money in middle earth

[Rumil]

One source of cash, or precious metal, for the Shire must have been derived from their dealings with the Dwarves.

The Dwarves often travelled through the Shire and seem to have bought agricultural produce from the hobbits, probably sometimes by barter for 'ironmongery' of various types, but conceivably with coins. The Dwarves were not farmers and had a similar sort of relationship with the men of the second age. I seem to remember this from UT where Gandalf explains his dealings with Thorin and 'of Dwarves and men'.

[Kuruharan]

I would presume that if someone like Bilbo came back to The Shire with a lot of gold that was not in the form of Shire currency then he would have had to exchange it in some way.

Not really. Historically speaking, people were not always nearly as finicky about the…err…”national origin” (an extremely clumsy expression, but I don’t know how else to put it) of currency. This was because the issue at stake was the value of the metal itself (often easily expressed in weight or comparison to other metals), not the relative credit of the coin’s nation of origin. The gold would have been gold and spendable in a money economy that had experience with gold (and I am presuming that the Shire did based on general common sense and the points made by Rumil) whether the coins happened to be stamped with the head of Thror, King Under the Mountain or stamped with the head of Isumbras III, Thain of the Shire.

[Lalwendë]

Originally Posted by Kuruharan

Not really. Historically speaking, people were not always nearly as finicky about the…err…”national origin” (an extremely clumsy expression, but I don’t know how else to put it) of currency. This was because the issue at stake was the value of the metal itself (often easily expressed in weight or comparison to other metals), not the relative credit of the coin’s nation of origin. The gold would have been gold and spendable in a money economy that had experience with gold (and I am presuming that the Shire did based on general common sense and the points made by Rumil) whether the coins happened to be stamped with the head of Thror, King Under the Mountain or stamped with the head of Isumbras III, Thain of the Shire.

That's true. Archaeological finds of money often contain a variety of coins, from a variety of countries. Just because say a Saxon hoard includes say Italian coins, does not mean those Saxons went there, just that these coins had come to them through trade of other people. Probably bad examples to contrast, but there you go! It was the actual quality of the money that counted, which is where that image of someone biting a coin to see if it is real comes from.

I was thinking of what might happen if someone came to The Shire with actual bullion. Obviously a lump of gold would be less useable than coins, except maybe if a Hobbit wished to buy a new Smial. Coins, even if they are not all of the same Mint, can be measured for what they are worth, and are obviously easier to use on smaller purchases - try knocking lumps out of a gold bar to pay for your groceries, it's not a very accurate way of paying!

There's also another question to raise. If there was not a Mint in the Shire, how could the flow of cash be controlled? Too much cash in the economy would cause serious inflation, so would Bilbo's return with 'treasure' have raised eyebrows in more ways than one?

[davem]

Originally Posted by Lalwendë

There's also another question to raise. If there was not a Mint in the Shire, how could the flow of cash be controlled? Too much cash in the economy would cause serious inflation, so would Bilbo's return with 'treasure' have raised eyebrows in more ways than one?

Maybe this is why Bilbo refused to take a full share of the treasure & only took two small chests....

[The Saucepan Man]

Here's another thread discussing the place of money in Middle-earth, which also includes a discussion on the likelihood of trade between different realms:

Money!

As for my own contribution to this thread, I shall take the liberty of quoting myself from that earlier thread:

Originally Posted by The Saucepan Man

Of course, it does not follow from the existence of trade that any form of currency existed in ME. Goods could be bartered. But there is some evidence for the existence of currency. The auction involving Bilbo's furniture has been mentioned, and auctions tend to involve goods being exchanged for currency, rather than bartered for other goods. Also, the Trolls that Bilbo and the Dwarves encountered had a purse, the purpose of purses generally (although not exclusively) being to carry coinage, and their hidden horde included pots of gold coins.

I doubt that a society as complex as that of Gondor could function without some form of currency. And it seems that the Shire probably had some form of currency too. I hardly imagine, however, that there was any form of exchange rate between currencies of different realms. Possibly, there was a universal currency, perhaps consisting of gold, silver and copper coins, although that raises the question of where they were minted. Could anyone with access to the relevant precious metals and the necessary technology have minted coins which would be acceptable elsewhere in ME? It seems more likely to me that realms which operated on the basis of currency would develop their own currency, signifying the coinage as their own by impressing upon it the likeness of their ruler. I would therefore speculate that some (although not necessarily all) realms did have some form of currency of their own. However, it is likely that trade between different realms mostly took place by barter.

[Formendacil]

Another thing to note, too, is that Gold was probably not the only metal used in the making of coins. We know, from the silver pennies that Merry received from Butterbur, that silver was also in general use. And, since I believe that Merry received ONLY 18 silver pennies in compensation for 5 ponies, there must have been another, lesser, denomination for smaller, more everyday purchases. Looking at history, it seems safe to assume that these would have been copper, or possibly bronze (I've never heard of bronze coins, but I assume that they COULD exist...).

[davem]

Just found this essay by Michael Martinez on Merchants in Middle-earth. He makes reference to something Tolkien wrote for the Appendices of LotR which had to be excised for reasons of space.

From the essay:

Just prior to The Lord of the Rings' publication J.R.R. Tolkien was forced to condense the extensive material he had prepared for the appendices. Among the excluded passages which were only published in The Peoples of Middle-earth was a brief but fascinating section detailing the names of money used in Gondor. The tharni, we are told, was a silver coin, the fourth part of a castar. The tharni may thus have been equivalent to the silver pennies of Eriador.

The Elven equivalents for tharni and castar were canath (from kanat-, 'four') and mirian (from mir, 'a jewel or precious thing'). "The Etymologies" provides a root-word, mbakh, meaning 'exchange', from which words for 'trade', 'tradesman', and 'commerce' were derived in Qenya (the precursor to Quenya). There were also words for 'pedlar' and 'ware' in Noldorin (Sindarin).

Unfortunately I'm still trying to find the exact part of Vol 12 that Martinez refers to. I'll keep looking - unless someone beats me to it.