Thursday, December 19, 2013

Electrum Coinage (continued)

In a presentation delivered at the ANS Electrum Coinage conference, François Velde pointed out that early electrum coins have very precise weights but their gold:silver ratio varies widely. Since the local gold was pure the minters were likely adding random amounts of silver. So why carefully control the weight? He described these coins as basically lottery tickets.

Velde's observations expose the problem. The following should be considered a speculation...

If the minters explicitly added varying amounts of silver could they have been trying to purposely make the coinage less useful than the hack gold ingots in use at the time? Could the irregular bullion value of early electrum have been a "feature" rather than a "bug"?

It is usually presented that the cementation process of separating gold and silver was an improvement over natural electrum. The story is that when that process became available, under King Croesus, he switched his coinage to the superior bi-metallic system. We aren't sure exactly when the ancients first learned to separate gold and silver, or the precise issue period of early electrum coins. I wonder if the ability to separate gold and silver counter-intuitively caused to the appearance of mixed (electrum) coinage, rather than set the stage for the end of early electrum.

David Graeber points out in his intriguing Debt: The First 5000 Years (2012) that systems of accounting based on debt long preceded coinage. He speculates that coinage was invented as a scheme to provision an army. In Graeber's view, rather than forcing citizens to provide food and materials for an army, a king merely demands a tax in coins he only issues to his army.

Electrum seems perfectly suited to a paranoid king attempting such a scheme. The equipment to separate gold and silver takes a lot of capital to build. Refineries are hard to conceal because of the smoke and smell. It would be easy to have a royal monopoly on parting gold. Mercenaries paid in electrum were less likely to desert if they knew their leader was the only person who could convert their electrum coins into more valuable hack gold.

Such a king could stamp the electrum he issued to his soldiers to ensure the populace equipped the right army. (His army.) I can imagine a lot of warlords running around ancient Lydia, each trying to obtain provisions from local farmers. Attempting a closed currency with identifiable stamped designs seems ideal.

Under such a system the precise weights serve the purpose of discouraging the unscrupulous from hacking or filing off a bit of the coin to keep for themselves. The weight standard can be seen as an anti-clipping technology rather than a promise of fixed bullion value.

Early electrum as a closed military coinage feels correct and compelling, but am I fooling myself? It would be nice to look for confirmation or something that could show the idea to be false. More precise dating could help … if we could show that gold refining was successful before early electrum coins were issued that would lend support. Or if I could find something that suggested early electrum economies were 'closed'.


Bob said...

If it were a closed system, I've always wondered whether the total amount of gold and silver in an entire issue might have been a known/fixed amount, and they just didn't worry about mixing it well because of how they imagined the economics to work.

For example, perhaps the king would make an emission of coinage with 100 lbs of gold and 300 lbs of silver in total. The value of the whole emission would be a known and fixed amount, even if individual coins might be variable in gold/silver content.

If the thinking (wrongly or rightly) was that it would eventually be recalled, or would only operate within a closed economy, would the amount of gold/silver in any individual coin matter?

Ed Snible said...

Exactly. With a closed economy the expectation might have been that the coins would eventually be redeemed or used for taxes. The precious metal content might have merely been an 'insurance policy' for the holders of the coin, should the issuing faction fall. Since the expectation was miliary success perhaps the gold wouldn't be as important as we imagine.

Today I went to the Heritage auction preview and saw this electrum stater. The reverse punch was interesting. This was my first chance to look closely at a reverse punch since the seminar and I was surprised how much the punch looked like itself was made of punches and scorings.