Encyclopedia of Money: Solon

Solon

(ca. 630–560 b.c.)

Solon was a sixth-century Athenian lawgiver and poet who, according to a literary tradition, changed the Athenian monetary standard in an effort to extend relief to debtors. Subsequent research has cast doubt on the populist nature of Solon’s monetary reforms, but the thrust of his reforms nevertheless eased the burden on debtors. He redeemed land that had been forfeited for indebtedness and freed citizens enslaved because of debt. His laws forbade loans that subjected the borrower to enslavement in case of default. In the life of Solon in Plutarch’s Lives of Noble Grecians and Romans (1952) can be found the following passage, referring to Solon’s monetary reforms:

Though some as Androtion, affirm that the debts were not canceled but the interest only lessened, which sufficiently pleased the people; so that they named this benefit the Seisacthea, together with the enlarging their measure, raising the value of money; for he made a pound, which before passed for seventy-three drachmas, go for a hundred; so that, though the number of pieces in the payment was equal, the value was less; which proved a considerable benefit to those that were to discharge great debts, and no loss to the creditors.

Solon lived before the Greeks began writing history and ancient authors writing after the event disagreed on the nature of Solon’s reforms. Aristotle’s treatment of the same subject suggested that Solon’s reforms raised rather than lowered the value of the drachma.

The literary and archeological evidence suggests that Solon began the coinage of silver money in Athens. Before Solon there is no evidence of Athenian coinage. It also suggests that before Solon two monetary standards dominated trade in the Greek world, the Euboic standard, and the Aeginetan standard, derived from the older Phoenician silver standard. Solon, himself of the merchant class, preferred the Euboic standard as the standard in use by most of Athen’s trading partners. It seems that Solon urged the Athenians to adopt a standard that made Athenian coins most acceptable to trading partners. During the sixth century the Euboic standard spread rapidly and superseded the Aeginetan standard in most areas.

One of the far-reaching provisions of Solon’s reforms provided that fines be remitted in currency rather than cattle or sheep as existing Athenian law provided, marking a turning point in the transition from livestock money to coinage. In 454 b.c. Rome sent three commissioners to Athens to study Athenian law. The 12 tables of Roman law drawn up in 456 b.c. did not mention penalties paid in cattle as in former times, but provided for payment in copper coins.

The history of Solon’s monetary reforms, regardless of their true nature, opens a theme that is often replayed in monetary history—the secret war between debtors and creditors that invariably surfaces when monetary policies are up for discussion and revision. Policies that change the value of money, either directly by government decree or indirectly by inflation, always tilt the balance between debtors and creditors. When money loses its value, debtors win and creditors lose because the money they receive in repayment has lost some of its value. The opposite occurs when money gains in value.