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The first coins – no ‘means of market exchange’ but ‘means of gift exchange’?

Somewhat to my surprise, I find myself reading numismatic articles. Money existed before coins were invented. So, where and why were coins invented? According to Reid Goldsborough, in an nuanced article, it’s not unlikely that the first Lydian coins (about 600 BC) were not used for ‘market exchange’ – at first they might well have been used for ‘gift exchange’, somewhat like we exchange wedding rings. What’s not a ‘maybe’ or a ‘likely’ in the history of this innovation is the crucial role of the state. An excerpt:

The Lydian Lion is the one coin I’d personally call “The Coin.” It directly preceded ancient Greek coinage, which through Rome begot all Western coinage, and which through the Seleukids, Parthians, and Sassanians begot all Islamic coinage. Indian coinage has largely been a product of Greek, Roman, and Islamic influences. Chinese coinage, though it probably developed independently, was succeeded by Western-style coinage in the late nineteenth century.[5]Other countries in Asia, in Africa, and elsewhere have adopted the Western approach to coinage as well. It’s not chauvinistic, and it’s only mildly hyperbolic, to suggest that virtually all coinage in use today is the progeny of the Lydian Lion, that it’s the Adam of coins…

The most fundamental debate involving these coins is whether the Lydian Lion is in fact the world’s first true coin. Much here depends on what definition you use for “coin.” I’m using a commonly held numismatic definition of what a coin is, which is spelled out well in Webster, Second Edition: “A piece of metal (or, rarely, of some other material) certified by a mark or marks upon it to be of a definite exchange value and issued by governmental authority to be used as money.” Key here are “mark or marks” and “certified … by government authority.”…

There’s no reason that fully typed coins couldn’t have been the first coins. Stone and clay seals with pictorial designs predated coins, and some scholars have argued, persuasively, that the idea of stamping coins with designs developed from the use of seals to designate ownership or authority…

Even though coinage doesn’t appear to have initially served commerce or trade, it’s likely that the Lydians created coins as we know them because they were the first to recognize their profit-making potential, as will be shown below. It would still be possible of course for later governments to earn seigniorage profits by issuing coins in pure gold and silver, just not as easy

these coins have a higher content of both silver and copper than naturally occurring electrum from the area…

Though some scholars disagree, the evidence, though not conclusive, suggests that the Lydians already possessed the technology to refine pure gold and silver and that if they wanted they could have produced pure gold coins, as they did shortly later during the rule of Kroisos (Croesus).[47]

The reason they didn’t is debated. One theory, famously proposed by Sture Bolin in 1958, is that the first coins were the first numismatic deception. The Lydian ruling authorities may have deliberately and surreptitiously debased naturally occurring electrum as a profit-

It used to be thought that coins came into existence to facilitate commerce, preventing merchants from having to weigh bullion with each transaction. The weight of Lydian trites, in fact, is remarkably consistent, with most hovering very close to 4.7 grams.[64]But one of the things we now know about the function of the first coins with any degree of assurance is that they weren’t used as coins were used later on in ancient times, and as coins are used today, that is, for everyday market transactions.

It’s clear that it took some time before ancient coins were used for commerce and trade. Even the smallest-denomination electrum coins, perhaps worth about a day’s subsistence, would have been too valuable for buying a loaf of bread.[65]Electrum coins have been conspicuously absent from archeological finds in the marketplace in Sardis, capital of Lydia.[66]Gold and silver bullion were likely still used for commerce in western Asia Minor, including Lydia, at the time that electrum coins were minted.[67]The first coins to be used for retailing on a large-scale basis were likely small silver fractions minted by the Ionian Greeks in the late sixth century BC.[68]

What’s more, evidence shows that Lydian Lions weren’t used in international trade, not showing up in substantial quantity in hoards outside of western Anatolia.[69]That role would be served later on by silver coins, whose intrinsic value could be more easily determined than electrum coins, beginning en masse with Athenian Owls and to a lesser extent with the coins of Aegina, Corinth, and the Thraco-Macedonian tribes.[70]The uncertain intrinsic value of electrum was the primary reason it was largely superseded as a numismatic metal by silver and to a lesser extent until the time of Alexander the Great by gold. (Electrum was also used in Asia Minor for the coinage of Ephesos, Miletos, Phokaia, Smyrna, Chios, Kyzikos/Cyzicus, Halikarnassos, Lampsakos, and Mytilene and elsewhere for the coinage of Carthage, Syracuse, the Celts, the Thraco-Macedonian tribes, the Kushans, and Bosporos.)

Instead of commerce and trade, these earliest coins were in all likelihood used for other purposes. What follows is a suggested scenario: Bullion had long been used as money. The Lydian king, Alyattes, a crafty and powerful figure who ruled for half a century, figured out that if he controlled the bullion market, or part of it, he’d further amass his wealth. So he deemed that only bullion with his mark, the roaring lion, could be used for official purposes — the state paying state workers and mercenaries and the people paying taxes and making religious donations. Other purposes that this first coinage were soon put to likely included gifts as part of treaty ceremonies, wedding presents, and hospitality offerings. Along with typical seigniorage profits that later minting authorities would enjoy, Alyattes further enriched himself by debasing naturally occurring electrum with silver and copper. To facilitate acceptance, he carefully controlled the weight of each piece of this new type of bullion. Merchandisers and traders continued to use regular bullion until the Greeks, clever traders that they were, took what the Lydians invented and went a step further. They figured out that silver coins, being more difficult to debase, would be more accepted in more places than electrum coins for retailing and trade while still earning them profits. Coinage, invented by the Lydians, was thus spread by the Greeks.[71]

  1. November 3, 2015 at 1:23 am

    Very interesting. I’ve read the silver content of Roman coins dropped in parallel with the empire. More recently I read that Genghis Kahn used paper money successfully.

  2. Peter T
    November 5, 2015 at 3:41 am

    As the article notes, “money” as in a generally transferable debt, had been around for millennia before coins appeared (and are still the dominant medium of exchange). Coins are probably connected with the appearance of mercenary soldiers and states with a large stake in trade. The soldiers wanted portable, anonymous wealth, the state wanted foreign soldiers and had the resources to pay in stamped metal. The same is true of Greek states, with their significant transient populations (mercenaries, metics). And of the Persian Empire – the Great King’s golden darics were minted to pay soldiers and subsidies, not buy bread.

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