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by Michael E. Marotta, 28 Jan 1995
Note: I have been collecting coins for only three years. With a Randian interest in first principles, I was immediately attracted to the origins of coinage. I found many theories. I summarized my findings for the MSNS Mich-Matist (Winter 1994) and the Seaby Classical Numismatic Review (Summer 1994). Kerry Wetterstrom of CNG pointed me to new material on the subject. My library of choice is Michigan State University. With the help of a friend at the University of Michigan, I was able to fill in the gaps in my resources.
The "Commercial Theory" holds so much sway that selling this article has been difficult. I found nothing but refusal, rejection, and argument from libertarians, objectivists, and conservatives, bankers and investors. Since I have little problem selling magazine articles to trade journals, I knew that my writing style wasn't the barrier. If you look in the Encyclopedia Britannica, you will find the commercial theory. It's everywhere. So, when the editors check my facts, they see no agreement with the standard references. This is curious when dealing with objectivists because they take the EB to task for its entry on "Capitalism". However, they are such strong advocates of the marketplace as the embodiment of morality, that only the "Commercial Theory" meets their perceived needs.
I have sent this article to the ANA three times. The first time it was rejected immediately as not meeting their requirements, thank you, try again. After it ran in CNR, I revised it for the ANA and sent them the CNR article along with the new manuscript. They passed it to a perceptive reviewer. He checked off every assertion that I already knew was weak. I retraced my steps, provided full citations for each claim, and sent it in again. I got a letter from Barbara Gregory promising me that the article would be reviewed again "next month."
Before I upload a summary, one final word. Last Fall (1994), I opened this topic on the Coins mailing list and immediately got a reply from a numismatist who felt that coinage was invented because merchants figured it was convenient to hallmark their bullion. The more things change, the more they stay the same.
Copyright 1993, 1994, 1995 by Michael E. Marotta
[Note: This version was created specially for this Internet mailing list. The complete manuscript is with The Numismatist.]
[The article was published in the August 1995 issue of The Numismatist. --Numismatica]
The Encyclopedia Britannica claims that the first coins bore a primitive punchmark, "certifying to either weight or fineness, or both." This view is commonly shared by other writers. The trustees of the British Museum concur by claiming that, "Lydians saw the advantage of stamping such pieces guaranteeing their value when used as money."
This theory is probably the most compelling to us today. However, the first coins were electrum, a naturally-occurring alloy of gold and silver. No one could have guaranteed the fineness of an electrum coin. Archimedes of Syracuse discovered how to assay an alloy by weighing it under water, about 250 BC, 400 years after the electrum coins of Lydia.
Another problem with the commercial theory is that no one has ever suggested a meaning to the punch marks which appear on the earliest coins. There is no known way to see in the impressions the name of a merchant or the weight of the ingot [dump] or its fineness. The punchmarks ("windmill", "swastika", etc.) are there, to be sure. What they mean is not clear at all.
Furthermore, those unsurpassed traffickers, the Phoenicians, were among the very last, not first, ancient people to mint coins. If coinage were invented to facilitate trade, it didn't impress the greatest traders of the day.
The earliest coins are never found far from home. If coins were invented to facilitate trade and commerce, they would have travelled along the same paths as grain, lumber, and hides. They did not. As yet, no known hoards of the earliest coins have been found in Egypt, Tyre, or other centers of commerce.
The historical evidence is that the first coins were overvaluable, and they were anonymous, and they never traveled far from home. Therefore, as useful as coins later proved to be in commerce, they cannot have been invented specifically to support trade.
In 1920, P. N. Ure suggested that the 7th century BC saw the birth of both a "new form of government and a new form of wealth." According to Ure, the emergence of a mercantile class along the Ionian coast led to conflicts with the agrarian class which ruled from Lydia. In the words of historian C. J. Emlyn-Jones: "The economic and social pressures of the late seventh and early sixth centuries led to violent revolution almost everywhere."
Ure pointed out that tyrants were not necessarily oppressors. That is a modern view. To the people of the time, tyrants were merely rulers who did not have hereditary authority. They were self-made men. The word tyrant only became negative when tyrannies were replaced later by oligarchies and democracies.
This idea was also offered in 1958 by the classicist Robert M. Cook. He cited five known facts:
Therefore, according to Cook:
". . . it may be reasonably inferred that coinage was invented to make a large number of uniform payments of considerable value in a portable and durable form, and that the person making the payments was the king of Lydia. One solution suggests itself, that the purpose of coinage was the payment of mercenaries."
An interesting variant to this theory comes from Martin J. Price. In 1986, Price claimed that the first coinage was not payment per se, but a bonus.
". . . it is clear that the theory proposed by R. M. Cook and now widely accepted, that coinage was to provide payments for mercenaries does not fit the facts. . . . At this stage in the economy payments in metals for service was not normal. We can gain some idea of the practice of employment from [the Iliad and the Odyssey], and it would seem that employees were normally given board and lodging in return for service, and 'payment' was received at the end of service by way of a bonus, which could presumably, but not necessarily be given in metals. . . . [As] bonus payments, the coins are more akin to gifts (or medals) than to coins as we know them."
In other words, the Lydian king, Alyattes, (or the Lydian tyrant, Gyges) would have promised payment in kind. After a successful battle, or at the end of the campaign, the sovereign would have issued electrum nuggets as a special reward, like a medal of honor. This spin does explain how over-valued coins would be introduced into the stream of commerce.
The Tyrant theory could also explain the first coins as anonymous badges of conspiracy. Melting and casting electrum created natural-looking lumps that mimicked the nuggets found in local streams. Stamping a rude mark would identify the ingot to the select few and yet would be meaningless to the authorities. The earliest coins would then have had a purely local use in buying loyalty.
Michael E. Marotta
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