Origin of Money in Economics
How Venturing From a Small Village Through the Seas Made Trade Flourish
At the beginning of the sixth century BC, Sparta formed an alliance with the main cities of the Peloponnesian peninsula, which a few decades later would become one of the main powers, together with other leagues and Greek cities, that would face the Persian Empire in what are known as the Persian Wars. A conflict that our collective imagination recalls as the famous Battle of Thermopylae.
Meanwhile, during this same timeframe, a stage of Greek development and colonization flourished that, among many geographical slopes, would end up reaching the Iberian Peninsula (currently Spain). The people who arrived to establish trade relations with the Iberians — who already populated these lands — came from Phocaea, present-day Foça (“fozza”) in Turkey. According to Herodotus, these settlers were the first to make long voyages by sea, thus discovering the Adriatic, the Tyrrhenian, Iberia, and the civilization of the Tartessos (southern Spain).
The Phocaeans, contrary to how we understand the term today, did not colonize solely to radically impose their culture or beliefs; rather, much of their ultimate goal was to establish commercial relations. When they arrived on the peninsula, they settled in a small settlement on the north coast of present-day Catalonia. They called this commercial enclave in the western Mediterranean Ἐμπόριον, a term that could be translated as “market” or “port of commerce” in the ancient Greek language. I don’t think there is a clearer indication to understand the purpose that these colonizers sought to achieve: trade and money.
Emporion’s situation was unbeatable: it was right at the mouth of the Ter River to the south and the Fluvià River to the north, which allowed it to act as a distribution center for manufactured goods and, at the same time, channel the output of raw materials. Surely this trade generated a class of rich and powerful men who likely had a decisive influence on the government of the city.
As an anecdote, Strabo, in his work Geography, wrote:
“The Emporitans used to inhabit a small island off the coast that today is called Palaeopolis, but now they live on the mainland. Emporion is a double city, being divided by a wall, having before, as neighbors, some indigenous people.”
Strabo, Geography, III.4.8.
This referred to the different parts that form the current archaeological complex: the Palaeopolis or ancient city, the Neapolis or new city, and the later Roman city.
Numismatics, in the context of Emporion, also provides us with some data of interest regarding the economic history of Emporion. But what is numismatics? It is the discipline that studies coins and medals, especially ancient ones. We know that during the fifth century BC, small silver coins circulated in Emporion, with characteristics very similar to those of the Phocaeans, possibly of Massaliote origin (present-day Marseille). Towards the second half of this same century, the city already minted its own silver coins, of small dimensions and without legend, whose types or engravings featured a varied symbolism. Later, the “representations” that would appear on these coins often copied those present in other issues of Greek or South Italic origin, and especially those of the coins of Athens, with Athena’s head on the obverse an owl on the reverse, which you have surely seen before. So you can get an idea that trade, finance, or investment have been with us since the earliest days of our species.
However, it was not until the end of the fourth century BC that the city began to mint silver coins of greater value, the so-called drachmas. Curiously, the symbolism represented by these first Emporitan drachmas is a clear imitation of the types known from some Punic coins, which highlights the links between the city and the Carthaginian area of commercial influence at this time.
It is incredible how much information about all kinds of events can be contextualized through small pieces of metal. Do you think the same thing will happen in another 2,000 years, and our descendants will be fascinated by seeing a one euro or dollar coin?
Much of what we are discovering together through this article has been revealed to us, if you allow me the expression, by the simple monetary system. Coins have served both as a utility for the exchanges of value in their corresponding eras and as carriers of the iconography and context of ancient history. Thanks to those desires for discovery and knowledge fueled by commerce, the Greeks went from the mythical to the historical. There were no more minotaurs to kill; what mattered after that was to promote and understand what would largely trigger economic development.
But then, if there was a monetary system, there must have been banks, right? According to Herodotus, the Lydian people were the first to introduce the use of gold and silver coins and also the first to establish exchange shops in permanent premises — the first precedent of the bank). It is believed that they were the first to mint stamped coins during the second half of the seventh century BC. The currency, as we know it, was preceded by small electrum ingots, which were an alloy of gold and silver.
At the time of these events, Greece was not as we know it today; rather, it was a set of city-states and peoples that identified themselves in common for having an almost identical language in composition. In addition to sharing the same deities, it would be akin to saying that all the countries of Latin America are the same people just because they speak the same language. That would clearly be an incorrect statement.
Thank you for everything, dear Greeks!
And did the ancient Greeks invest their money? There was no stock market, no start-ups, and obviously, no cryptocurrencies. By that millennium, everything that has flowed to this day has been almost completely transformed. But even so, the ancient Greek citizens also invested money like you and me, although in less volatile assets such as raw materials, and others a little more controversial in the eyes of today’s society, such as slaves.
Surely, on their journey, the Phocaeans encountered thousands of impediments and problems, especially as pioneers in the colonization of the Iberian Peninsula. We could say they were lucky and leave it there, or we could say that they were quite resilient and also had the “gods’ favor,” considering that a large part of the total expeditions leaving Greece ended in shipwrecks.
Historians say that forgotten history is destined to be repeated. So, like the Phocaean colonizers seeking to expand their trade, what we can do is continue to train and learn from the history our ancestors left us, so that we can avoid the same mistakes, thus minimizing the probability of a possible “shipwreck” of our personal economy.
As our great friend Herodotus shared:
“Man’s destiny is in his own soul.”
I’ll write to you soon,
