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The Greeks invented the gold standard – first in Lydia and reinvented it later in Athens.
The Greece of the sixth century BC, however, was a place of economic and political turmoil. Plutarch observed: "Athens was torn by recurrent conflict about the constitution. The city was divided into as many parties as there were geographical divisions in its territory. For the party of the people of the hills was most in favour of democracy, that of the people of the plain was most in favour of oligarchy, while the third group, the people of the coast, which preferred a mixed form of constitution somewhat between the other two, formed an obstruction and prevented the other groups from gaining control.”
Solon of Athens tried to bring order out of this chaos. As Nathan Lewis wrote in Gold: The Once and Future Money:"The failures of soft-money experiments in the ancient Greek states no doubt inspired Solon of Athens, who soon after he assumed power in 594 BC, struck a new coin and announced that anyone who debased the coin -- including himself -- would have his hands chopped off. In 508 BC, democracy was established in Athens, and the city-state enjoyed a long period of economic and social advancement. The Athenian 'owl' was used throughout the Mediterranean, as the Athenians scrupulously maintained the coin's integrity and refused to devalue it even when the Treasury was depleted in times of war. It was widely accepted currency for six centuries."
Time has not been kind to Greece and Greeks. Not all Greek leaders have been as wise as the Solon of Athens. John Lennon, with a little help from his friend Paul McCartney wrote a song first recorded in 1965, back when the Bretton Woods agreement was still in effect :
There are places I'll remember
All my life, though some have changed
Some forever, not for better
Some have gone and some remain
The current fiat money system that is contributing to Europe’s and Greece’s financial problems is one of those things that have changed “not for better.” The gold standard that existed from 1879 to 1914 is one that few may remember, but it is the system that the Greeks invented and the world should return to again. As John Mayer sings:
We don't have to wait till tomorrow
We don't have to wait till tomorrow
We don't have to wait till tomorrow
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