"The Divine Bounty has bestowed upon us inexhaustible mines of silver, and advantages which we enjoy above all our neighbouring cities, who never yet could discover one vein of silver ore in all their dominions." — Xenophon of Athens
Persian Gold: The Golden Archers of Emperor Xerxes
The Greek city-states and their foes the Persian Emperors struggled for dominance using both warfare and violence, and through monetary machinations. The Lydians had favored gold above other metals, and the same was true of the Lydians' eventual nemeses and conquerors: The Persian Emperors.
Striking gold coins was at one point a monopolized right of the Emperor— though regional governors were sometimes allowed to mint silver coins of lower denomination and lesser prestige. A Persian gold coin called the Daric was eventually struck, featuring a depiction of the emperor bearing arms. These golden coins became known as "archers." It was these coins that Emperor Xerxes referred to when he boasted: "I will conquer Greece with my archers."
Around the year 490 BC, however, rich seams of silver struck in the Laurion mines provided the Athenians with a wealth of silver to coin into money. The Athenian silver owl coins were struck from their rich stock of Laurion silver to contend with the Persian gold, and in time it was the Athenians who were victorious: Xerxes and his "Archers" were defeated by the Greeks with the Athenian "Owls."
Athenian Silver & The Laurion Silver Mines
The Athenian Silver Owl
Peisistratos was said to have been among the first to recognize the importance of the Laurion silver, and to have had the first Athenian Owl coin struck from the rich yields of silver wrought from the mines circa 546 BC. The Athenian silver Owl would go on to become a famous coin throughout the ancient world. In Greece, the silver Owl became one of the most favored forms of money circulating in the islands, available in multiple denominations, and minted for an estimated six centuries, until the supply of silver from the Laurion mines finally dwindled.
The Silver Owls Confound the Golden Archers
Hostilities between the Greek city-states and Persian Empire flared up in 547 BC, when Cyrus the Great conquered Ionia and appointed tyrants to rule over the independent Greeks. The Ionians began a six year revolt in 499 BC, and Athenian and Eretrian forces burned what was now the Persian regional capital at Sardis in 489 BC. The Persian Emperor Darius vowed revenge on the Greeks, and his ambitions for conquest were taken up by his successor Xerxes.
At the urging of the Athenian general Themistokles, powerful Athenians were apparently persuaded to forgo their dividends from the Laurion silver mines, in anticipation of Persian invasion. Themistokles instead persuaded the Athenians to invest the money into the construction of a much larger war fleet.
Ten years later, the Persians had overrun much of Greece and won major victories, including setting fire to an evacuated Athens. The Athenian war fleet, however—funded by the Laurion silver—turned the tide by defeating the Persian navy at the Battle of Salamis, a critical battle that some historians believe was crucial to the survival of Greece, and consequently also to western civilization. After the battle, Xerxes was forced to retreat to Asia, never again to attempt the conquest of Greece.
Athenian Silver vs the Iron Money of Sparta
The Spartans, in their turn, would also end up making war on the Athenians in the 5th century BC, in the Peloponnesian War.
The experience of Agesilaus II was not the only account of Sparta's negative experiences with money to find its way into the annals of Greek history. Sparta was already known for its reluctance to embrace coinage (as well as democracy, commercial markets, and other trends favored elsewhere in Greece), and was said to have long disdained the commercialism of the Athenians.
Alexander Del Mar in A History of Monetary Systems, suggests that Spartan iron currency was likely still awkwardly serviceable as money since it was declared legal tender by an edict of the state— and because the militaristic Spartan government had the strength of arms necessary to enforce such an edict. Appropriately enough, given their martial inclinations, the Spartan authorities reportedly also tolerated the use of iron spear-tips as money.
In 407 BC, the Spartans cut Athens off from their traditional source of silver, capturing the Laurion mines and releasing some 20,000 slaves (many of whom were prisoners of war). Athens was suddenly faced with a massive shortage of silver coins and money, and were forced to melt down golden statues and treasures of the Acropolis in order to create more coins for the financing of the ongoing war.
By some accounts, the Athenians minted 84,000 gold drachmae in this way, but when the coin shortage continued to grow even worse over the following two years, the government resorted to the minting of a new issue of bronze coins covered in only a thin silver plating.
This greatly debased form of money immediately gave rise to the widely observed monetary dynamic in which poor money drives good money out of circulation: The coins with the higher content in silver and gold were hoarded by the Athenian citizens, leaving only the inferior coinage in regular circulation. (This dynamic would later became known as "Gresham's Law," after the Elizabethan finance minister Thomas Gresham.)
The Spartans were the victors of the Peloponnesian War, and by many accounts, Athens never regained either its power or its former prosperity.
The Spartan sovereigns, in turn, did not hold fast to their traditional prohibition against all forms of money other than iron, and ended up minting a significant number of silver coins of their own.