Maggie's Farm

The Greek drachma was originally defined as 1/6000th of a talent of silver (a talent was a unit of weight equal to about 56 pounds). But Solon, the leader of Athens at the beginning of the sixth century B.C., ordered the minting of 6,300 one-drachma coins from each talent of silver, an instant profit of 5 percent. (In fairness, it should be pointed out that setting the face value of the coinage slightly above the bullion value also helped safeguard the money supply, because people would not be tempted to melt down the coins for the metal content.) The profit from minting coins with a face value greater than the bullion value is called seigniorage, a word that clearly implies the sovereign nature of the power to coin money. 

But if the money supply soon came under the exclusive jurisdiction of the sovereign, the sovereign, all too often, became the money supply’s greatest threat. For while governments possess the power to coin money, they have always been hard-pressed to pay their bills—proof, if any were needed, that money and wealth are by no means the same thing.