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Ancient Athens eventually became a democracy
(albeit one dependent on a large slave class) and showed some of the features
of a modern democratic state. It was the cultural birthplace of modern
western philosophy, culture and systems of government. It was also the
creative powerhouse of Mediterranean antiquity, with change and ideas being
embraced all around.
It stood in stark contrast to the overlapping
but slightly older civilisation of Sparta. In some ways the two were a
forerunner of the confrontation between modern capitalism and communism -
with a dynamic and creative culture running in parallel with an austere
neighbour with a tendency to collective approaches, unchanging institutions
and severe treatment of dissenting individuals.
Athens was developing maritime technologies,
and building wealth by trading. Its empire - founded on a mix of trade and
coercion - stretched to coastal regions all around the eastern Mediterranean,
and militarily it had the best high tech capability of the day, which meant
naval power. Sparta had the bigger army.
Athens was further blessed with productive
silver mines and a sufficiently progressive government that it was able to
extract annual revenues from its empire back to the central Athenian core -
ostensibly for defence. Through trade, silver mining and tribute its wealth
became phenomenal.
It spent this money in two main ways. The
first was squabbling, which tended to boil over into wars - notably with
Persia and later Sparta. As with most disputes it was usual for both
sides to end up weaker at the end, and because there were so many competing
proto-empires in the region the typical result of any large scale dispute was
the relegation of both combatants to second class imperial status. Certainly
the costs of wars and defence was one of Athens'
regular and major state expenditures.
The other we are lucky enough still to be able
to see. The enormous Athenian riches of the 5th century BC were spent in
building the great public works of the time. There being no particular
political pressure for welfare systems in those days, the surplus money was
spent on public architecture. The objective was nothing less than to house
the Gods, whose previous shrines and temples had been destroyed by Persians
in 480 BC. Thanks to this we have the Parthenon and the other great buildings
of the Acropolis.
They were not cheap, and even at the time the
degree of extravagance which they entailed encouraged considerable political
criticism.
Presiding over this rebuilding was Pericles.
He was a second generation politician, being the son of the moderately
significant Xanthippus. Pericles was a master of manipulating popular
sentiment - what we would call now 'a great communicator' - and was around at
the time when this skill could be used in earnest for the first time, to
drive newly democratic Athens in particular directions.
Although he found himself unable to include
his then ally - Sparta - in his plans, he managed to generate enough popular
support within his more immediate Athenian alliances to finance his ambitious
building program, although he had to resort to demagoguery and even religious
exhortation to do so. Indeed he may even have been operating what amounted to
a deliberate economic stimulation package for Athens and was later accused of
exactly this by one of the two principal sources of historical information on
his life [Plutarch].
At any rate he spent the money, and continued
to become involved in occasional military disputes. He had a long and costly
campaign to recover Samos, which had been an ally, but revolted in 440 BC.
The campaign was eventually successful in its direct aims, but damaging to
Athenian strategic alliances. Sparta - generally friendly to that point with
Athens - might easily have got involved then on the Samos side, but stayed
out.
Pericles general policy "was one of
firmness, coupled with careful manipulation of the diplomatic position to
keep Athens technically in the right". He detected a looming war with
Sparta which might never have happened were it not for his increasing the
diplomatic temperature on key trade issues - notably concerning the region of
Megara, which was strategically important for food supplies and whose trade
was substantially embargoed by Athens. After military coercion most of
Megara was placed under Athenian 'defensive assistance'. This transparent
expansionism was not welcomed by Sparta.
Although he saw war as inevitable well before
it came, and made financial plans to accomodate it, Pericles underestimated
its likely length and cost. The Peloponnesian war finally broke out in 429 BC
and lasted for 27 years. He saw very little of it, dying in its second year
of a plague which swept through Athens killing large numbers of the
population.
The eventual monetary consequences of this war
were slow to materialise, because at its start Athens was rich in silver and
gold, which circulated as money. These large metallic resources were used to
pay garrison soldiers, who were on foreign territory and whose purchases from
foreign populations required commodity money rather than any Athenian
representative currency with no obvious value in its government guarantee.
By 407 BC the metallic pot was more or less
empty and Athenian domestic currency had to be debased - incorporating
significant amounts of copper. It was assigned a face value well above the
commodity worth of the modest amount of included gold. It was further debased
in 405 BC to highly overvalued copper discs which
circulated concurrently with the older gold and silver based coinage, because
even at this stage the state still held the population's monetary trust.
But a year after this debasement the 27 year
war was finally lost. The inability of Athens any longer to pay her occupied
populations for supplies with a form of money they would accept, or to offer
worthwhile financial incentives to her allies, contributed to this loss. The
result was the complete valuelessness of the increasingly copper based
currency which had appeared in the final three years of the war - once the
real money ran out.
Athenians were now perhaps used to a
representative money. In the 50 years following the end of the Peloponnesian
war a relatively steady state allowed the re-appearance of copper discs as
money, and these were officially redeemable in silver. This was perhaps the
finest period of ancient Greek culture - being the time of Demosthenes,
Socrates, Plato and Aristotle. For all the appearance of easy wealth which
these Greeks must have enjoyed there is no record of the copper money ever
being redeemed.
The eventual effect of prolonged war was the
impoverishment of the state and after those 50 years of further prosperity -
a time of essentially notional but nonetheless trusted money - Athenian
political and military dominance of the region ended. A rough and ready
people immediately to the north, the Macedonians, were regarded as rather
backward by Athens at its height, but their king Philip was militarily and
politically shrewd, and he had access to gold mines. This gave him the
ability to pay a Macedonian army on the march, so he steadily encroached
southwards into Athenian areas, beating them in battle in 338 BC, and
subsequently imposing relatively benign terms for peace.
The Greeks rose up from this temporarily but
were thoroughly and finally subjugated by Philip's son, Alexander the Great,
who went on to conquer half the known world before his death at the age of
32.
The legacy of both Philip's and Alexander's
enormous military success was colossal debt. Their imperial achievements were
short lived in part because of this.
Athenian money meanwhile had defined a pattern
which was to repeat in other empires which were to follow:- dominance of
trade; influx of gold to balance exports; public wealth; liberty;
overconfidence; the discovery of loosely managed money as a stimulating solution
to stagnation in an economy near its zenith; an ongoing success born of
cultural momentum and monetary expansion which was to persist for decades
before finally the emptiness of the monetary promise was exposed, leading to
rapid national collapse.
Paul Sustain
Director and Founder
Bullionvault.com
Paul Tustain is director and founder of BullionVault - the world's fastest-growing gold ownership service, where you
can buy gold today vaulted in
Zurich on $3 spreads and 0.8% dealing fees.
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