The
innovation of Legal Tender in seventh century BC was adopted by the greater
part of the Greek world. Towards the end of the seventh century BC, wealth and
debt went extreme with complications.
Money and Man by Elgin Groseclose, 1961
The introduction of coined money [Legal Tender]
produced what might be called in today’s parlance "boom times" in the
Mediterranean. It was an era of expansion, of the development of frontiers, of
the exploitation of natural resources. Cities flourished, trade was active,
debtors and creditors appeared, banks were organized, and in the end there grew
up a host of attendant evils resulting from an unbalanced economy based too
largely on money.
Toward the end of the seventh century B.C., the
Greek civilization, which had been riding the crest of a sudden prosperity, was
being carried, irretrievably, it seemed, toward the dark headlands of distaste.
The inexorable culmination to the era grew out of the growth of debt. In
Attica, as in modern America, the incubus of debt had thrust its tentacles into
the very vitals of society. The greater part of the peasants’ holdings had come
under mortgage, the evidences of which were stone pillars erected on the land,
inscribed with the name of the lender, the amount, the rate, and the maturity
of the loan. A still more insidious form of debt was the chattel mortgage in
which the farmer could pledge his own person or that of his wife or his
children, for the repayment of a loan. These chattels, under Athenian law,
could be sold off into slavery, and such was the extent of the existing credit
structure that the greater part of the agricultural population was in danger of
being converted into bondage.
A state of affairs developed in Greece toward the
end of the seventh century B.C. similar to that in the Middle West in the
nineteen twenties. Revolution was being talked, with mutterings about
"redistribution of the land," and armed insurrection was imminent.
A History of Interest Rates by Sidney Homer,
Rutgers University Press, 1963
In Attica, at the beginning of the sixth century
B.C. the tenant farmers were under severe economic pressure and threatened
rebellion. They were sometimes able to keep only the sixth part of their
produce. Personal slavery of whole families for debt was permitted and became
common. Freeman had to compete with slaves. In spite of the relief provided by
extensive colonization, discontent grew. Pawn credit was widespread. Debt had
become an insupportable burden. At this crucial point (594 B.C.) the poet and
wiseman Solon was called upon by Athens to assume supreme legislative power for
a limited period and revise her laws.
Money and Man by Elgin Groseclose, 1961
The moneyed classes, the aristocracy, and the merchants,
sensed the growing dissatisfaction among the masses, and in the hope of staving
off rebellion, put up Solon for archonship in 594 B.C. The oligarchy had tried
their best to enforce this law of debtor and creditor, with its disastrous
series of contracts, and the only reason why they consented to invoke the aid
of Solon was because they had lost the power of enforcing it any longer, in
consequence of the newly awakened courage and combination of people.
Inaugurated as archon, Solon moved with amazing speed,
and before the country knew what was happening, it was going through a social,
economic and political revolution that completely revamped the character of the
Athenian state and still amazes historians.
Solon assumed extra-legal powers, and with a facility
for "catch" expressions that took hold of popular fancy, issued
immediately a revolutionary decree under the appealing name "Shaking Off
of Burdens". This decree, going at once to the heart of the money problem,
tore down all the mortgage pillars of Athens and abrogated at once all
agricultural and personal loans. It liberated all those debtors who were
actually in slavery under previous legal adjudication, and it forbade any
Athenian to pledge his own person or that of any member of his family as security
for a loan.
A History of Interest Rates by Sidney Homer,
Rutgers University Press, 1963
Solon’s reforms were radical and for the most part
they endured. He canceled many debts secured by land and scaled down others.
All those enslaved for debt were freed; those sold abroad for debt were
redeemed at state expense. Political power was reapportioned according to
property. The drachma was devalued by about one quarter. Weights and measures
were increased in size. Citizenship was granted to immigrants who were skilled
artisans. Judging from these reforms and their acceptance, the economic crisis of
594 B.C. was severe indeed.
Money and Man by Elgin Groseclose, 1961
Of course it shattered the credit structure of
Athenian economy. Deprived of the security behind their assets, and with
obligations of their own to meet, the landlords and the money lenders were
thrown into practical bankruptcy. In solution to this problem, the crumbling
financial edifice, Solon provided a partial moratorium by means of a debasement
of the currency. The money question solved temporarily - it was to come up
again and again in Greek history - Solon was now able to lay the foundation for
the enduring structure of reform which brought into being that cynosure of
history - the Athenian democracy.
To
prevent complete authoritative meltdown, the Greek State responded to the economic
crisis and looming revolution with the concept of democracy.
Democracy
Government by the people; a form of government in
which the supreme power is vested in the people and exercised directly by them.
However,
the system was not a pure democracy, but a democracy more representative of
propertied individuals, individuals with the greatest ownership, individuals
who derive the greatest interest income.
An Economic Interpretation of the Constitution of
the United States by Charles A. Beard, 1913
It is difficult to conceive of the Constitution as
an economic document. It places no property qualifications on voters or
offices; it gives no outward recognition of any economic groups in society; it
mentions no special privileges to be conferred upon any class. The concept of
the Constitution as a piece of abstract legislation reflecting no group
interests and recognizing no economic antagonisms is entirely false. It was an
economic document drawn with superb skill by men whose property interests were
immediately at stake.
To
this day, the image of Solon graces the frieze of the United States Supreme
Court building, captioned with "Equal Justice Under Law",
impressively supported by pillars of Greek columns, an architectural style that
continues to adorn buildings of Law and Money.
Solon
a wise lawgiver.
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Confucius, Moses, and Solon
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