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History of Money: Money, Banking & Commerce in Ancient Greece

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The ancient Greek Minoan civilization emerged in the early Bronze Age sometime c. 3000 BC, on the island of Crete. The Minoans are believed to have developed an economy that exported a range of goods to mainland Greece, as well as producing oils and perfumes as luxury trade items. They also cast bronze ingots and exported them to their trading partners. Contemplating the origins of money among the ancient Greeks, Aristotle later speculated 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."

Silver Bull Tetradrachm of Gela

Money & Pre-Coinage Emerge in Ancient Greece

Preliminary steps toward developing a metal coinage were apparently taken at Cappadocia as early as 2250 BC, where the government stepped in to standardize the weight and purity of the stamped silver ingots that were used as money. The size of the ingots was reduced gradually for convenience, and they were fashioned into bars, rods, and elongated nails. Large globular pieces of silver were also used as money in Knossos in the 2nd millennium BC. Minoan precursors to coins were not thoroughly uniform, but the stamping of state seals enhanced their acceptance, leading to their increased circulation in the Greek islands and surrounding regions.

Among other ancient forms of Greek money were the iron spits known as oboloi. The Attic standard of Greek money was based on the "drachma" (meaning "a handful" or "grasp"), equal to about 4.3 grams of silver, and the drachmae were divided into six "oboloi," (meaning "spits"). Later, the term "drachma" became used as monetary measure of weight for coins, rather than than a specific reference to a handful of iron spits. 

The era most commonly referred to as "Ancient Greece" is that which arose in the era of Greek City States. For a substantial period of time, the Greeks remained notable for not uniting under a single sovereign, tyrant, or centralized political power— instead remaining as many distinct states. By most accounts, early Greek culture was notable for its heavy emphasis on agriculture and landowning. In some periods, metics (i.e., resident aliens) who were not allowed to own land carried out a significant proportion of the actual trading taking place at city markets. Most manufactures and other enterprises were originally on an individual or small scale, and markets were somewhat locally confined— until the revolutionary introduction and spread of Lydian coinage. It was in this period that most of the ancient Greeks began to create and use fine coinage.

Mount Olympus

The Greek Monetary Legacy

The introduction of excellent gold, silver and electrum coinage from the kingdom of Lydia appears to have been a great catalyst that spurred the development of Greek money, commerce and trade onward, with a huge long-term impact on both the Greek Isles and surrounding realms. Marketplaces developed much more easily and much more rapidly when aided by the advantages of high-quality coinage, with towns and cities centered on these thriving focal points of commercial activity. The Greek islands and surrounding territories became increasingly linked by the growing web of commercial towns and cities, which were visited by many traders making long-distance mercantile voyages over land and sea. The growth of commerce has been credited with giving a new impetus to major political changes. In the case of Greece, this had a huge impact on the Western world through the development of democratic political institutions.

It was only after the peak of classical Greek civilization had passed that the area was finally conquered and brought under the dominion of a single power, when King Philip of Macedonia began to conquer many lands. Philip was famously followed by his son Alexander, who famously engaged in a surfeit of conquest all the way to Indian subcontinent, before the Macedonian empire was vanquished and replaced by that of the Romans.

Map of Ancient Greece

The Revolutionary Introduction of Lydian Coinage

Lydia and mainland Ionia were separated by mountainous terrain, but linked by the sea, and both these kingdoms were evidently well-favored with abundant deposits of gold in their day;  rivers such as the River Maiandros ("the Meanderer") and the Pactolus rushed down from the mountain slopes and bore much gold downstream, creating rich alluvial deposits.

Lion-head Electrum Coin of Lydia
The Lydians and Ionians learned to mine both gold, silver, and—in particular—a natural amalgam of gold and silver called "Electrum," which shines with the lighter luster of both metals combined, and is sometimes called "white gold."

According to legend, the rich gold deposits near the Lydian capital city of Sardis had formed when the cursed King Midas entered the high mountain waters, to try to wash away the enchantment which turned everything he touched to gold. This enchantment was transferred to the waters themselves, and it was from the abundance of precious metals borne downstream thereafter that the Lydians struck their earliest coins.

Advances in Lydian metallurgy took place during the reign of the famous King Croesus, leading to the kingdom's ability to separate gold and silver much more easily, after which they begin to strike coins of pure gold and pure silver instead of a mixture of the two. As Lydian skill in metalworking and coin-striking advanced, the gold and silver coinage was stamped with a uniform weight and purity, bearing a heraldic lion's head to signify the dynastic line of the Mermnadae.

Gold Lion & Bull Coin from Lydia

The Lydians and Ionians were active traders, and the use of their fine gold and silver coinage enhanced trade and economic advancement not only in their own realms, but also in the nearby Greek city-states and other surrounding territories— including the Persian Empire in the east. After Lydia fell to Persian conquest, the legacy of its gold and silver coinage spread. 

Herodotus and Aristotle both wrote of the Lydians, the former claiming that they were much preoccupied with commerce, and that they were the first people that the Greeks knew of to strike coins from gold and silver, as well as to open retail shops. A hoard of treasure discovered beneath the ruined temple of Artemis at Ephesus confirmed that the Lydian coins had indeed been in circulation as early as 630-40 BC, as Herodotus had suggested.

Gold Coin from Ephesos

Athens & Sparta

The ancient Greek city-state of Athens developed strong markets and famous currencies. Athens rose to prominence as a dominant Greek economic power around the 6th century BC, and rich veins of silver were found in the nearby mountains. The Athenians were noted for their high valuation of silver, which was more scarce in many parts of Greece than it was elsewhere in the ancient world. 

Athenian Silver Coin

One of the most renowned Greek silver coins was the Athenian Owl, the first of which was struck from the rich yields of silver wrought from the Laurion silver mines circa 546 BC. The Athenian silver Owl would go on to become a famous coin throughout the ancient world, minted in multiple denominations, until the supply of silver from Laurion finally dwindled some 600 years later. 

Ancient Athens
The figure of Solon the Lawgiver (c. 630-560 BC) stood out as one of the most revered reformers of Athenian history. One of the "Seven Sages," Solon revised the severe code of laws that had been established by the Athenian legislator Draco. The latter's code of law was noted for extreme severity, including the proscription of the death penalty for relatively minor crimes, and his name later gave rise to the English word draconian, meaning "excessively harsh or severe."

Several of Solon's most notable economic revisions were to abolish the enormous numbers of outstanding debts, some of which were being used as the basis for the enslavement of farmers who failed to pay rents to landowners.  Even more revolutionary was Solon's abolition of the decree that only men of "noble birth" could hold public office. Instead, he decreed that eligibility was to be based on landed wealth, and his division of classes based on wealth instead of birth is said to have been the basis of Athenian democracy.

Solon's reforms were said to have greatly encouraged commerce and trade, which went on to flourish throughout most of Ancient Greece.

Standing out in strong contrast to Athens, the rival nation of Sparta was said by many accounts to be the most resistant both to democracy, coinage, and the rise of commercial markets. Legend says that the Spartans lawgivers allowed only cumbersomely heavy iron bars, iron spits, and spear tips to be used as money, and that they greatly restricted commerce of all types by the edicts of the government. The Spartans later went to war against the Athenians and captured the Laurion silver mines, cutting off a crucial source of Athenian silver money. This forced the Athenians to resort to melting down gold and silver statues and treasures, in order to mint more coins to pay for the costs of war.

Ancient Greek Money & Temple Banking

Greek Turtle Drachm Coin of Aegina
Enriched by their emerging markets, the Greeks rose to new heights of development as a civilization. Gold and silver coinage and the Ionian alphabet had spread across the islands, and to the adjacent mainland. Money in the form of gold and silver coinage served as a standardized and widely accepted measure of value, and provided buyers and sellers of all types with a convenient medium that was easily transported, and was also an excellent long-term store of value.

Many of the Greeks also became excellent bankers. Greek foreign exchange services were provided by merchants, money-changers, and pawnbrokers. Both private and city-government backed money lenders operated out of Greek temple banks. Governments, typically avid borrowers and spenders in all ages, were on record as early as 430 BCE as having borrowed money in Greece, when the state was given a loan by bankers from the temple of Athens.

Ruins of Athenian Treasury at Delphi
The Temple of Artemis at Ephesus was also noted for its vast treasury, and its temple bankers provided banking services to a variety of Greek notables, including Aristotle. Later, the barren Aegean island of Delos becoming a particularly influential center of banking and finance— not only among the Greek islands, but throughout the ancient world during the ascension of the Roman Empire. 

A number of notable early Greek bankers to find their way into the annals of history were "metics," resident aliens living in Greece. Several of the wealthiest bankers in Greece were also former slaves, who were allowed by their owners (also bankers) to work in the profession, and were eventually emancipated and granted full citizenship.  

Money & Commercial Markets Spread Throughout Ancient Greece

The spread of vibrant commerce and markets created wealth that made it possible to finance the construction of new temples, building works, academies, arts, and sciences. The wealth generated by the monetary economy also expanded the leisure time of many of the upper classes, allowing them to pursue politics, philosophy, arts, and sciences. 

Bazar in Athens

Growing wealth and the specialization made possible by the development and advancement of markets also enabled intellectual classes to develop in Greece. Their contributions in these areas are credited as a foundational influence in the development of history, science, philosophy, mathematics, and other fundamental disciplines that went on to become one of the cultural legacies of Europeans— and in the shorter term, of the Romans, who later adopted a great deal of Greek economic and cultural contributions for their own use.

Plato & Aristotle
Ironically, many noted members of the Greek intellectual classes appeared to be decidedly suspicious of markets, and in some cases they were overtly disdainful of commercial pursuits. Plato, preoccupied with laying out a host of detailed and specific totalitarian dictates, apparently wanted to outlaw gold, silver, and foreign money. Aristotle was less preoccupied with totalitarian edicts, but believed markets existed to satisfy greed, and that wealthier people with more money should be charged higher prices at the markets, even if the merchandise itself was valued at the same price by the market participants.  As influential as these two intellectuals may have been, their notions in this regard do not appear to have found any footing in the practice of Greek commerce, which continued to flourish. 

Apparently there was even a Greek saying: "Chremata, chremat aner!" ("Money, money makes the man!"

The Greek Monetary Legacy is Carried on by Macedonia & Rome

The Greeks were said to be among the earliest to embrace money and money economies— thanks in no small part to the inherited legacy of gold and silver coinage from Lydia. In time, other civilizations who followed this example eventually broke similar barriers in their advancement, whether independently or through the direct influence of the Greeks.

After the Greeks were weakened by warfare and subsequently conquered by Macedon, the Macedonians later had the ambition to take their great network of cities connected by commercial trade routes, and force them under their own centralized dominion. Alexander made huge strides in this regard, founding a number of commercial cities in the course of his onslaught across vast tracts of territory, including the founding of legendary Alexandria, in order to connect Egypt to the cities of Greece. Due in part to these efforts by Alexander, the Greek language—or at least a grammatically simplified variant of it—became an international language of commerce spoken throughout much of the ancient world. The uniquely Macedonian ambitions, however, were brought to an end with their defeat by the Romans. The Romans, in turn, followed their example and went on to form an empire of even greater martial and commercial dominion.



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