Money is commonly credited to have originated in seventh century BC; however, money has been in existence long before written history, and metallurgy had long been at an advanced state by seventh century B.C., advanced enough to make rings, swords, shields, jewelry, and such. Creating small, circular disks of metal to be used as money would not have been a technological nor conceptual breakthrough. Minters stamping ingots of copper or silver to certify a coin’s weight and fineness had been practiced long before in Babylon. So what significant event happened to money in seventh century B.C. to confuse it with the origination of money itself? Answer: the origination of Legal Tender.

In sixth century BC, the first Legal Tender coinage was stamped in Lydia, a leading gold producer, a country in what is now western Turkey. King Croesus of Lydia [560-546 BC] is credited with this development of Legal Tender, often confused with the birth of money itself.

Legal Tender (Random House Dictionary): Currency that may be lawfully tendered or offered in payment of money debts and that may not be refused by creditors.

Legal Tender (Dictionary of Cultural Literacy): Any form of money that a government decrees must be accepted in payment of debts.

1. died 546 B.C., king of Lydia 560-546: noted for his great wealth. 2. a very rich man.

The History of Money by Jack Weatherford, 1997

"As rich as Croesus" is a common expression in modern English, Turkish, and other languages around the world.

A Man in Full by Tom Wolfe, 1998

He was Old Family and Piedmont Driving Club all the way, and he was rich as Croesus.

The Three Musketeers by Alexandre Dumas, 1844

However, when he served the dinner given by d’Artagnan and saw him take out a handful of gold to pay for it, Planchet thought his fortune was made and thanked heaven for having placed him in the service of such a Croesus.

Martin Luther, 1517

 

In 1517, Martin Luther posts his 95 Theses protesting the sale of indulgences by the pope in order to raise money to build a basilica to shelter the bones of St. Peter. “Why doesn’t the pope build the basilica of St. Peter out of his own money? He is richer than Croesus."

Though two gold coins may be of the same quality and weight, only a coin stamped by the State is considered Legal Tender, and therefore a valid payment for taxes and debt. If one coin is not stamped Legal Tender, it may be rejected by the State or Creditor as a valid payment, throwing the Taxpayer or Debtor into default, evoking eviction, seizure, and/or slavery clauses. Since the State monopolizes Legal Tender, all Taxpayers and Debtors are motivated to sell a portion of their goods and services to the State, directly or indirectly, in order to obtain the Legal Tender required to avoid default. The State is in a position to pay less than Market value for the goods and services received, skewing wealth towards the State at the expense of the Taxpayer and Debtor.

Gold and silver coins stamped by any other minter did not constitute Legal Tender. Other forms of money - copper, grain, tin, and other commodities - were essentially excluded from the Market. The use of Legal Tender spread throughout the Greek States. Greek architecture has overwhelmingly adorned the institutions of Law and Money. The first public building constructed by the new government of the United States, well before the Capitol or White House, was the mint building.

The Greek Experience -- Wealth Goes Extreme

Money and Man by Elgin Groseclose, 1961

The introduction of coined money produced what might be called in today’s parlance "boom times" in the Mediterranean. It was an era of expansion, of the development of frontiers, of the exploitation of natural resources. Cities flourished, trade was active, debtors and creditors appeared, banks were organized, and in the end there grew up a host of attendant evils resulting from an unbalanced economy based too largely on money.

Toward the end of the seventh century B.C., the Greek civilization, which had been riding the crest of a sudden prosperity, was being carried, irretrievably, it seemed, toward the dark headlands of distaste. The inexorable culmination to the era grew out of the growth of debt. In Attica, as in modern America, the incubus of debt had thrust its tentacles into the very vitals of society. The greater part of the peasants’ holdings had come under mortgage, the evidences of which were stone pillars erected on the land, inscribed with the name of the lender, the amount, the rate, and the maturity of the loan. A still more insidious form of debt was the chattel mortgage in which the farmer could pledge his own person or that of his wife or his children, for the repayment of a loan. These chattels, under Athenian law, could be sold off into slavery, and such was the extent of the existing credit structure that the greater part of the agricultural population was in danger of being converted into bondage.

A state of affairs developed in Greece toward the end of the seventh century B.C. similar to that in the Middle West in the nineteen twenties. Revolution was being talked, with mutterings about "redistribution of the land," and armed insurrection was imminent.

A History of Interest Rates by Sidney Homer, Rutgers University Press, 1963

In Attica, at the beginning of the sixth century B.C. the tenant farmers were under severe economic pressure and threatened rebellion. They were sometimes able to keep only the sixth part of their produce. Personal slavery of whole families for debt was permitted and became common. Freeman had to compete with slaves. In spite of the relief provided by extensive colonization, discontent grew. Pawn credit was widespread. Debt had become an insupportable burden. At this crucial point (594 B.C.) the poet and wiseman Solon was called upon by Athens to assume supreme legislative power for a limited period and revise her laws.

Money and Man by Elgin Groseclose, 1961

The moneyed classes, the aristocracy, and the merchants, sensed the growing dissatisfaction among the masses, and in the hope of staving off rebellion, put up Solon for archonship in 594 B.C. The oligarchy had tried their best to enforce this law of debtor and creditor, with its disastrous series of contracts, and the only reason why they consented to invoke the aid of Solon was because they had lost the power of enforcing it any longer, in consequence of the newly awakened courage and combination of people.

Inaugurated as archon, Solon moved with amazing speed, and before the country knew what was happening, it was going through a social, economic and political revolution that completely revamped the character of the Athenian state and still amazes historians. Solon assumed extra-legal powers, and with a facility for "catch" expressions that took hold of popular fancy, issued immediately a revolutionary decree under the appealing name "Shaking Off of Burdens". This decree, going at once to the heart of the money problem, tore down all the mortgage pillars of Athens and abrogated at once all agricultural and personal loans. It liberated all those debtors who were actually in slavery under previous legal adjudication, and it forbade any Athenian to pledge his own person or that of any member of his family as security for a loan.

A History of Interest Rates by Sidney Homer, Rutgers University Press, 1963

Solon’s reforms were radical and for the most part they endured. He canceled many debts secured by land and scaled down others. All those enslaved for debt were freed; those sold abroad for debt were redeemed at state expense. Political power was reapportioned according to property. The drachma was devalued by about one quarter. Weights and measures were increased in size. Citizenship was granted to immigrants who were skilled artisans. Judging from these reforms and their acceptance, the economic crisis of 594 B.C. was severe indeed.

Money and Man by Elgin Groseclose, 1961

Of course it shattered the credit structure of Athenian economy. Deprived of the security behind their assets, and with obligations of their own to meet, the landlords and the money lenders were thrown into practical bankruptcy. In solution to this problem, the crumbling financial edifice, Solon provided a partial moratorium by means of a debasement of the currency. The money question solved temporarily - it was to come up again and again in Greek history - Solon was now able to lay the foundation for the enduring structure of reform which brought into being that cynosure of history - the Athenian democracy.

To prevent complete meltdown, the Greek State responded to the economic crisis and looming revolution with the carrot of democracy.

Democracy (Random House Dictionary)

Government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them.

However, the system was not a pure democracy, but a democracy more representative of propertied individuals, individuals with the greatest ownership, individuals who derive the greatest interest income.

A People’s History of the United States by Howard Zinn, 1980

When economic interest is seen behind the political clauses of the Constitution, then the document becomes not simply the work of wise men trying to establish a decent and orderly society, but the work of certain groups trying to maintain their privileges, while giving just enough rights and liberties to enough of the people to ensure popular support.

The democratic reforms carried Athens through the impending economic crisis without complete loss of control. And to this day, the image of Solon graces the frieze of the US Supreme Court building, captioned with "Equal Justice Under Law", impressively supported by pillars of Greek columns. Solon should also be given credit as the father of modern economics. The Market upheaval did not remove Legal Tender, nor taxes and debt.

Solon (Random House Dictionary)

1.      a wise lawgiver.

Croesus and the Delphi Oracle

The Delphi Oracle was renowned both for the ambiguity and the occasional plain accuracy of its answers. Croeus, king of Lydia [560-46BC, wanted to test the most highly regarded Greek oracles. He sent messengers to each one of them with instructions to ask, after exactly 100 days had passed, the following question: “What is the king of Lydia doing today?” Five of the oracle were wrong. A sixth was close. The oracle at Delphi replied as follows:

Lo, in my sense there striketh the smell of a shell-covered tortoise,

Boiling now in a fire, with the flesh of a lamb in a cauldron.

Brass is the vessel below, and brass the cover above.

As it happened, Croesus was, at that very moment, cooking a lamb-and-tortoise stew in a brass pot. Convinced of the oracle’s accuracy, he questioned it about the more weighty question on his mind, namely the Persian Wars. The answer was that a great army would be defeated. Taking this for a good omen, Croesus sent his army into battle against Cyrus the Great. Again the oracle hit the mark, but it was Croesus’ army that was defeated.