The advent of coinage is a highly debated field in the study of Ancient Greek economies. In constant flux as new hoards are found and their analyses published, ideas regarding what motivated Greeks to begin striking metal pieces with stamps play an integral role in understanding archaic and classical Greece. However, some economists and historians question the way issues of money are approached. Economist Maria Pia Paganelli argues that asking what money is “for”, as if some individual invented it for a specific purpose, leads to a severe misunderstanding of what money is and how it came to be. As a physical manifestation of money, Ancient Greek coinage can be similarly misunderstood. Coinage’s evolution in Lydia, along with its type variability
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Lydia’s geography meant electrum, an alloy of gold and silver, was its most plentiful naturally-occurring metal. Its natural gold-to-silver proportions varied and could be easily diluted with refined silver . Two hoards of 30 coins from Samos shows that gold percentages varied from 84%-46%. In order to determine its value, electrum had to be tested visually via its streaks on a touchstone, a cumbersome procedure for frequent transactions and small pieces . By predetermining a piece’s gold content and striking it with a type that signified its value, issuing authorities solved the difficulties of trading in electrum. As a result, coinage facilitated the use of electrum in transactions, the reason frequently attributed to its invention . However, the transfer of valuation from the metal itself to an issuing authority created an incentive to overvalue coins: the royal Lydian lion-head electrum coins were officially valued at average natural electrum levels, yet their actual metal content had been artificially diluted to create a 15-20% profit for the state . Though electrum coins made each trade faster and less cumbersome, it also created arbitrage opportunities. This feature of early electrum coins undermine the idea that coins were ‘intelligently designed’ to solve the difficulties in trade. While coinage may have facilitated exchange, it also threatened to undermine its own purpose as people
Lydia’s geography meant electrum, an alloy of gold and silver, was its most plentiful naturally-occurring metal. Its natural gold-to-silver proportions varied and could be easily diluted with refined silver . Two hoards of 30 coins from Samos shows that gold percentages varied from 84%-46%. In order to determine its value, electrum had to be tested visually via its streaks on a touchstone, a cumbersome procedure for frequent transactions and small pieces . By predetermining a piece’s gold content and striking it with a type that signified its value, issuing authorities solved the difficulties of trading in electrum. As a result, coinage facilitated the use of electrum in transactions, the reason frequently attributed to its invention . However, the transfer of valuation from the metal itself to an issuing authority created an incentive to overvalue coins: the royal Lydian lion-head electrum coins were officially valued at average natural electrum levels, yet their actual metal content had been artificially diluted to create a 15-20% profit for the state . Though electrum coins made each trade faster and less cumbersome, it also created arbitrage opportunities. This feature of early electrum coins undermine the idea that coins were ‘intelligently designed’ to solve the difficulties in trade. While coinage may have facilitated exchange, it also threatened to undermine its own purpose as people