Money is any object that is used to purchase goods and services. Throughout history, many different types of objects have been used as money, but coins made from precious metals have been the most common. Because money was useful for buying items, people in ancient Greece and Rome often needed to borrow money from individuals or institutions, such as temples or banks. For much of classical antiquity, the coin itself was worth what it weighed. Fiduciary money, which we use today (in which the object itself is not actually worth its agreed-on value), was rare.
Money in Ancient Greece and Rome. By about the 800s B.C., most Greek communities had adopted official units of money, usually in some form of precious metal. Lydia, in western Asia Minor, was the first nation to mint coins, in about 635 B.C., and the practices of minting and using coins spread rapidly. After about 400 B.C., Rome was also using coins as money. Coins were stamped with a particular design to show that they were of uniform size. This saved people the trouble of having to weigh each coin individually. Although most coins were used in the region in which they were produced, the coins of Athens during the classical* period and the coins of Alexander the Great and his successors in the Hellenistic* period were made in large quantities and used over a wide area.
The first coins were made only of precious metals, especially elec- trum, a naturally occurring mixture of gold and silver. Later silver was used widely, and gold coins were introduced by Philip II, the king of Macedonia, in the 300s B.C. After Philip, a combination of gold and silver was used in most coins. Because southern Italy and Sicily had a limited supply of precious metals, these areas began producing bronze coins, which had less value as metal. By the 300s B.C. most Greek city-states, including Athens, adopted bronze coins. However, most city-states continued to use gold and silver in addition to bronze, believing that coins of high value must be made of good metal.
* classical in Greek history, refers to the period of great political and cultural achievement from about 500 B.C. to 323 B.C.
* Hellenistic referring to the Greek-influenced culture of the Mediterranean world during the three centuries after Alexander the Great, who died in 323 B.C.
Although coins were widely used in Greek and Roman cities, coins were less important or not used at all in large areas of the Mediterranean. Instead, people bartered* agricultural produce or other goods as they always had. Money was not even necessary for overseas trade.
Moneylending. Although the practice of lending money is older than the use of coins in ancient Greece and Rome, coins made moneylending easier. In Greece, most moneylending occurred between individuals, although temples and banks also made loans. Wealth, for the most part, consisted of land and the goods produced from the land. Wealthy people could be cash poor, and they borrowed money from one another to maintain their social standing or to influence political decisions. Poor people also borrowed money from wealthier people, usually at high rates of interest.
Small businesses run by merchants controlled moneylending during the Roman Republic*. Instead of coins, these merchants used bills of exchange, which were written orders from one person to pay a certain amount of money to another. This system spread throughout the empire. During the later years of the Roman Empire, the business of moneylending gradually shifted from merchants to the wealthy owners of large estates. It was customary for Roman moneylenders to charge interest on the loans they made. (See also Banking; Coinage; Economy, Greek; Economy, Roman; Taxation; Trade, Greek; Trade, Roman.)
* barter to exchange goods and services without using money
* Roman Republic Rome during the period from 509 B.C. to 31 B.C., when popular assemblies annually elected their governmental officials
MONEYLENDING AND OVERSEAS TRADE
Overseas traders often needed to borrow large sums of money to finance their trading expeditions. Even if they owned their own ship, they still needed to buy cargo for trade and supplies for the trip. Traders often borrowed the money they needed from wealthy individuals. These moneylenders frequently charged extremely high rates of interest—sometimes as high as 30 percent—because trading expeditions were very risky. Unless the trader was shipwrecked, he had to pay back the loan. If he failed to repay it, the moneylenders could take possession of his ship and its cargo.