Many industrial and technological advances owe their existence to war and the same is true for financial innovation. In late-17th century England, a financial revolution was triggered in part due to a large European war then underway. The need to fund wars sparked financial ingenuity in more ancient times too. The city-states of classical Greece and its environs often warred amongst themselves yet they maintained primitive governments. As such, they would ordinarily maintain no standing army, or at very least no more than a miniscule one. However, this meant that when war did break out, and ordinary citizens were enlisted as hoplites in hastily put together armies, the need to finance their campaigns required some quick and often creative thinking.


           Some of what is known today about classical military tactics survives through the writings of Polyaenus. He was born in the 2nd century AD and was a Macedonian living under the Roman Empire. Polyaenus was a lawyer and an orator; the two professions were far less distinguishable in the classical world than they would seem today.

           However, his most relevant work for our purposes, Stratagems of War, was meant to be a guide to emperors and generals fighting to defend or expand their kingdoms. The book covered earlier Greek military strategy but a surprisingly large portion of it was dedicated to describing how wars were financed in the classical world. 

           Some of the means of funding armed campaigns Polyaenus recounted are not particularly intriguing. As an example, the Romans were known for devaluing their coinage to fund wars when taxation proved insufficient and unsurprisingly, the earlier Greek rulers Polyaenus wrote of resorted to the same tactics. However, there were still other aspects of military finance the Greek kings, statesmen, and generals of centuries earlier used that were novel. A common thread between all these schemes was that they required some amount of sleight of hand, a feature that makes a few of the approaches Polyaenus described as humorous as magician tricks.

Debased Coinage

           Of course, one straightforward way of raising money involved devaluing the coinage. This technique was a favorite of ancient tyrants. While most classical Greek city-states used coins made of locally-mined silver, their composition and face values were occasionally tampered with. Seigniorage revenues were also engineered out of the system of precious metal coins by setting their face values at a premium to the metal value by means of a fee charged to those wanting to exchange bullion for coins. Further, when a city was conquered, its new rulers would often demand that its coins be re-struck into the money of the victorious country. However, the conversion would come at a cost for the holders of the old money, a devaluation to the victor’s benefit.

           This income would occasionally be multiplied by periodically requiring that all holders of money have their coins reminted. Various autocratic rulers of Greek city-states required that old coins be re-struck into new money of lower metal content per unit of face value. They used any profits generated by the scheme to fund their martial aspirations.

           At least one ruler, Hippias, who ruled Athens in the 6th century BC, came up with an amusing twist to this technique. He demanded that all money be handed over to the state for ‘reminting’. However, he did not devalue the currency but simply returned the same old silver coins after charging for their ‘reminting’ into supposedly new coins. Moreover, shortages of money with which to pay soldiers occasionally required that generals improvise while on campaigns. Aristotle recorded that Timotheus, an Athenian general of 4th century BC, paid his soldiers in hastily prepared copper coins, a kind of military scrip, but promised to eventually exchange these for silver.

           Monetary improvisation was a hallmark of military finance in the classical world. Polyaenus describes a situation where certain documents were drawn up to replace metal coins in commerce. He explained that the same Timotheus was successful in persuading merchants “to treat his documents as coinage. He assured them that the documents would all be redeemed with money. The merchants trusted in the general’s honour”. Polyaenus appears to describe the ‘documents’ here as something between money and a loan; if interpreted as more like the former, this could be an early example of an improvised paper money, centuries before paper money is said to have been invented in China.


           Naturally, when in need of quick money there was always the option of turning to conventional loans. Indeed, classical Athens was home to money lenders, including the slave-born banker Pasion. To call Pasion a banker does not seem inappropriate. Not only was he a money changer and lender, of which the classical world was full, but there is evidence that he funded his lending, at least in part, through customer deposits. This was centuries before the more modern history of deposit banking began in early-modern Europe. For his services to Athens, the humble-born Pasion was made a citizen.

           Timotheus was said to have relied on money borrowed from Pasion to fund his war against Sparta and some other commercial endeavors. At least four thousand drachmas were lent to him in total. Timotheus’s failure to pay back these debts resulted in a 4th century BC bankruptcy case whose records survive to today.

Leukon I of Bosporus

           In one of his more curious stories, Polyaenus describes the financial maneuvers of King Leukon I of Bosporus. Leukon was the tyrant who ruled the Bosporan Kingdom, which included modern day Crimea and nearby parts of what is now Russia, the northernmost extent of the Hellenistic world. As king, he campaigned against other cities along the Black Sea coast.

           Leukon may have resorted to some external borrowing to finance these wars; his family was well acquainted with Pasion and his bank back in Athens. Regardless, it is certain that he made use of the other tried and true techniques. He launched a monetary reform which ordered currency be reminted; each new coin was struck with twice the face value for the same amount of metal. He then gave half the coins back to the people and kept half for himself, a rather extreme devaluation.

           Whether for this or some other reason, many of Leukon’s subjects were unhappy with his rule. According to Polyaenus, the king became aware of a coup being organized against him. To defeat the conspirators, he borrowed large sums of money from lenders and merchants, pretending that he needed it to buy information about the conspiracy. Then, he gathered his creditors in his palace and told them that he depended on their security to defend his government, otherwise their money was lost. The lenders armed themselves to defend the palace and defeat the conspirators. Following the successful defeat of the coup’s organizers, Leukon’s creditors were repaid with the money they had lent. Such was Leukon’s trickery that he managed to find a roundabout way of hiring mercenaries for free.


           Leukon was far from the only leader of the era who faced occasional threats of insubordination. The Athenian general Iphicrates used financial incentives to keep his army in line. Iphicrates, a contemporary of Timotheus and Leukon, withheld parts of his soldiers’ pay as a means of encouraging loyalty. Should they cause him trouble, or if they deserted, the part of their wages kept in arrears would be lost. Promising to pay the soldiers’ accumulated wages after a campaign was usually enough to defuse any tension. This strategy was not all that different from that used by Leukon to stop the coup against him. Iphicrates essentially made the soldiers his creditors; like Leukon, he was using the borrower-creditor relationship to align incentives.


            Whether by borrowing money, debasing the coinage, or various other more creative schemes, the rulers of classical city-states and their military commanders resorted to new ways of financing war. That Polyaenus spent so much of his Stratagems of War describing these methods reveals an understanding on his part that finance matters greatly to successfully deploying an army or navy. This remained just as true in later millennia as it was in ancient times. Few would deny that raising and maintaining large armies are among the costliest endeavors that states assume. Though many of these more primitive means of financing war often relied on sleight of hand, where national survival or the rule of tyrants was at stake, desperate times called for desperate measures and those in power were happy to play along.

More from the Tontine Coffee-House

Read about how the Romans tinkered with their currency to finance wars. Also learn about how the War of the Grand Alliance led to the creation of the Bank of England and new ways of financing the English state.

Further Reading

1.      Demosthenes. The Orations of Demosthenes. Translated by Charles Rann Kennedy, vol. 5, G. Bell, 1901.

2.      Foster, Benjamin R., and Morris Silver. “Economic Structures of Antiquity.” Journal of the American Oriental Society, vol. 116, no. 4, 1996.

3.      Kroll, John H. “The Reminting of Athenian Silver Coinage, 353 B.C.” Hesperia: The Journal of the American School of Classical Studies at Athens, vol. 80, no. 2, 2011, pp. 229–259.

4.      Millett, Paul. Lending and Borrowing in Ancient Athens. Cambridge University Press, 2004.

5.      Polyaenus. Stratagems of War. Translated by Everett L. Wheeler and Peter Krentz, Ares, 1994.

6.      Pritchard, David M. “Public Finance and War in Ancient Greece.” Greece and Rome, vol. 62, no. 1, 2015, pp. 48–59.

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