Croesean Reform

Page 79

Croesus, king of Lydia from 570 to 546 b.c., reformed the Lydian currency by suspending the coinage of electrum and introducing the rudiments of a bimetallic system based upon gold and silver.

Lydia is credited with inventing coinage between 640 and 630 b.c. These first coins were struck from electrum, a naturally occurring mixture of gold and silver, sometimes called white gold. Lydia owned vast deposits of electrum and the export of electrum, often in the form of coinage, was a major industry.

By mid-sixth century other cities along the coast of Asia Minor were striking gold coins that competed with Lydia’s electrum coinage. King Alyattes, Croesus’s father, had sent Croesus on military expeditions in areas where these gold coins were popular, and he returned convinced of the importance of gold coinage. By then Lydian metallurgy had progressed sufficiently to enable the separation of the gold and silver in electrum. King Alyattes continued the coinage of electrum but did begin the coinage of gold.

Croesus, succeeding his father as king, undertook a major reform of the Lydian currency. He abandoned the coinage of electrum, which ceased to circulate as coinage in Asia Minor, and he established a currency system of gold and silver that would later supply the model for the currency of the Persian Empire.

The gold unit was called a stater, and the Greeks called the gold stater the Croesean stater. It bore the images of a bull and a lion, thought to have been introduced by Croesus. The Greek historian Herodotus wrote that Croesus sent two gold staters to each of the citizens of the Greek city of Delphi because of a prophesy that he—mistakenly, as he learned later—took as favorable for his prospects in a war against the Persians. Herodotus also recounts in detail many gifts of gold and silver objects that Croesus gave to the oracle of Delphi, many of which were still extant when Herodotus wrote in the fifth century. According to Herodotus, Solon, the famous lawgiver who reformed the monetary system of Athens, visited Croesus, who displayed to him his vast treasures, and hinted that Solon must regard him as the happiest man alive because of his wealth. Solon demurred, citing the many hazards that any living person faced, and after Croesus was overcome by Persia, he expressed admiration for Solon’s wisdom.

The gold stater was made of 130 grains of pure gold, and smaller coins equaled one-third, one-sixth, and one-twelfth of the full-size coin. A silver stater was made of 220 grains of pure silver. The silver stater equaled one-tenth the value of the gold stater. Smaller silver coins equal to one-half, one-third, and one-twelfth of the value of the silver stater were also struck. The smallest silver coin equaled one-twentieth of the gold stater, providing a range of coins to handle transactions of varying sizes. All the coins were full bodied, making no use of cheaper alloys. Relationships between coins of the same metal were based upon the duodecimal system, while relationships between coins of different metals were based upon the decimal system. The duodecimal system uses 12 as the base number, as opposed to the decimal system, which uses 10.

Croesus is credited with introducing the world’s first bimetallic monetary system. He did not invent either gold coinage or silver coinage, but perhaps because Lydia’s electrum deposits held both gold and silver, he furnished the world with the first coinage system based upon both metals. A bimetallic monetary system was the prime rival to the gold standard in Europe during the late nineteenth century.