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In the same category 
Sparta - Gold prohibition in a collapsing economy
From the Archives
Originally published March 01st, 2009
282 words - Reading time : 0 - 1 minutes
( 3 votes, 3.3/5 ) , 2 commentaries Print article
 
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This coinage was famous enough to have a classical joke made about it much later by Plutarch (in about AD 100). Assuming that its representative value ought to be its true value Plutarch believed it would require a horse and cart to transfer an amount appropriate for even the most modest transaction. The joke lasted longer than the money, perhaps because it paints an absurd picture, but only a fool would imagine the Spartans conducting their grocery transactions with armfuls of iron currency, for 300 years.

In fact throughout that time the Spartan iron coinage was perfectly operable on a notional value both enforced by law, which declared its status as legal tender, and underwritten by state integrity. It was only the eventual breakdown of Spartan political strength which finished the money, not the over-issuance of the coinage. As Athens grew to culturally dominate Sparta in the 50 years after the apparent victory of the Spartans in the Peloponnese war Spartan merchants’ confidence in their iron coinage started to wane, and they steadily preferred to use gold and/or silver which was creeping into the system.

As the situation deteriorated the state decreed that "no coin of gold or silver should be admitted into Sparta," and that they should "use the money that had long obtained". The decree did not pass into practice because the choice was a bleak one - no goods, or goods traded in gold.

The Spartans either left (which they did in droves, leading to the end of Spartan power) or used gold.

The Spartan system shows the dependence of a representative money system on the power and continuing integrity of the state.

 

 

Paul Sustain

Director and Founder

Bullionvault.com

 

 

 

 

 

 

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Wow, a few hundred years of Spartan history in 6 paragraphs bu the author and 1 commenter. Then there is that little "correlation infers causation" matter. "It was the iron coinage." "It was concentration of wealth in a few hands." The "Law of Causatio  Read more
overtheedge - 3/16/2013 at 6:40 PM GMT
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Paul Tustain

Settlement-systems specialist Paul Tustain launched BullionVault in 2005 to make the security and cost-efficiencies of the professional wholesale gold market available to private investors. Designed specifically to meet his own gold ownership needs as a risk-averse investor, BullionVault now cares for over US$1bn of client gold property, all of it privately owned in the client's choice of low-cost, market-accredited facilities in London, New York or Zurich.
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Wow, a few hundred years of Spartan history in 6 paragraphs bu the author and 1 commenter.

Then there is that little "correlation infers causation" matter. "It was the iron coinage." "It was concentration of wealth in a few hands."

The "Law of Causation" requires cause precedes effect. You analyze the effects and claim they are the causes of end effect.

Oh, here is the classic:
"Who would wish to remain in a nation where they could not contribute to decisions affecting the nation's course? "
People don't leave over politics, they leave over economic security.
Wealth accumulates by one method only. By "NOT BEING USED". Lower usage, fewer jobs. No job in Sparta? Well then I'm headed for Thessalonica.

The problem with the study of economics is that it is as narrowly focused as the study of the history of American Wire Gauge.

Everything is connected to everything.
Everything has to go somewhere.
There ain't no such thing as a free lunch. TANSTAAFL
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There was another factor influencing Sparta's decline - Concentration of wealth. Sparta's citizens had practiced a very effective form of citizen participation in state affairs for hundreds of years until the early version of the Goldman and Morgan players began to exert influence. What had once been a society where all citizens had a voice slowly grew into a society where fewer and fewer families possessed the majority of the wealth and the people lost their participatory voice and as a consequence, the reason to remain a productive member of their society. Citizen flight? You bet. Mr. Tustain nails it when he says citizens fled. Who would wish to remain in a nation where they could not contribute to decisions affecting the nation's course? There were numerous factors which contributed to Sparta's decline, but it was the concentration of wealth which hammered the last nails into their society's coffin. Sound familiar?
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