bank (2002) what is Money Really About? A Brief Introduction To The Swiss National Bank Swiss National Bank Publications Department.
Swiss National Bank (2002) The Swiss National Bank and The Vital
Commodity: Money. Swiss National Bank Publications Department.

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