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Programme two: The Love Of Money

Peter Jay

This is Yap - one of the Federated States of Micronesia. Its 38 square miles form a tiny dot in the vast blue expanse of the Pacific, a world away from the cut and thrust of my normal life.

Itís an unlikely, if idyllic, stop along the Road to Riches. But Yap, its few thousand people, and these mysterious stone discs - have a special significance in our story. They tell us something really important about money.

Wherever you go, even when - from a British view - itís the back of beyond, you find money. Since very early times itís been a building block of civilisation. Love it or hate it, it seems we just canít live without it.

Can you imagine arriving somewhere, thousands of miles from home and finding youíve forgotten to pack any of this stuff, no cash, no plastic, no travellers cheques, no banks, in fact no money and no means of getting any... At first itís a bit embarrassing and then itís rather scary.

But there is money here - if you know where to look and what to look for. Because outside its one small modern town, Yaps traditional money is everywhere, Öit's just a bit difficult to put in your pocket.

It comes in the form of these large limestone discs and there are thousands of them. However neglected they look, each piece belongs to someone; and theyíre still used on big occasions. The islanders are proud of their remarkable currency. Even today the more stone money you have, the richer you are.

And, as John Tharngan knows, money talks, here just like anywhere else

John Tharngan

By getting more money the chief has more wealth and he can manoeuvre things around. He can control a number of things. Even buying lands, buying alliances and so stone money is one of the valuables here in Yap but there also other valuables.

Peter Jay

So how did these stones become so valuable? As he islanders showed us, the answer lies out to sea. Centuries ago a famous Yapese navigator brought the first piece home.

A long voyage had taken him to Palau, an island where he found limestone, then unknown in Yap. He carved a piece out, lashed it to a raft, and sailed with his treasure for home.

The stone was prized by his chief for its beauty and soon others wanted their own. In the years that followed, generations of young men made the five hundred mile round trip. More stones were carved out and brought back and began to be used for trade between villages.

The typhoons of the Pacific took their toll, many sailors lost their lives and some stones sank to the ocean floor. Yet, this didnít detract from their value. On the contrary.

John Tharngan

There are several factors that determine the value of stone money. One is the number of human lives sacrificed on the expedition. Another one is the amount of work and labour that is involved in carving a particular piece. Size is also important but a small piece of stone money may be more valuable than a big piece of stone money.

Peter Jay

The outside world intruded of course. From the eighteenth century on colonists came and went.ÖNow the tourists have followed, bringing with them the mighty dollar.

They havenít come to see the islandís unique stone currency or even to search for those pieces long abandoned to the sea.. Instead the tourists spend their dollars on diving - out beyond the coral reef Ė where Yapís now famous Manta Rays patrol its approaches. For the young Yapese the tourists love of the Manta Ray brings in welcome dollars. But they still measure real wealth as their ancestors did.

Theo Carngam

Stone money is a very unique money world-wide. I would say some Yapese donít have pieces of stone money like what Iím holding right now So this is very unique [thatís why Iím very proud of it]. You have to have a lot to class yourself as a rich family but a few pieces would be good. I donít want to be a rich guy, a rich kid, I just want to have stone money.

Peter Jay

Stealing money is strictly forbidden, whether itís in your purse or seemingly abandoned

John Tharngan

Stealing is very bad. If you steal a piece of stone money and the owning village knows about it they will punish you in unimaginable ways where you may not only have to return that piece but return three times, four times the worth of that piece. So stealing stone money by one village from another is forbidden.

Peter Jay

Out there beyond the reef the ocean in these parts gets as deep as Mount Everest is high. And even so the people of Yap count money at the bottom of the ocean, perhaps ten thousand metres down, as part of their wealth. And when you think about it thatís rather like the way we look at our money in the bank. We donít go to see if itís there, we just write out orders on bits of paper, transferring its ownership from one person to another.

And that works for the same fundamental reason that Yap money works. It works because people believe in it. They believe that everybody else will accept it in payment for the things they want to buy. And that tells us something very important about the nature of money. Money is whatever everybody believes is money.

Yapís stone money has found its way to the British Museum - an oddity among other currencies from around the world, most of which looks fairly like our money. Indeed, itís here that we find clues to how coins first started.

It happened about two and a half thousand years ago in a place called Lydia, in what is now Turkey; and itís our next step along the road to riches.

Prof Andrew Meadows

Prior to the appearance of Lydian coins people had been using weighed amounts of silver to carry out transactions or perhaps other sorts of bullion. What made Lydian coins different was of course first that they had a design on them and second that they were made to a known weight. So when you went into the market first of all you knew precisely what you had in terms of weight of electrum in your pocket, so you didnít have to worry about weighing the amount of silver you had or cutting bits off it for particular transactions.

John Tharngan

For thousands of years this busy road linked the Mediterranean world to the civilisations of the middle east and beyond. Lydiaís capital Sardis lay right on it.

The Kings of Lydia ruled here about seven hundred years before the birth of Christ.

And it was in this foundry and workshop that something happened which for ever established their place in history.

This, so far as we can tell, is the exact spot on which money was invented, the exact place from which all evil - or if you like or all blessings - spread through history and across the world. For this is the site of the metal workshops where the very first of these - coins - money in what is still to most of us its most familiar form, was minted on the orders of the King of Lydia.

But how did this come about and why here ? The answer may lie in this river - the Pactolus. It literally flowed with gold, washed down from deposits up in the mountains. It made Lydiaís king - most notably Croesus - fantastically wealthy, but sadly not me ! The river gold wasnít pure So, the kings stamped their sign on the good pieces, like a hallmark. Today the people are poor; but their great invention paved a road to riches for half the world.

That road, the trade route from Asia to Europe, emerged next at Ephesus, then a rich commercial port which today bears the stamp of successive colonial masters from around the Mediterranean. From here the Lydiansí idea would spread. It would begin to be used as the Lydians never had - to create the worldís first cash-based economy. Every aspect of life would be affected. That future lay west, across the sea.

The Greek islands and the coastal settlements around the Aegean, now so beloved of modern tourists, were once a series of independent states. They traded together and spoke the same language but politically they were fiercely independent. That civic pride was most clearly expressed in their coins.

Prof Andrew Meadows

States were starting to form themselves into things we would now recognise as political entities, people were starting to think of themselves as citizens of particular states and those states were starting to take on economic activities. They were starting to have to make occasional payments and this may well explain why different states started needing coins.

They all came up with badges that somehow they thought represented their city state so for example Corinth picked on a myth that was partly set in Corinth involving the winged horse Pegasus, the island of Aegina just off the coast of Athens came up with a turtle, Thasos an island in the northern Aegean came up with a rather nice design of a satyr carrying off a nymph, and of course most famously Athens with the owl on the reverse of her coins.

Peter Jay

Athensí coins signalled her wealth. It was the ships based at her port, the Piraeus, that made her a great sea power. And as her influence grew, another unique concept was maturing - a radical new philosophy with far-reaching consequences.

The people of ancient Athens had this great idea, really unknown since the first cities and states were formed. A society could be run just for the benefit of its citizens; and it could be run BY the people. Not yet ALL the people. Women, slaves, foreigners, children didnít yet count; But it was an idea that would change the world.

Athensí enduring reputation as the cradle of democratic government still draws people today. The star attraction is the Parthenon, which was both a temple and a Treasury for the Cityís money. That money paid jurors and councillors, built a navy and maintained the army. These were collective acts, made on behalf of and approved by a citizensí majority.

Prof Andrew Meadows

You could well say that coinage and democracy are fundamentally inter-linked. It is difficult to imagine a democracy functioning as the Athenian democracy did without the existence of coinage.

Because Athens was a radical democracy and paid people for performing the functions that a democratic state required of them, that is serving the law courts, serving in the counsel, serving the assembly, coins were needed in large numbers. But they were also needed in small denominations. This of course meant a lot of small value coins entering circulation and a lot of people carrying coins in a way that perhaps we would recognise today as a society that was monetised.

Peter Jay And nowhere did that coinage circulate faster than it did here: in the market place, called the Agora, now being excavated in the heart of Athens. This team is led by John Camp, of the American School in Athens, which has worked on the site since the 1930s. Theyíve rebuilt one of the marketís arcades. It would once have been full of people shopping and gossiping.

Beneath it, lies a basement full of Athenian treasures.

Prof John Camp

The agora in most Greek cities was basically the centre of town in all respects, political, commercial and social. This is where they came to gather and meet their fellow citizens. Itís the heart of the city. It probably would have been pretty crowded and pretty lively. And round all sides of the square youíd find the buildings you needed to run the city on a day to day basis, the senate building, the archive building, the magistrates office, the law courts, the mint, pretty much everything you needed was somewhere around. And if you were an Athenian citizen you probably had business here of one sort or another virtually every day. In the immediate vicinity we hear of book-sellers, we hear of fish-mongers, we hear of perfume-dealers, there are wine shops. All these are either attested in the written sources or weíve found the physical evidence in the excavations. So anything you wanted to buy youíd come somewhere to this area.

Peter Jay

Thousands of artefacts show the extent of the markets business. These jars which would have been filled with olive oil or wine. Visitors from other city states were said to be agog at the sheer spectacle of the Athenian Agora, - unlike anything the ancient world had ever seen. But itís bustle was well ordered with a strict code to ensure fair dealing.

Prof John Camp

The market place was controlled in that there were weights and standards, there was a bureau of standards. The quality of the coinage had to be maintained and so provisions were made to make sure the silver circulating was of full value.

This law here for instance which dates to 375 BC establishes an official tester to sit in the market place on market day and check any dubious coins. You could bring a coin to him and he would either validate it, in which case it remained in circulation or it would be deemed of less than proper value in which case it would be removed from circulation. There are no specific provisions for punishing the merchant or individual trying to pass the fake coin but if the magistrate in charge of this procedure fails to do his duty he can be fined 500 Drachmas which is more than a yearís salary and the public tester, who was a slave, if he failed to do his job properly he could be flogged with 50 lashes. So the punishments were serious as were Athenian attitudes toward maintaining the purity of the silver.

Peter Jay

Athens grew rich on more than just trade; and her domination of the Aegean was due to more than just good seamanship. In the country-side, under these unassuming rocks, lay Athensí ace-in-the-hole: a massive silver mine. Its ore was extracted by an army of slaves working in dreadful conditions.

To this day thousands of mine-shafts around here reach a hundred metres down into the old silver deposits. In their heyday they supplied Athens with three thousand tons of silver over about two centuries. And that was a fortune in anyoneís language.

Todayís fish market in Athens looks much the same as it did two and a half thousand years ago. But the ancient Athenians had very different attitudes to business. They thought it was wrong for traders to raise prices just because the catch was meagre. Profit was suspect.

Indeed, useful as money was, people saw it as dangerous. Aristotleís philosophy may be Greek to many of us; but we can understand his warning that money is the one human craving that is never sated. For Greeks, who believed above all in moderation, such unbounded greed was debasing.

But it wasnít only philosophers who debated these issues, as Richard Seaford knows. Heís on his way to see a play by Aristophanes - a popular playwright of the time. Its called Wealth and itís very much in tune with what ordinary Athenians felt about money.

Prof Richard Seaford

Aristophanesí comedy the Wealth is one of the very first texts about economics. It may seem surprising that one of the first texts on economics should be a comedy, an allegory but there it is. Itís about the distribution of wealth. Itís about the relationship between wealth and other values.

What the Greeks had was one thing, coinage, silver coinage for the most part, which they used as a universal means of exchange and payment and as a store of value. So they were aware of this rather special thing called money which the Egyptians or the Mesopotamians werenít aware of. Itís hardly surprising therefore that the Greeks were the first people to think about it, they were the first people who had it. It is interesting that they do think about it and about the dangers it presents and about its nature really quite early on in their history.

In the play Wealth is a blind man who gives out money without any thought for the consequences. The other characters try to put things right with sharp comments about everyoneís thirst for wealth.

Poverty also stalks the play. Fear of her makes people work. She says that in a world where everyone had equal amounts of money theyíd be no incentives to do the difficult things.

Prof Richard Seaford

The Greeks were very aware as we are of the dangers of money. Of how money can persuade people to do terrible things. People will pursue money rather than justice or friendship, how money can divide families in disputes, and how some people never get enough of money.

Alas, thereís nothing honest left in the world Love of money overcomes us all.

Peter Jay

The sun soon set on Athensí golden age. Her ideas would live for ever; but others states would have to find the way to provide the peace and stability that eluded her.

Romeís power came from its swords and its legions. Success in battle led to huge gains in territory from North Africa to the Middle East to North West Europe. Riches, slaves and plunder came in abundance. Violent conquest was followed by order, law and bureaucracy. And where Romeís military might went, its coins went too, paying the armies, lubricating trade and returning to the centre as taxes - to indulge the pampered Roman

To understand its scale I was told there was one place I must go.

Andrew, to my eye itís a lot of old ruins it could be almost anywhere, especially in the Mediterranean area but where actually are we, whyís it here?

Prof Andrew Wallace-Hadrill

These are very special ruins. Weíre at Ostia at the mouth of the Tiber near Rome and this is the key point at which the resources of the Mediterranean converge.

Weíve got the sea just out over to the west there and to the north in front of us is the River Tiber and that is they key link, the river Tiber that goes twenty miles upstream to the city of Rome.

Peter Jay

What was the scale of the economic traffic that passed through this port between Rome and the whole Mediterranean and its empire?

Prof Andrew Wallace-Hadrill

Itís an absolutely gigantic scale. Weíre talking about hundreds of thousands of grain alone coming to Rome. Of those certainly tens of thousands are being stored annually in warehouses in Ostia alone.

Peter Jay

And did it have a political and strategic importance for the government, for emperors over and above its economic importance?

Prof Andrew Wallace-Hadrill

An enormous strategic importance because of the vital importance of keeping the people of Rome happy. This is the biggest city in the empire, itís the biggest city that anyoneís ever heard of.

Peter Jay

That city needed food, and it relied on private enterprise for a steady supply. The traders grew wealthy; and on the proceeds they built Ostia. To the uttermost frontiers of the Roman world which stretched two and a half thousand miles from Mesopotamia to Hadrianís Wall here in Northumberland the advancing legions sucked economic life in their wake. Trade in grain and other goods flowed outwards from Italy. Settlements and cities sprang up. And money to pay the soldiers to man the ramparts was pumped all the way from the centre to the furthest fringe.

This wall in this incredibly bleak spot actually is the northern frontier of the Roman empire. Within those frontiers was stability and prosperity, most of the time anyway. Beyond were the barbarians and they had to be kept out.

Finds from along the wall are kept safe at Newcastle university. They show just how Romeís trading system flourished.

It wasnít only essentials like grain and wine that reached these remote corners of the empire. All kinds of beautiful and valuable luxury goods were being bought and sold.

Lindsay Allason Jones

This is just a range of some of our small items, but although theyíre small they tell us an interesting story about the imports from all over the Roman world to the Hadrianís Wall area.

Peter Jay

So these things were not made in Roman Britain?

Lindsay Allason Jones

No itís very unlikely that they were. The Negro head flask here for example although itís west African would have been made in Egypt in Alexandria. Then we have the bronze patura here which would have been made in Campania Italy The other objects are even more interesting because the gold fingering would have come from one of the Greek provinces, the intaglio here is rather large and is made of Indian sardonyx.

Peter Jay

I came from beyond the Roman empire? Lindsay Allason Jones

Indeed so and this also itís made of ivory unfortunately we donít know if itís Indian or African ivory.

Peter Jay

So Lindsay does this mean that the Roman empire was one economy and that somebody living up on Hadrian wall, a soldierís wife could order any item from the other end of the empire and beyond.

Lindsay Allason Jones

Yes, it wasnít the Argos catalogue but excavations have shown objects which have come from really quite a long way away.

Peter Jay

It was trade that relied on the common coinage of the Empire

Lindsay Allason Jones

I suspect this is either a hoard from a commanding officer or it is the actual supply money for a camp.

Peter Jay

So he or any soldier who was paid in these could take it all the way to the other ends of the empire?

Lindsay Allason Jones

Any coin minted anywhere in the Roman empire was equally as valid in any other province in the empire.

Peter Jay

In the heartlands of that empire, one product dominated the export trade. Wine. On the flanks of Mount Vesuvius once lay the volcanic ash that destroyed Pompeii. Now vines grow.

They are directly descended from the strains used in classical times. A Roman vineyard has been re-planted. Wine-grower Piero Mastroberardino created it.

He studied the ancient way of making wine. The methods were recorded by classical writers such as Pliny; and Pieroís family have got old manuscripts of his works dating back hundreds of years.

Piero sees another link between the ancient world and his business today, the system of law which meant that a producer could ship his goods to the far end of the empire knowing that he would get paid.

Piero Mastroberardino

The similarities of the way I trade are that I am governed by laws many of which derive from the Roman times. We work within rules and regulations that are part of a legal system and that system is descended in part from Roman law.

Peter Jay

The streets of Imperial Rome at the height of its power may well have been as relaxed as they seem today. Markets boomed. Roman citizens prospered. Rome could enjoy its wealth and its public magnificence. But endless fights over the succession and inflated military spending undermined the Empire. Wishing wouldnít pay the army. One Emperor after another was tempted to tinker with the coinage - the Roman denarius.

For more than two centuries Roman emperors had been trying to make their money go further by putting less and less silver in each coin and for a while it worked the emperorís head on the coin being enough to prove its value. But as we found in Yap money is what people believe is money and when in about A.D. 300 the emperor drew attention to what was going on actually be putting more silver back in to each coin, that belief was undermined, confidence collapsed and inflation soared.

Diocletian knew inflation was bad, so being a practical man he banned it. You may wonder how? Very simply, anyone who broke the ban was executed . Why didnít we think of that?

With his price edicts posted all over the empire, Diocletian tried to restore faith in the currency by sheer force of will. But the cost of equipping and feeding the army didnít come down. No-one waffled about supply and demand. Instead, greedy merchants were blamed for the increase in prices, just as in ancient Greece; and come to think of it, just as in much more recent times.

Lord Hattersley

Peter, how nice to see you.

Peter Jay

Very good to see you.

Lord Hattersley

What are you doing here?

Peter Jay

I was reading, youíd enjoy this, about Diocletian where he introduces his edict, díyou remember this, it was about 1700 years ago he laid down maximum prices for all the necessities for life and said that anybody who charged prices above that level would be executed.

Lord Hattersley

I wish Iíd had that power twenty years ago when I was trying to lay down price edicts for the British economy. Not very successfully.

Peter Jay

Remind me what exactly was your title then?

I was called Secretary of State for prices and Consumer Protection, I think the longest title in government, ever in government.

Peter Jay

Cast your mind back in imagination obviously you were not there 1700 years ago, but cast your mind back in imagination to what Diocletian might really have thought when he issued his edict which Iíve described to you. what do you think that he probably thought would be the effects of this?

Lord Hattersley

Iíve no doubt that Diocletian thought it would work. Because he was an authoritarian and had supreme power and he really believed he could chop peopleís heads off if they charged too much for a bushel of wheat or too much for a hard dayís labour. We never believed that authoritarian policies would work in a democratic society. I guess they wouldnít work in his either because the thing was too diffuse - people operated on the black market and would have held back goods and services. I suspect with Diocletian it worked to a certain degree because half that theory is dealing with public perception... as you know economics is 50% psychology and 50% other things.

Peter Jay

Diocletian did succeed for a while. But decay and ruin soon overtook his successors

Northern tribes pushing south put the Empire under growing strain. Invaders were bought off with treasure and land. Tax and booty fell away. The army could not be paid.

It was time to abandon outposts, like Britain.

Dr Jeremy Paterson

In the end I donít think they could pay for it. And they could not meet the new threats. Itís as much... I once thought of the Roman empire as an impossibility. Itís not that it worked for a couple of hundred years and then something went wrong. It was that the reason that the empire held together and that frontiers held was they didnít come under serious threat. When that happened in the 200s and 300s this system collapses - itís very fragile.

Peter Jay

And within a century Law and order broke down. In Britain even coins disappeared. Prosperity evaporated; and people learned the hard way that good government does matter. The sun went down on Roman civilisation; but money was too well established as an idea to die out

As happened in Yap it would be used everywhere for everything. John Tharnganís dream of preserving Yapís stone money against the mighty dollar underlines the biggest lesson I have learnt along this road to riches - that money, as well as being useful, is political. In other words it says who you are.

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