The Role of Money in the Economies of Ancient Greece and Rome

Abstract

Coined money was first invented in the Greco-Roman world. The monetization of Greek and Roman societies was a complex, dynamic, and often experimental process in which the economics of money were inescapably connected with cultural, political, and social developments. How did money contribute to the spread of market exchange and the development of sprawling territorial empires? Certainly, the rise of Greek democracy coincides with the adoption of coinage. Furthermore, in the wake of Alexander the Great’s conquests, the Eastern Mediterranean went through processes of both Hellenization and monetization – as Greek-style coinage systems promoted the development of financial institutions and market exchange. The course of monetary development, however, was not a uniform process. Many of the Celtic cultures of Western Europe simply incorporated Greek coins into their existing traditions of reciprocity. Greek city states on the Italian peninsula used coinage, but inhabitants of the Latin‐speaking cities of central Italy, including Rome, were comparably under-monetized. Rome, in fact, did not adopt a coherent coinage system until the necessities of the Second Punic War forced Rome to finally adopt a Greek-style coinage system. By the late first century B.C., however, money served much of the Mediterranean world in one form or another. How prevalent was money use? Even under the Pax Romana in the first and second centuries A.D., the lines between “general purpose” and ‘special purpose’ money were blurred. Money may have only been useful to autarkic peasants whenever taxes and tributes were due. For urbanites, however, money served them regularly in interactions with strangers, neighbors, and even family. Barter, commodity money, and credit maintained a role throughout Greco-Roman antiquity. By the third‐century A.D., the Roman monetary system came under strain as coinage standards became erratic. Eventually, all competing provincial and local coinages were abolished in favor of a single central coinage supported by strict legal tender laws. This experiment with fiduciary – like many in ancient Greek and Roman societies – was of mixed success. Money’s complex history and diverse functions in the Greco-Roman continue to captivate economic historians.