Alexander III Conquest

Scholarship regarding the economic effects of Alexander III’s conquest mostly agrees that because Alexander minted such large quantities of coinage in such a short period of time, he effectively inflated prices across the entire Mediterranean. This idea is supported by the Quantity Theory of Money, which states that an increase in the money supply will create a proportional increase in the price level, as the velocity and real value of transactions remain constant. Despite the fact that this theory was developed for the fully-integrated economies of the modern age, it has been directly applied to an ancient economy that existed from 330-290 BC. Yet, many other elements of ancient economies, which were by no means fully-integrated, may also
While the supply of coinage in the market did increase substantially over the course of Alexander the Great’s conquest, the concurrent economic growth and transformation of the ancient economy, along with the timeline over which new coinage was introduced, served to temper the effects of inflation at the end of the 4th Century BC.
In Asia Minor, Alexander gained access to stupefying amounts of gold and silver that was eventually minted as his new coinage, fueling the argument for the period’s heavy inflation. Though the literary evidence presents contradictory figures, Alexander seized an estimated 180,000 talents from the Persian Kings in gold and silver (Reger 471). This figure is nearly twenty times the 9,700 talents Athens accumulated in the early 440s (Davies 80). This wealth arose through
Namely, these coins entered the Mediterranean economy through royal expenses. In Macedon alone, government spending was substantial. First, the Macedonian government, like any other, had inevitable expenses: its servants’ salaries, construction and maintenance of government buildings, organization of the great religious ceremonies, etc. (Le Rider 27). Antipater, Alexander’s appointed caretaker of the homeland, was also responsible for maintaining the king’s authority and sending reinforcements abroad. In the eleven years from April 334 to June 323, he protected the Greco-Macedonian Coastline from Persian offensives, repressed Memnon’s attacks in the Aegean Sea, and put down a revolt by the Spartan King Agis III, feats which required substantial military spending (Le Rider 45-46). He was also responsible for training, equipping, and supporting the mercenary reinforcements sent east (Le Rider 49). In the rest of the empire, the establishment of over 70 towns also required financing (Davies Glyn 83-84). Using coinage already circulating in Egypt, Cleomenes spent considerable resources and money building Alexandria (Le Rider 200). Money also flowed out of the royal treasury as gifts to important officials in new territories (Reger 464). In turn, these new towns were filled with young families likely receiving military incomes,