History of Coins

From: Alan VanArsdale
Date: 2000 May 22, 3:45pm

The entire purpose and idea of coins is as a guarantee by the person
who is striking them, from earliest times. The more powerfull or
reliable the power which strikes the coins, in general the higher the
premium they can trade over bullion value, though sometimes very
powerfull nations can mint coins at near bullion value for religious,
political, or economic reasons. Even when coins are struck at near
bullion value the good faith of the manufacturer is extremely
important.  This is basically the entire reason for the evolution of
coins from assayed ingots and measures of metals. If this were not the
case then it would be better to trade raw gold as it is not as easily
adulterated as coins can be by the maker. That is coins began as the
mark of some political power or commercial authority attesting to the
weight and purity of the contained metal, to eliminate the need for
assay of purity and weighing at every transaction. And in fact, there
are many instances where coins are backed by some measure of precious
metal in ancient history.

In the earliest coinage, Lydian and Indian punched, in both instances
the faith in the authority of the striker eliminated the need for
assaying the coins at each turn. Also from earliest times it has been
illegal to imitate the coins struck by the government or their
licensed agents, and they have traded at a premium over the metal they
contained usually (this because of the convenience of trading them,
and the backing of the issuing authority). Coins are often imitated
outrside of the issuing authorities area of rule, but generally these
imitations were easily distinguishable then as now, and internal
imitations were generally severely punished if discovered. Further,
earliest coinage is generally characterised by consistant purity and
weight standards, it is not until later we see frequent official
corruption or ancient forgeries in wide circulation which are
underweight or under standard. 

The main exception to this is the early electrum coinage, which was
struck from natural alloys of gold and silver, which were never
smelted so as to be modified as to the ratio of gold and silver. This
natural alloy varied in nature as to gold silver ratios, and so the
coins varied in gold content. The result was that higher purity gold
coins were pulled from circulation for melting, and the defacto result
was steady debasement of the coinage. So electrum was virtually
abandoned within two centuries of its initial use in coins (it was one
of the first metals used to make coins). It is true that in many cases
the coins were not redeemable. But this does not mean that the good
faith of the issuer was not of utmost importance, and also the ability
of that issuer to make coins which could not be imitated to deceive
the expert eye, or to punish those who abused the currency.

So in ancient Athens Athenian tetradrachmas actually traded at a
premium in other places to their value in Athens (so the saying like
bringing owls to Athens). But they still traded at a premium over
bullion value within Athens. This based not upon any redemption, but
the understanding of the good faith of the issuer, and the resulting
increased convenience of international trade based upon that good
faith alone. Also the ability to make a product which could not be
easily imitated, or reduced in weight without leaving some evidence of
that reduction. So the art and complexity we see in coins is mostly of
a practical nature, to deter forgery and intentional reductions in the
coinage (even now it is not easy to accurately copy ancient
coins). This is not really an issue of debate in numismatics, the very
soul of coinage is about the good faith of the issuer, and often their
ability to enforce a monopoly on the issuing of that coinage. Whether
this good faith is brought about by military force, lack of corruption
in the mints, and/or redeemable currency (coinage can be redeemable
even if not in a measured weight of metals, goods or services, or to
pay some tax, just a stable system where the coin can be exchanged for
other coins of specified value in essence makes the coins redeemable,
based upon once again the good faith of the issuer), without the
recognised good faith of the issuer the coinage is of less utility
than lumps of raw unforged metal.

After Alexander the Great died, his credibility as an issuer of coins
was so great, that his image appeared on coins even two centuries
after his death. This was not to commemorate his memory (often the
coins were struck by his usurpers or enemies), it was to validate the
coins with his image on them. As the good faith and authority of the
issuer was weakened, there was inflation and debasement. Within a
century of Alexander the Greats death his good silver drachmas were
reduced in size and became billon in many areas, but still bearing
crude likenesses of him. In places of more stable authority, at the
same time, good silver coins to weight were being issued, again with
his image (but the coins are easily distinguished as to the
manufacturer by their appearances).

As to England being the first to guarantee its minor coins against its
gold ones nations which write history often take credit for
reinventing ancient discoveries. Even the history of WWI has been
rewritten a good bit, historians now understand even fairly modern
histories can be political of nationalistic in nature. In most ancient
states there were fixed exchange rates between gold silver and base
metal coins. For example gold traded at five to one before the
Alexandrian conquests in ancient Greece, whether in coin or bullion.
This directly relates to the power of Athens in the fourth century BC,
that silver was so valuable and they controlled most of the mainland
Greek production in silver, which they minted into their famous coins.
In most periods in ancient Rome bronze was backed by silver and gold
by fixed exchange rates. The sestertius was largely minted to make a
base coin which could stand in trade against silver, and it was even
the preferred issue for much trade and many forms of payment (for
example in many periods a laborer expected a sestertia for one days
labor, and he had no need or desire to demand payment in silver as the
sestertia was backed by the good faith of the issuer and had most of
its value in underlying metal as well). It is true modern Europeans
were the first to issue paper money, but the claim they were the first
to back base metal currency by precious metals is false, as a general
rule base metal currency has usually been backed at fixed exchange
rate with precious metal currency in any stable economic system.
Coming out of the medieval period perhaps English historians were not
aware of this, so made this claim.

The value of metal in coins relative to their value in trade is a
very interesting study, with many implications as to ancient economy,
political stability, and history in general. In early numismatics the
claim was made that coins trading at a premium to bullion was a modern
event, this claim is mostly abandoned in light of modern research in
the last few decades. Coins often traded at high premiums over their
metal content in the ancient World. I do not know enough about South
Asian coins to put forth examples and defend them, but I have seen it
proposed in the literature that they often traded at high premiums. I
can give the examples of Celtic coinage, and Roman coinage. 

Roman middle period bronze usually traded at high premiums to bullion
value. When the Roman government was stable it orchestrated this by
limiting production, so the tight control of such coinage with mint
marks and official license (whether is it a bank, a local authority,
licensed merchants, or anyone else actually making and managing the
coins, it is ths military might and legal system of the nation which
backs the coinage, truly private issues virtually never trade at high
premiums over bullion value). And exactly in these periods we see that
Roman coinage became scarce in barbaric territories, so was most
heavily imitated by barbaric peoples in periods when Roman currency
traded at high premium to the base metal value (the imitations all
could be easily recognised in Rome, and were like emergency coinage
for the barbaric peoples who found themselves short of small change,
the standard for all of Europe being set by Rome, as the saying goes
all roads led to Rome).

The problem was that in times of military crisis the Roman government
generated revenue by overproduction of base metal coinage, so the army
could often refuse to be payed in base metal currency (and so the
guaranteed exchange rates floated or broke down entirely, so that the
situation the English inherited was basically the collapse of the
Roman monetary system, which apparently they took credit for
discovering rather than restoring). As the exchange rate, official or
in reality, fell in favor of silver, the base metal currency units
came under pressure. That is a folli was still a folli, but it bought
less silver per folli and became smaller and smaller, and was often
struck by oversized dies specifically for this reason.

Celtic coinage is vastly more complex, but also traded often at high
premiums and could be issued by none except the tribal governments
which made it simply because the crafting skill was so high nobody
could make forgeries which could pass the expert eye. But again
inflation was the usual condition, so Celtic precious metal currencies
were often steadily debased, and often in secrecy from the
public. This was done by gradually increasing the copper and silver
content maintaining the color of the coin. Coins were given secret die
marks, so that they could be recognised and withdrawn once the metal
content equalled or exceeeded the circulation value. With time these
systems usually collapsed, once the gold content became to low to
continue the deception the units suddenly became obvioulsy debased and
collapsed in value (as public confidence was destroyed), or they were
reduced in size and struck with oversized dies (as the dies were much
to complex for any human hand to reduce in size faithfully, and the
exact imitation of the dies was the key to the acceptance of the
issues). I have read that dump issues are by nature inflationary, that
is they do not need to have any real intrinsic value as often no goods
or services are even given in exchange for them or they are forced
upon the native populace by conquest (for example temple money). So
they need only to weakly imitate the unit of currency they are
following.

Now that I begin to learn a little about South Asian coinage I see
many striking similarities to barbaric issues (barbaric coins being
any people neoghboring Greeks or Latins and not Greek or Latin). Due
largely to European academic bigotry in favor of classical cultures
barbaric coins were poorly understood and very little studied until
the last two decades, and are still relatively neglected (and they are
more difficult to study, with linguistic abilities being of little aid
often in their study as they are usually illiterate). Perhaps there is
some similarity here to South Asian coins, though I do not really feel
qualified yet to make this conclusion, seems I see much evidence that
I am correct and that some bogotry is still reflected in the stream of
the study of South Asian coins in Europe. Bigotry as applied to
research in science is not a term of offense. We all suffer from
bigotries of many sorts, it is human nature. In modern science the
goal is to overcome as many bigotries which impair ones work as
possible. Most bigotry comes from our cultural backgrounds (though
likely we will come to understand genetics is a large factor also). As
numismatics is still largely a christian European science, then it is
christian European bigotries which most need to be put to
scrutiny. This is by no means a criticism of European christian
thought, from which the modern understanding of academic bigotries
based upon culture emerged in the first place. I am not attacking
anyone personally by these evaluations. 

I have studied barbaric coins in Europe in some detail, and am in the
mainstream of thought for those people who have studied them about the
problems of the past. My point is that we have a diversity of cultures
and peoples on this list. The topic of study is not of an origin of
the dominant culture for that study. So this would seem an appropriate
format for the discusion of any inherent problems in the study of
South Asian coins based upon European academic bigotry (especially as
the study of South Asian coins is mostly in the 19th century still,
and has not even been exposed to such progressive scrutiny yet for the
most part).

As an emergent student of South Asian numismatics I am interested to
read anything which mught reflect on the literature I might read as I
study South Asian coins, as to any inherent bias in that literature,
or lack thereof. Understanding the level of bias will help me to
understand South Asian coins better, before their study is
modernised. I hope that this list with time will serve to help
modernise the study of South Asian coins. Anyone who is of the opinion
no modernisation is needed I am also interested to hear from. In 19th
century England (which arguably is where South Asian numismatics was
created), researchers were primarily discoverers and catalogers. This
of course if of great utility in all areas of science.

My personal interest in coins is less their classification, than what
they reveal about ancient cultures (I have had advanced training in
anthropolgy, so it is not strictly an amateur interest, I was recently
encouraged by my anthropolgy professor to pursue a PhD in numismatics,
but for now I remain a simple dealer in coins). Coins need to be
dated, organised, assayed, counted, distribution maps made etc. for
such study. This is already very advanced in numismatics. Analysis of
that data is ultimately what can yield other information, of the type
which interests me more. While I only begin to comprehend South Asian
coins, I already can see clearly that they represent a vast untapped
resource for such cultural studies.  That this study will with time
prove more difficult and complex than similar studies in classical
coins (as in South Asian coins all issuers of coins are considered as
a whole, whereas in Europe there are classical coins and the closely
related barbaric issues are a seperate study still).

I probably have many years left to live, and I await the future of
South Asian numismatic cultural studies with eager anticipation, and
hope to be able to observe these advances from the convenience of this
email list as well as in the literature. If I seem to like controversy
more than I should sometimes, perhaps my bigotry for ancient Greek
reason is showing, an influnce strongly felt by South Asian cultures
like my own. In science all authority is subject to refutation (unlike
in the issuing of coins, where issuers are refuted or established
usually only by the successfull application or establishment of
military force, so the study of military history and numismatics are
intertwined).