Jacques Melitz, 15 December 2019

Why did the Lydians decide, in the 7th century B.C., to coin electrum? On the face of it, this alloy of gold and silver would seem a particularly poor choice for coinage since its natural gold content varies and is hard to gauge with precision. This column suggests that it is the very uncertainty of the value of electrum, and the close control that the Lydians had over its gold content in coin form, that were the keys to the benefit of its coinage. It also suggests that the subsequent decision by the Greeks to coin silver was driven by the government's plan to subsidise the lower denomination coins, perhaps in order to economise its own transaction costs in its budgetary affairs.

Jacques Melitz, 10 October 2015

Minting small change was a big, expensive problem in the ancient world. This column argues that the ancient Lydian government and Greek city-states absorbed the cost of producing an extremely wide array of denominations of coins as a political strategy. Governments had much to gain from the spread of coinage in managing budgetary affairs. If it subsidised the mint, an ancient government would make savings in terms of transaction costs.

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