The Babylonian Woe

by David Astle

  Where taxes withdraw units of exchange from circulation, there must be a force which injects such units of exchange into the circulation. What therefore was the source of such units of exchange or moneys as were injected into the circulation in order that the people of Rome of the kings might estimate their worth with some exactitude and according to a certain standard? Clearly there is no reason to doubt this record of Livy.

  In the Panadects of Justinian, Tenth Book, occurs this remarkable passage from Julius Paulus, jurisconsul of the third century of our era:

  “The origin of buying and selling began with exchange. Anciently money was unknown and there existed no terms by which merchandise could be precisely valued but everyone according to the times and circumstances, exchanged things useless to him against things which were useful; for it commonly happens that one is in need of what another has in excess. But as it seldom coincided in time that what one possessed, the other one wanted, or conversely, a device was chosen whose legal and permanent value remedied by its homogeneity the difficulties of barter. This device being officially promulgated, circulated, and maintained its purchasing power, not so much from its substance as from its quantity. Since that time only one consideration in an exchange was called merchandise, the other was called price.”

  Whether those devices such as governed the exchanges of early Rome and Etruria were clay or leather or wood does not really matter. As such they were true money being intrinsically valueless, and only of value because of that law which ordered their acceptance in the exchanges and that they be of value as according to their scarcity or otherwise relative to the goods and services for sale. What would above all matter would be the ease with which they could be counterfeited, no doubt the source of their ultimate failure, and whether they were loaned into circulation by private persons against so-called collateral, or paid into circulation as against government expenses, as were the Aes Grave at a later date.

  This fragment from Paulus repeating the words of a commonwealth scholar of whose work even then little remained, did no more than express the opinions of all the philosophers-scholars of antiquity, at least, those of whom record exists. Almost all of them wrote of numerical or fiduciary systems of money as being the only natural systems. None of them, however entered into discussion as to whether issuance should be as against state indebtedness. It was so obviously a necessity for good order and well-being in life, that such discussion never seems to have occurred to them. The success of private monetary emission in this day and its boldness now that its former criminal activities are recognized and accepted as inevitable, such men could not even imagine, not even Aristotle, who it is certain by reason of his family connections, must have known something of the undercurrents of the financial world as it existed at that time.

  Aristotle, Plato, Socrates, Zeno, all seemed to have been clear on the subject, and all lived at a time when fiduciary systems were still in existence, both in the Greek states although there is little record, and elsewhere.[319] Plato was most clear on the subject and no doubt had studied the numerical system that had obtained at Sparta not long before when he was a young man. Living between 429 B.C. and 347 B.C., he must have been at Athens during the Peloponnesian War when such system certainly must still have existed in Sparta, or have been a recent memory; even if, as seems most likely, as a result of the war, it had been replaced by the Athenian system of private money issue based on the fiction of precious metals or valuables in reserve. As Aeschines, also pupil of Plato was conversant with that fiduciary system of Carthage,[320] it is more than likely that Plato was so instructed. As no coinage in precious metal was struck at Carthage itself until 340 B.C.,[321] it may reasonably be supposed that at the time of writing The Laws, either 348 B.C. or 349 B.C., there would have been Carthaginian agents at Athens, well able to explain their monetary system to enquirers. On the subject Plato wrote:

  “Further the Law (of the ideal Republic) enjoins that no private individual shall possess or hoard gold and silver bullion, but have money only for domestic use, such as is necessary for dealing with artisans and servants, sojourners and slaves. Wherefore our citizens should have a money current amongst themselves but not acceptable to the rest of mankind. For foreign expeditions, journeys, embassies, the expense of heralds (abroad) and such matters, the government must also possess a fund of coins in other states. When an individual needs to go abroad, let him obtain the consent of the Archon and go; but on his return if he has any such money remaining let him deposit it in the treasury and receive an equivalent sum in local money. If he is discovered to have concealed it, let it be confiscated, and let him who knows and does not inform, be subject to anathema and dishonour equally with him who brought the money, and also to a fine not less in amount than that of the universal money which had been brought back.”[322]

  Gathering together further fragments of evidence we see that Aristotle less than 400 years after Pheidon of Argos, made comment: “Numisma (Money) by itself is a mere device which has value only by law (Nomos) and not by nature; so that a change of convention between those who use it, is sufficient to deprive it of value and its power to satisfy our wants.”[323]

  In The Ethics, Aristotle states further: “By virtue of voluntary convention, Nomisma has become the media of exchange. We call it Nomisma because its efficacy is due, not to nature but to Nomos (Law) and because it is always in our power to control it.”[324]

  Thus despite at least four hundred years of control of trade by the masters of precious metal bullion, the scholars still clearly understood the actuality of money and that it was an evincement of the law. They still understood it was but so many numbers injected into a circulation amongst the people relating value to value, and not in any way influenced by the material on which these numbers as laws were recorded. The scholars must, however, have been aware that in the case of these laws being recorded on precious metal, if the convention in respect to the value of the unit of exchange was changed, so far as financial houses with facilities for smelting and export of bullion were concerned, there was no loss. If the change in convention was disadvantageous to such holder of precious metal coin, such coin could be reduced to bullion and quietly exported to that country offering the most advantage to holders of such bullion.

  To say that money as such began with the striking of precious metal coinage is therefore incorrect. The statement that an international control over money came about as a result of a certain group of private persons, members of which were located in all major states of the world, creating a monopoly of those precious metals of which its symbols were coming to be made, or, better put, on which they were imprinted, would be more to the point.

  The evidence that the earliest coinages in Greece had essentially a local circulation in no way alters the picture previously outlined of silver money as being part of an international conspiracy. All Greek states apart from Athens and Samos, Siphnos and Corcyra, and possibly one or two others, had to obtain silver bullion for their coinage from abroad, which necessarily obliged them to deal with those traders who specialized in dealing in bullion. Such trade in bullion had to be in the hands of a small and highly secretive group, as much on account of the sources of supply being relatively few and scattered as it were out to the ends of the earth, as on account of the fact that it would be only such a group that could also control those supplies of slave labour and their purchase from triumphant peoples whose warlike activities, as likely as not, they had instigated themselves; slave labour so necessary to the success of their mining operations.

  For example, the fact that the Carthaginian mines of Spain show no signs of even the use of the ordinary propping and shoring associated with mining,[325] cannot but indicate that the miners were most likely captives of war from distant parts, purchased for a song from a victorious general, and driven under threat of the lash.

  At that period it would appear, such labour was so plentiful that the cost of purchase of new slaves, would have been less than the c
ost of ordinary safety precautions. The silver mines of Spain as worked by the Romans, show interestingly enough an entirely different story.[326] All safety methods, including the use of concrete, were used; which also agrees with the fact that Rome, even when silver money was in use, particularly in foreign trade, so far as internal exchanges were concerned, had a relatively ample supply of money for the details of day to day organization in the overvalued bronze fiduciaries, the most grandiose aes and its parts or multiples.[327]

  History has proven over and over again that a precious metal coinage will move one way or another to where it might realize the most profit either as coin or bullion. The so-called law of the economists known as Gresham’s law states just that: “Bad money drives out the good.” which means that the silver in circulating would be replaced by that less intrinsically valuable money, if such also circulated, and which the economists described as “the bad,” (the question of course being bad for whom?); such silver being hoarded and exported to whatever market offered the best price or advantage.

  Cases of wider application of this so-called law are without number, and as much as of application to a lesser degree. A few outstanding ones are:

  a. The disappearance of silver from Athens and its replacement by baked clay facsimiles during the 5th Century B.C. and by yellowish copper (or orichalcum) at the end of the same century.

  b. The drain of silver from Rome during the late commonwealth and the early Empire, particularly to the Orient,[328] where the ratio varied around 6:1 to gold as compared to that established by Caesar of 12:1, and its replacement by bronze or orichalcum fiduciaries.

  c. The drain of English silver coinage to India after the act of 1666.[329] Such silver being replaced by the “Bad” money of the goldsmith’s receipts and the Bank of England notes and ledger credit page entries.

  d. The disappearance of the silver roubles in Russia[330] during the 18th Century almost as soon as they left the mint, their place being taken by the “Bad” money of the copper roubles, and, later, after catherine, by the “Bad” money of the paper roubles (assignats).

  e. The almost complete disappearance from the circulation between the years 1967-1973 of silver coins of our own country of Canada: such silver being replaced by coins fabricated from base metal alloys, relative to the silver coins, without intrinsic value.

  Returning to Ancient Greece, Professor Heichelheim states: “Such hoards as found previous to 560 B.C. are found in the areas in which they were minted and never in other countries.”[331] Which fact indicates that prior to 560 B.C. it is probable that laws governing the export of coin were strictly enforced in Greece. Any silver that left a state would do so covertly as bullion. The following Athenian Edict is evidence that such laws existed: “Let no Athenian or sojourner lend money to be exported unless (to pay) for corn or some such commodity allowed by Law.”[332]

  By the time of Plato, something less than two hundred years later the real weaknesses of precious metal systems of coinage were beginning to show, hence the increasing discussion of the matter of money in the schools of philosophy, although such discussion does not seem to have given rise to any vigorous action by the Grecian States. The establishment of the Aes Grave system at Rome may have been a direct result of such discussion, and the establishment of this numerical coinage of bronze certainly bears close resemblance to that internal coinage as recommended by Plato for the ideal Republic.[333] By the date generally accepted as the commencement of the Aes Grave system, that is 338 B.C., Roman scholars would have been fully aware of the teachings of Plato. This city state, already stirred by consciousness of its world destiny, would have neglected no instrument towards the maintenance of morale and strength in the structure of its internal life. Such an instrument was the Aes Grave system in which the national money was paid into circulation by the state, and only of value insomuch as the symbols on which its numbers were recorded, were scarce or otherwise.

  The weaknesses inherent in precious metal coinage systems as becoming apparent in the time of Plato were as follows:

  a. The coins wore out or were hoarded out of circulation.

  b. Hard rock mining was never profitable without slave labour so far as the Master Miner was concerned.[334]

  c. The mine slaves died and sometimes, there being no wars, they could not be replaced so easily.

  d. The mines themselves became exhausted.

  e. In a time of national calamity, when coinage was most of all needed, it disappeared into hoards, largely held by foreigners, members of that secret class of persons to whom wars were but opportunity to drive harder bargains yet again, with mankind and his states and peoples.

  f. Even in time of peace, captains and merchants, if permitted, were ever seeking a cargo for their return trip. If such cargo was not available, they would take away their balances in precious metals or slaves.

  A country such as Greece, by no means rich agriculturally as was the Egyptian Delta, yet having a relatively large population to feed, in its declining days would usually have an unfavourable balance of trade; which further, despite laws to the contrary, drained away its precious metal coinage or bullion. At the time of Plato, this condition must have been really showing and its significance.

  The Laureion mines were petering out despite the agitation by Xenophon for the Government of Athens to purchase ten thousand slaves to lease to mine owners,[335] (presumably to be obtained from his financial sponsors), and where in days gone by there had been considerable silver circulating at Athens particularly, now it had become scarce and there was an insufficiency.

  The numerous clay facsimiles of Eastern Mediterranean coinages, still being found at Athens,[336] show that the foreign bankers, in accordance with Gresham’s so-called law, were quietly filling the void now appearing with issues of a fiduciary character such as our paper money, exemplified in their case by the baked clay facsimiles mentioned by lenormant which the bankers clearly were injecting into circulation to their own private account, and, of course, that of their most useful greek agents. This would be effected by pointing out to a customer to whom the banker was prepared to make a loan, how much safer the actual silver would be if left with the banker’s reserve in the Acropolis where it would be guarded by the gods themselves, and how these clay facsimiles which all the customers were accepting, could always be redeemed in silver if really necessary. (!)[337]

  Seltsman in Greek Coins[338] says that about this period, following the complete collapse of the Athenian Empire, Athens resumed its previous financial activities through the growth of powerful “Banks,” such as that of pasion which operated in all major Greek cities, providing a money market for all of the Greek world. however, seltsman makes no mention of abstract expansions of the monetary unit, nor of the clay facsimiles which were the tangible evincement of such expansion, and whose power to inspire confidence was the main source of that renewed financial activity, and whose existence and purpose was defined by françois lenormant, even if somewhat diffidently. (p. 27, present work.)

  What Seltsman really points out to us in stressing that Athens resumed its previous financial activities with powerful banks such as that of Pasion operating in all major Greek cities, is the correctness of our previous conjecture that the real underlying purposes of the “Great” peloponnesian war was to establish private common money market across the greek world totally controlled by the trapezitae or bankers in modern terminology. Banks, too, could not thrive and realize full potential except that government was become their instrument, and that Government, the creator of the laws of the land, was in their debt, as according to these same laws of the land, as much as private citizens. The foundation of this god-power, to which, as a result of the utter exhaustion of Athens and Sparta, and the death of their noblest, there were none to offer resistance, was government borrowing of the banker’s fictitious “Credit” money; and although there may be little evidence of such in athens at that time, it is clear that this situation had been brought about.
the frantic efforts of the athenian government after the war to devise methods to stimulate increase of government spending, such as the donatives and the theorica, while at the same time devising methods to withdraw money from the public circulation, such as by sales tax,[339] reveal that Athenian Government was now more firmly than ever in the hands of International Money Power, if Sparta was but now rearrived there after absence of three hundred years or so.[340]

  Both Athens and Sparta were in no better a position than they were before the war. Neither one had won and neither one had lost. Both lay exhausted, and over their prostrate bodies the servants of this same sardonic Money Power drew the chains of their slavery.

  Although Seltsman says the source of the renewal of the prosperity of Athens was the new markets in Cyrene, Chalcidice, and South Russia, Rostovtsev points out that the South Russian market, the most important of all, was closing due to local manufactures, and in the fourth century, Attic and Ionian imports disappear entirely in South Russia,[341] where, in the sixth and fifth centuries they had been extensive.[342] According to Rostovtsev, at Athens during the fourth century B.C., both population and unemployment increased, prices rose, and there was so-called “class struggle” and discontent.[343]

  Increase in prices is usually indicative of increase of the number of monetary units in circulation, that is, of the money supply relative to goods and services for sale. Unemployment would not cancel out such increase in the money supply; for money had to be created for the Donatives and theorica which belong to this time. Herein is further proof of some artificial and invisible growth of the monetary unit. So while the markets for Greek agricultural and industrial products had shrunk considerably, and were no more able to absorb the goods that were being offered to them by Greece,[344] money was still being created, in Athens particularly, and being put into circulation as against “Free Bread and Circuses,” such as indeed were the donatives and theorica; consequently causing inflation and the rise of prices of record. considering the findings of professor rostovtsev as being more likely than those of seltsman, it is clear that what athens exported, and possible some other cities in greece where such as pasion had branches, was, after the “Great” peloponnesian war, privately created capital.[345] Thus in what we know of as Antiquity, the full meaning of the unit of exchange as a purely abstract conception, regardless of what material it was recorded on for the purposes of day to day exchanges, was clearly understood; and without a doubt this knowledge was inheritance from ancient days, long before the advent of exchanges based on silver by weight.