Sunday, September 3, 2017

Reply to Selgin on the Origin of Electrum Coinage, Part 1

George Selgin replies to my post here in the following critique:
George Selgin, “‘Lord Keynes’ contra White on the Beginnings of Coinage,” Alt-M Ideas for an Alternative Monetary Future, August 30, 2017.
You can follow the complete debate in these posts as follows:
Larry White, “Why the ‘State Theory of Money’ doesn’t explain the Coinage of Precious Metals,” Alt-M Ideas for an Alternative Monetary Future, August 24, 2017.

“Larry White on the Origins of Coined Money: A Critique,” August 26, 2017.

George Selgin, “‘Lord Keynes’ contra White on the Beginnings of Coinage,” Alt-M Ideas for an Alternative Monetary Future, August 30, 2017.
The issue here is how electrum coinage in ancient Lydia and Asia Minor arose, and who first invented it. The issues are so many and complex that my responses will be in two different posts.

This is the first post.

Selgin’s reply to me here is interesting, an enjoyable read, and deserves a serious response. I recommend everybody read it first.

The first issue I discuss here is the current scholarly “consensus.”

What I meant by “Consensus”
Selgin questions my claim that there is a modern consensus that the Lydian state invented coined money.

Of course, by the word “consensus” I meant “the majority view” (one of the legitimate definitions in English dictionaries), not that all scholars think so, as Selgin seems to imply.

I meant that, amongst general and specialist ancient historians of the late 20th and early 21st century, most seem to think that coined money was invented by the Lydian kings or at least the Lydian kings were the fundamental driving force behind it. I take “majority” to mean more than 50% of general and specialist ancient historians and scholars – and ideally a percentage in the upper range of 55–60% or higher.

So let us try and calculate some percentages from a broad sample of the work of late 20th and early 21st century general and specialist ancient historians, numismatists and other relevant scholars.

Here is a list of “Group 1” modern scholars who support the view that the Lydian kings invented coinage, or at least were the driving force behind it, even if some scholars allow that the kings might have employed private goldsmiths or mint masters to make the coins:
Group 1:
Cook (1958)
Bolin (1958)
Kraay (1964)
Thompson (1966: 2–4)
Jenkins (1972)
Grierson (1975: 10)
Kraay (1976: 28, 317–324)
Grierson (1977: 2–3)
Picard (1978)
Wallace (1987: 386)
Kraay (1988)
Jenkins (1990: 28)
Howgego (1995: 3): Howgego notes that no certain evidence in all of antiquity for coins being produced by private individuals.
Osborne (1996: 256)
Kurke (1999: 6–10, especially p. 10. n. 19): Kurke accepts Cook (1958) modified by Price (1983), but rejecting the view that private individuals minted coins, and accepting ancient states as the inventor.
Wray (2000: 46)
Whitley (2001: 193)
Le Rider (2001: 85–86, 94–100, 116)
Wallace (2001)
Kim (2001: 10)
von Reden (2002: 152–153)
Freeman (2004: 185)
Bresson (2006: 13–14, 5): “These first electrum coins were struck on the same standard by the Lydian kings, but certainly also by a series of Greek cities of the coast, among them Miletus and Teos, and also by Phokaia, but on a different, local standard.”
Wallace (2006)
Peacock (2006)
Kroll (2008: 17–18)
Semenova (2011a)
Kroll (2012: 44)
Rutter (2012: 342)
Peacock (2013)
de Callataӱ (2013: 13–14)
Hornblower et al. (2014: 182)
Bresson (2016: 264): Bresson states that coined money was invented between 650–625 BC and the ratio of metals manipulated by the “monetary authorities of the city-states and the Lydian monarchy.”
I have been far from exhaustive here, and no doubt more scholars could be added who hold the same view: e.g., some like Hall (2013: 275–280) do not take a clear view, but do seem to imply that the state lay behind the minting of the first coins.

Then we have “Group 2” scholars who accept a significant role for the state in inventing coinage, but argue that private individuals were allowed by the state to mint their own independent coins, or were allowed to mint on behalf of the state:
Group 2:
Seaford (2004: 132–134): “with coins perhaps issued by individuals.”
Roisman and Yardley (2011: 7)
Konuk (2012: 44): “Electrum was a commodity available locally and was largely controlled by the Lydian kings, who turned some of it into coins by applying a design on lumps of electrum of consistent weights”; Konuk (2012: 47): later states: “We do not know whether there was a state monopoly on issuing coinage or whether some wealthy private individuals such as bankers or merchants were also allowed to strike coins of their own.”
Group 2 scholars do not really vindicate the free bankers, since most acknowledge the fundamental role of the state.

Then there are “Group 3” scholars who argue explicitly for the private sector (or mostly the private sector) – whether the private wealthy elite, merchants, bankers, or goldsmiths – being the first inventor of coined electrum, or the driving force behind it:
Group 3:
Seltman (1955: 17–18)
Breglia (1964: 42)
Holloway (1978a: 10–13)
Holloway (1978b)
Price (1983: 6–7)
Furtwängler (1986: 164–165)
Schaps (2004: 100)
Furtwängler (2011)
Graeber (2011: 224–225)
van Alfen (2012: 26–27)
van Alfen 2014 (forthcoming in van Alfen 2017)
Melitz (2017: 84): Melitz states it is “possible” private initiate came first in minting coins, but it “cannot be proven.”
I have been generous in listing Melitz (2017) here, since his support for this position is weak.

Strange to say, David Graeber in Debt: The First 5,000 Years (2011: 224–225) takes the view that electrum coins were first invented by “ordinary jewellers” in Lydia or Ionia, and then their production was quickly monopolised by the state (he also asserts that coinage in China and India was first invented “by private citizens, … [sc. but was] quickly monopolized by the state”; Graeber 2011: 225).

In my original post, I did not deny that there are these dissenters listed in Group (3).

But now we can calculate some approximate percentages for the range of opinion in modern scholarship. I have provided a sample of 48 published works by late 20th and early 21st century general and specialist scholars.

We can see the following percentages:
(1) Group 1: Kings or the State invented Coinage:
69% of total sample.

(2) Group 2: Kings or the State invented Coinage with Private Issues allowed:
6% of total sample.

(3) Group 3: The Private Sector invented Coinage:
25% of total sample.
So roughly 70% of works of modern scholars support the Group (1) view that the Lydian kings or ancient governments invented electrum coinage. If we combine Group (1) and Group (2) works, then we get a percentage of 75%.

This is a clear majority. There are roughly 25% of scholarly works that form a minority, and in which other scholars argue that the private sector was the inventor of electrum coinage.

It is perfectly possible that free bankers can add a few more scholars to Group 3, but – since I have not been exhaustive in listing Group 1 – I could no doubt easily add another 1 scholar to Group 1 for every new scholar added to Group 3.

The bottom line is: these percentages are not likely to change by very much.

So this should settle the issue for reasonable people.

Now we turn to some specific issues about what individual scholars have argued, as discussed by Selgin.

Speaking of the large number of obverse types of early electrum coins, Selgin states that “most authorities continue to allow that they may bear private markings.”

But this is not true. Most scholars are inclined to think they were coined by city-state governments, tyrants or kings, or, if by private agents, were minted for some government or king, and even John H. Kroll says so in this discussion of the subject here (which Selgin himself cites), and, at most, Kroll allows that some wealthy “large landholders” might have minted them too. Kroll does not state that merchants or private agents were first to invent electrum coins.

Even Konuk (2012: 44, 47) – also cited by Selgin in his reply to me – seems to accept that the Lydian kings first invented coins, and only allowed private merchants to mint them later. So, too, Bresson (2016: 264) (cited by Selgin) strongly implies that he thinks that the Lydian kings were the driving force behind the invention of coins.

And, unfortunately, Schaps is plainly wrong in making the following statement:
“It is by no means clear, however, that the first coins were official royal issues. Some twenty coins with the legend .WALWE. might seem to bear the name of the king that Herodotus calls Alyattes, father of Croesus; but from the same place we find others with the inscription .KALI., which is not the name of any Lydian king. The prevailing opinion is that the types of the coins (there are some twenty, many more than the two or three kings who reigned from the time coins were invented until the end of the Lydian empire) identify not the king under whom they were struck, but the producer of the coin—perhaps a royal functionary, more likely an independent gold-merchant.” (Schaps 2006: 12–13).
The only scholars that Schaps cites for this assertion are Breglia (1964: 42) and Furtwängler (1986: 157–158), neither of whom, as we can see, represent the majority opinion.

The fact is that the earliest electrum coins yet discovered were excavated in the 1904–1905 archaeological work on the temple of Artemis at Ephesus, dated to the last half of the 7th century BC, and already of these nearly half of them (Koray and Lorber 2012: 20) are lion-head electrum coins with Lydian inscriptions almost certainly royal issues of the Lydian kings, because the lion-heard is the symbol of the Lydian kings. The other issues are probably from Greek city state governments or tyrants. Some Chartalists have argued early coins might even have been minted by temples (Semenova 2011b), but this is an issue for the next post.

Another early coin hoard has been found in the Phrygian capital of Gordion in which there were 45 royal lion-head electrum coins, dated to the early 6th century BC (Bellinger 1968). On current evidence, from the very beginning the Lydian state or royal kings were minting coins. Where is the evidence of clear privately-issued coins before these royal issues?

At any rate, this post establishes that there is a consensus (understood as a majority opinion) in modern scholarship, and it does not support the free bankers.

In the next post (part 2), I will turn to the issue of the new evidence on the nature of electrum coins adduced by Selgin.

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Bellinger, A. R. 1968. “Electrum Coins from Gordion,” in C. M. Kraay and G. K. Jenkins (eds.), Essays in Greek Coinage Presented to Stanley Robinson. Clarendon Press, Oxford. 10–15.

Breglia, Laura. 1964. Numismatica antica: Storia e metodologia. Feltrinelli, Milan.

Bresson, Alain. 2006. “The Origin of Lydian and Greek Coinage: Cost and Quantity,” based on a paper at 3rd International Conference of Ancient History, Fudan University, Shanghai, 17–21 August, 2005

Bresson, Alain. 2009. “Electrum Coins, Currency Exchange and Transaction Costs in Archaic and Classical Greece,” Revue Belge de Numismatique et de Sigillographie 155: 71–80.

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  1. Thanks for this reply, JK. I'm afraid I did take your use of "consensus" to suggest, not a unanimous opinion to be sure, but rather more than a simple "majority," my own position having been simply that many important authorities take the other view, making the matter one that must be said to remain controversial.

    Though I therefore don't mind conceding that a majority have favored the state invention hypothesis, I will say that the business of counting authorities to arrive at such a determination is fraught with difficulties, including the question of determining which are weighty enough to include in the count. To give but one example, if we are to reckon Randy Wray and other MMT types as deserving a place on one scale, then I suppose that White and I perhaps other "Menegerians" might deserve places on the other.

    I look forward to the next installment.

    1. George Selgin@September 3, 2017 at 11:00 AM

      "To give but one example, if we are to reckon Randy Wray and other MMT types as deserving a place on one scale, then I suppose that White and I perhaps other "Menegerians" might deserve places on the other"

      I accept this as a reasonable criticism.

      I have written an updated list here in a new post, with Free Bankers in Group 3:

      If you have more suggestions for Group 3, I will happily assess them and add them, and recalculate percentages.

  2. These discussions are very intellectually interesting, however, the real economic issue is does the money system facilitate commerce, stability and equitability, i.e. practicality, security and ethics.

    IMO MMT has the mechanics of money correctly described, but precisely like what neo-liberalism did, is still an ideology looking for justification. Personally I think libertarians/free banking are headed in the wrong direction and that the money system requires governmental sanction/justification. But MMT, like neo-liberalism, still fails the stability and ethics requirements.

    Until such time as MMT or any other theory recognizes and properly understands the concept behind the new paradigm of Direct and Reciprocal Monetary Gifting they will be incomplete, inadequate and effectively unable to fulfill all three requirements.

    Wisdomics-Gracenomics: The Natural Concepts Behind The New Paradigm of Direct and Reciprocal Monetary Gifting