# How did finances work in Middle Earth?



## baragund (Mar 27, 2003)

*Did banking and finance exist in Middle Earth?*

This is something I have been curious about for some time and I would enjoy hearing the group's thoughts on this. As you know, Tolkien made only fleeting references to money and wealth as a day-to-day commodity throughout The Hobbit and LOTR; at The Prancing Pony, Frodo and the other hobbits had to pay for Bill the pony in "silver pennies". Who administered this currency? Did each country have it's own? Is there a dwarvish Alan Greenspan in the depths of Erebor setting monetary policy for all of the free peoples of ME?

Personally, I like to think the dwarves would take the lead in these matters. They seem to be the ones most interested in the creation and gathering of wealth. Banking and finance would be a natural fit for them. I also like to think that the elves somehow rose above the need for money and were able to create some kind of Utopian society where money was not needed. Men's pursuit of wealth through the exploitation of Middle Earth, particularly in the Second Age when the Numenoreans really plundered ME of natural resources and the like leads me to think that they would have created some kind of banking system as well. 

What are your thoughts? Also, does the group enjoy discussing "real world" issues like this applied to ME? If so, one could have similar discussions on everything from government to public works, land ownership, social classes, commerce, etc. etc.


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## Inderjit S (Mar 27, 2003)

Yes-I belive Dwarves had quite a lot of financial responiblities, all those razors to buy and beard to shave....

Aside, from poor jokes, 'The Hobbit' tells us how the Dwarves of Erebor exchanged work and training for food, and 'of Dwarves and Men' tells us that the Longbeards of Khazad-dum held alliance with the Marahican tribes surronding them, and they had similar exchanges. The Dwarves rarely cultivated theri food, perhaps because of Yavanna's words to Aule on their dislike of nature, so this can be seen as some kind of 'financial exchange.'

In the 'Naugflauirng', a sort of pre-cursor to the Fall of Doraith, the Dwarves demanded a price for their work on the Silmaril+Necklace, but were insulted and given little reward be Tinwelent (pre-cursor of Elwe, but if i made a mistake then correct me, I haven't got the books with me at the moment.)


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## Feanorian (Mar 27, 2003)

I doubt there was a banking system, as Inder said things were often exchanged for goods and services. And of course there was gold but the price of things in silver and gold probably came to what the tradesmen said and you could probably bartar(sp?) from there like modern flee markets. Then again bars and inns such as The Prancing Pony most likely had set prices for rooms, drinks, food, etc....


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## BlackCaptain (Mar 28, 2003)

Trading of good was only used... Or trading of learning.

Dwarves traded thier smith skills for lore skills and such with Elves back in the first age. It was simply a matter of how important and valuable are the things you are trading? That is how you traded in ME... 


Say Elf A wanted a mithril coat from Dwarf A. Elf A offers Dwarf A tengwar lessons and elvish lessons to enhance his future dealings with Elves. In exchange, Dwarf A gives Elf A the Mithril coat...

Im not sure if this is accurate, but thats generaly how things went down...


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## baragund (Mar 28, 2003)

Everything you say is true, but what about the reference in LOTR where the hobbits paid for Bill the pony in "silver pennies" at The Prancing Pony? Do you think that was a Shire currency with the likeness of, say, Bullroarer Took stamped on the coins? I also seem to recall the Trolls treasure as well as Smaug's hoard in The Hobbit including a lot of coins as well.


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## Nenya Evenstar (Apr 1, 2003)

I would like to believe that the Dwarves had monetary currency, considering that they mined the gold. I think that Men would work mostly with monetary currency as well, except in smaller towns and villages where there was probably a mix of money and trading. Hobbits seem to be the type that would function with a mix of both trading and money (since we know they had money and since they seem more of the "trading type"). I would like to think of Elves as having a Utopian society amongst themselves and only resorting to money when dealing with Men and Dwarves. Money seems to be a "mortal" thing. I'd think that amongst themselves the Elves would be able to live without the need of any type of buying or selling, but when dealing with other races they wouldn't have a choice but to follow their lead.

So yes, I bet there were banking systems -- probably simpler ones in The Shire, more complicated ones with the Dwarves, and even more complex ones in large cities such as Minas Tirith and Dol-Amroth.


> Also, does the group enjoy discussing "real world" issues like this applied to ME? If so, one could have similar discussions on everything from government to public works, land ownership, social classes, commerce, etc. etc.


 I actually enjoy this a lot.


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## Lantarion (Apr 14, 2003)

Yes the Númenóreans were a bright bunch, I think they must have had at least some frugal system of currency, which then was adopted by the 'wild' Men who they met when establishing havens and cities like Vinyalondë.
I agree that the Dwarves seem(ed) to have more resources and need to create a currency of their own.. But then which party, the Númenóreans or the Dwarves, introduced money into the Shire? Or were they so independent as to create their own system? Very difficult questions.
WHich I will not venture to answer now (it's getting a little late here).


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## Eledhwen (Apr 14, 2003)

I got the impression that gold was always currency, also mithril (Bilbo's mail coat=value of the Shire) and, possibly, gems. No doubt barter also had its place - the slate at the Green Dragon could probably be as easily settled in chickens or vegetables (or labour?) as any other ME currency. Like Barliman, each pub may have brewed its own ale, so it was all less complicated. I would also expect salt and skins to have a standard barter value.

In BoLT, the Dwarves worked the hoard of gold from the dragon Glomund (Glaurung) for Tinwelint (Thingol) for a share of it (not honoured), which was probably the usual way of paying a smith or wright of any sort.


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## Eriol (Apr 14, 2003)

Grrr... I typed a big answer to that and it was lost. Sorry if I sound curt, but that is very annoying... Summarizing it:

1) Ordinary elves probably had trade, and needed money of some kind. Check Thingol and Thranduil. 

2) The most detailed description of "international trade" in the books is surely the arrangement between the Wood Elves and Esgaroth. I doubt the Dwarves or Numenóreans had anything to do with it. 

3) Some elvish communities (Lórien, and perhaps Rivendell) were isolated from the world, and therfore had no such thing as international trade. Nevertheless there were probably private property and therefore richer/poorer elves. However, there was plenty to sustain the whole society, since numbers were stable and the land cared for to the fullest extent. A "poor" elf in Lórien would not mind it at all. But even there something would be to dear to be given away. As an example, how much would an Elf offer to pay for Galadriel's strand of hair? Or Elrond's jewels? Not that Gimli would sell it, but this is an example of something material but priced, as opposed to food and drink (of which I suppose there was more than enough for everybody, so there was no price)

4) On the opposite side of the spectrum there would be communities with no idea of value detached from use, like the men of Forodwaith. These guys would despise coins, and enjoy jewels for their beauty only, not as a means of exchange.

5) Then there would be the vast majority of inhabitants of M-E: people who recognized that something can be valuable as a means of exchange. In this category metals are an obvious choice, being durable, easily recognizable, etc. etc. But the vast majority of inhabitants do not know enough mining craft or metalworking to make their own coins. This means that coins would not be "standard" money, and barter would be widespread. Barliman would probably accept ponies, or a sword, as payment...

6) In a category by themselves would be metal-working and mining cultures, mostly Dwarves and Numenóreans and their descendants (Noldor would fit here too, but they were not "a culture" in T.A. middle-earth, and had few dealings with other people). These guys would recognize the utility of coins as a standard of exchange, a fixed weight and size. they would probably do it. The silver pennies that Frodo used, and that were in circulation at the Shire, were probably a remnant of Arnorian coinage. Saruman probably paid for his weed with Gondorian coinage. And so on. If the size of the coins is standardized (no reason for it not to be in twin cultures as these) they would be interchangeable. And the main thing is that the average weight of a coin is universally acknowledged. If these conditions are met, there is no need for a Dwarvish "Alan Greenspan". 

Now, Sauron could attempt to create inflation, but I guess he did not know how this could wreck a country . Economy was not too developed as a science...

I suppose the default situation in T.A. M-E is similar to, say, a country outside the Roman Empire but neighboring it. Coinage would be accepted and welcome, but not demanded. Barter would be the ordinary way of trading.


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## Eledhwen (Apr 15, 2003)

> _Originally posted by Eriol _
> * As an example, how much would an Elf offer to pay for Galadriel's strand of hair? *


Slightly off the subject (but interesting to me, so hard luck!) I find the episode of Gimli's gift from Galadriel very interesting. FotR says that the Elves were astonished at this gift to the Dwarf, and so they should be, because Feanor himself pleaded often with Galadriel for a lock of her hair to use in his jewel-craft, but she would not give him even one strand. I don't think Gimli would have swapped his gift for any amount of other treasure. Remember him considering whether gold would be good enough to house it?


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## Eriol (Apr 15, 2003)

Sure, what I meant is that the object had exchange value. Not that Gimli would sell it, but perhaps after so many generations, an impoverished great-grandson needing food... or perhaps it is stolen and sold to an Elf... who knows? I was just saying that it was not like "heaven", without any trade or material want. They did not lack food or shelter, and probably they did not lack weaponry (good to be immortal and to have all the time in the world to get that...), but even so some things would be available only to some and not to all. And people would covet that.


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## baragund (Apr 15, 2003)

Eriol, thanks for the detailed response. It sounds very reasonable and it 'sits well' with my perception of Middle Earth. Some forms of currency had been developed to aid commerce, but much of it still relied on barter.

Regarding the silver pennies referenced in FOTR, I like to think The Shire might have been well enough established to create their own currency. They may have enlisted the aid of the dwarves of Ered Luin to operate their mint. After all, The Shire had been in existence for around 1400 years by that time.

Care to speculate whose bust would appear on the silver pennies? Bullroarer Took? the first Thain of The Shire? If it was Arnorian currency, one of the kings?


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## Eledhwen (Apr 16, 2003)

> _Originally posted by jimzeller _
> *Care to speculate whose bust would appear on the silver pennies? Bullroarer Took? the first Thain of The Shire? If it was Arnorian currency, one of the kings? *


I don't think they would feel the need to commemorate a leader on their coins - a habit that probably came from Rome where Emperors often claimed to be gods (any numismatologists out there?). Perhaps some Tengwar or Runic inscription with the value, and a stylised illustration of some sort. I'd go for Runic, because the coins were probably introduced into The Shire by passing Dwarves, and they began to circulate. I don't think The Shire had a 'mint'. If they did produce their own coins, it was probably tasked to a blacksmith or silversmith. 

Originally coins themselves had intrinsic value, being made of valuable metals, and were not mere promises as today's currency is. They were themselves, in a way, a more developed form of barter. It has always been a feature of society that, as the society weakens, so does the value of the metals in their coins. Our copper coins in England are now so base that they are magnetic! The same happened in the Roman Empire. As it declined, so did the quality of its coins. An exception occurred in Britannia, where the local Roman Leader, Carausius, was accused of piracy and, rather than go to Rome to face the music, declared UDI and made himself Emperor of Britannia. His first act was to produce new coins in gold and silver (guess where he got it from?) which, next to Rome's poor coinage, had a positive effect on the locals, and he stayed in power for 7 years (until murdered by his finance minister - such is life!).

If the Shire dwellers were to commemorate someone on their coins, I'd go for Bullroarer, and maybe Merry and Pippin for the 4th age (unless, of course, they wanted to acknowledge the new Telcontar dynasty).


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