FROM JOHN CARR IN ATHENS

Twenty-six centuries of change: an obituary for Europe's oldest currency

IN ITS heyday 2,500 years ago, the standard Attic silver drachma would buy a sheep or a bushel of barley. It was the hardest currency of the civilised world.

By AD2001, however, a drachma could buy — as a Greek television commercial pointed out recently — maybe a single strand of spaghetti. So, with apologies to drachma-users from Pericles to Onassis, it is time to retire Europe’s oldest currency.

The drachma’s pedigree is impressively long, but the lineage is by no means constant. Rather like the Greeks themselves, the drachma’s modern resurrection in about 1830 was an effort at self-redefinition along classical Athenian lines.

The slogan about its being “Europe’s oldest currency” is a half-truth at best. Yet the true half remains impressive, as the drachma’s origin virtually coincides with the invention of minted coinage. That gives it an age (including the dormant periods) of about 2,650 years.

Coins as currency were invented in about 700BC in Lydia, a neighbour nation to the Greeks in Asia Minor. Lydia’s money-grubbing King Croesus got Greek traders interested in metal money, which soon spread to the trading cities of Greece proper, such as Athens, Corinth and Aegina. The Athenians of that era employed the obol as a currency, which was nothing more than a small iron rod. About six obols could fit into the average adult grasp, and therefore six obols became the drachma by a rule of grammar. The word derives quite logically from the Greek verb dratto — to grasp.

Thus drachma in old Greek really means “the graspable”.

By 600BC, well before Pericles, the distinctive Attic drachma with the owl’s head stamped on it had become established as Athens’s unshakeable currency. It was made of 96 per cent pure Laurion silver and weighed a little over 4 grams.

Depreciation was remarkably slow — about 50 per cent over the following 200 years. Aristophanes tells us that in his day one drachma was the average daily wage of a skilled labourer. Eight drachmas would buy a pair of shoes, 20 drachmas a quality tunic and 160 drachmas a slave (child slaves were a bargain at 72 drachmas). A family of four plus slave spent 1,000 drachmas a year on living expenses.

Inflation ate into the drachma more quickly when the eternally warring Greek states accepted large quantities of Persian gold for their war chests. By the Roman conquest in 146BC, the drachma was ailing, and its eclipse in favour of the denarius appears to have been of so little importance that it is nowhere mentioned. For the next two millennia the Greeks traded in the money of whoever ruled them.

The drachma of King George I (1863) was made as identical as possible in size and composition to its Attic forebear. The conceit backfired badly, as throughout the 19th century the modern drachma could gain nowhere near the solidity or prestige of the ancient. Overspending and overborrowing precipitated a national bankruptcy in 1893. An English financial specialist, Edward Law, helped to save the drachma from huge depreciation. His labours kept the currency intact for 50 years.

It was not until the late 1940s, after almost a decade of war and civil war, that the drachma again inflated with a vengeance. As in other countries, it required basketfuls of flimsy notes with a lot of zeros on them to buy basic provisions. An astute Finance Minister, Spyros Markezinis, dealt with the problem Alexander-fashion by chopping off three zeros in 1953.

Artists and writers who settled on the Greek islands in the inflation-free 1960s and early 1970s marvelled at how far the humble drachma — like the olive a symbol of national frugality — could stretch. This happy state of affairs was gradually eroded by growing urbanisation and EU-fuelled prosperity.

Renewed inflation, which coincided with the return of democracy after a seven-year dictatorship, was brought under control only in 1997 thanks to determined supply-side policies by a Government that conveniently forgot its socialist origins. The “graspable” was able to live out its few remaining years in peace.