Links. Monetary history.

1. Via Voxeu Jacques Melitz provides us with a more precise dating and geography of the origin of coins.  My take away: production of coins started around 630 BC, coins spread much slower than I thought (partly because denominations were large) and especially hubs of trade were late to adopt coins as they had other means of payment. It was very much a state led innovation used, among other things, to organize armies.
2. Jan Lucassen tells us, for a much later period (Netherlands, 1200-1940), how the state (again) solved the large denominations problem by producing ‘small change’. These small coins facilitated petty trade as well as the labour market. As producing small coins was not profitable, producing them could not be left to the market. This ‘coinisation’ of petty trade is nowadays called ‘deep monetization’ – mind that in the latter part of this period most trade was petty trade. Interesting fact: the Dutch VOC exported a billion of such coins to ‘The East’. Also interesting: different kinds of trade used different kinds of money – at the end of the eighteenth century there may have been as many as 14 of such ‘spheres’, all with their own markets and institutions and the like.  Small change seems to have been much less of a problem in the Netherlands than in the UK.
3. I’m working on the ‘loanable funds’ market in Friesland, 1537-1580. I’ve been reading a bit and, also using the data on Friesland which Paul Borghaerts unearthed and which Paul and I are starting to analyse, the next stylized patterns about pre-banking era rural lending and borrowing seem to emerge (at this moment: hypotheses!):

a) Since at least 1400 rural lending and borrowing was at least in some regions common and tied to the life cycle of households and families, which (though details show large regional variations) needed to borrow considerable amounts of money during some phases of their life cycle and lent money during other phases. Often, households borrowed to be able to buy a house and/or land.

b) After 1500 at the latest such credit markets can be found all over Europe: around Zürich, in the Black Forest, in the Vosges, in Flanders, Westphalia, the East of the Netherlands and many parts of England and France. For many areas we do not have any information but it turns out that once we look into this we discover extensive and lively credit markets everywhere.

c) Most lending and borrowing was local. Some of it (especially when people borrowed from family?) was however supra-local (i.e. lender and borrower lived further away from each other than can be travelled in one day)

d) As local ‘lending circles’ overlapped, while supra local lending and borrowing took place too, there were probably large areas, like the coastal zone of Groningen and Friesland in the north of the Netherlands, which were, as early as the first half of the sixteenth century, interconnected credit markets in the sense that there was a supra-local interest rate. Did this coastal credit market stretch all the way to Denmark?

e) A lot of lending and borrowing was based in the countryside. Towns sometimes played a decisive role but this was often the case when circumstances were special, i.e. in the case of new polders in the Netherlands (for instance around 1600) or the abolishment of seigniorial dues in Germany (first half of the nineteenth century).

f) Banks were next to non existent in these areas, at least until the beginnnig of the nineteenth century. But there often were middlemen, often quite literate officials. Using the information available to them often made this position quite profitable.

g) There may have been two distinct borrowing/lending patterns, both based upon the household. One was prevalent in labour abundant areas, where people borrowed money to buy land when children became of working age or (in the case of Edam, a coastal town in the Netherlands) when a couple married and had to buy a ship. In old age, land or ships were sold again and the proceedings were lent, to serve as a kind of pension. The other one pattern was more patrimonial and prevalent in areas were circumstances or economies of scale, like the necessity to own a number of horses to be able to plough heavy clay soils, more or less prohibited the existence of small farms. In such areas lending and borrowing took place when somebody died and one of the heirs needed capital to keep the farm together.

h) Which, in a long run perspective, of course leaves us with the question why people stopped lending to each other and started to leave lending to the banks.

Some literature:

Béaur, Gérard (2009), ‘Credit and land in eighteenth century France’ in: Schofield and Lambrecht, Credit and the rural economy pp. 153-168.

Cruyningen, Piet van (2009), ‘Credit and agriculture in the Netherlands, eighteenth – nineteenth centuries’ in: Schofield and Lambrecht, Credit and the rural economy pp.99-108.

Dehing, Pit (2012), Geld in Amsterdam. Wisselbank en wisselkoersen, 1650-1725. Hilversum: Verloren.

Fertig, Christine (2009), ‘Urban capital and agrarian reforms: rural credit markets in nineteenth-century Westphalia’ in: Schofield and Lambrecht, Credit and the rural economy pp. 169-196.

Knibbe, Merijn (2006). Lokkich Fryslan. Landpacht, arbeidsloon en landbouwproductiviteit in het Friese kleigebied, 1505-1830. Groningen: NAHI.

Knibbe, Merijn (2007), ‘Geen lezers maar Schrijvers. Uitingen van verschriftelijking van de cultuur in Hennaarderadeel rond 1560’, Fryslan 13-4 pp. 10-13.

Kuiken, Kees (2013), Het Bildt is geen eiland. Capita cultuurgeschiedenis van een vroegmoderne polder. Groningen: s.n.

Lambrecht, Thijs (2009), ‘Rural credit and the market for annuities in eighteenth century Flanders’ in: Schofield and Lambrecht, Credit and the rural economy pp.75-94.

Limberger, Michael (2009), ‘Credit, the land market and the connection between the rural and urban economy. The use of perpetual annuities in Aartselaar (Brabant) from the fourteenth to the sixteenth century’ in: Schofield and Lambrecht, Credit and the rural economy pp. 63-74.

Moor, Tine de; Jan Luijten van Zanden and Jaco Zuijderduijn, ‘Small is beautiful. On the efficiency of capital markets in late medieval Holland’, CGEH working paper series no. 11. Utrecht: University of Utrecht.

Moor, Tine de and Jaco Zuijderduijn (2013), ‘Preferences of the poor: market participation and asset management of poor households in sixteenth-century Holland’, European Review of Economic History 17 pp. 239-255

Nijboer, Harm (2007). De fatsoenering van het bestaan. Consumptie in Leeuwarden tijdens de Gouden eeuw. Groningen: Rijksuniversiteit Groningen

Ogilvie, Sheilagh, Markus Küpker and Janine Maegraith (2012), ‘Household Debt in Early Modern Germany: Evidence from Personal Inventories’, The journal of economic history 72-1 pp. 134-152.

Paping, Richard (1995). Voor een handvol stuivers. Werken, verdienen en besteden± de levensstandaard van boeren, arbeiders en middenstanders op de Groninger klei, 1770-1860. Groningen: NAHI.

Pfister, Ulrich (2007), ‘rural land and credit markets. The permanent income hypothesis and proto-industry: evidence from early modern Zurich’, Continuity and change 22-3 pp. 489-518.

Postma, O. (1962), ‘Slechte betalers in de gouden eeuw’, De Vrije Fries 45 pp. 155-160.

Ronsijn, W. (2014), Commerce and the countryside. The rural population’s involvement in the commodity market in flanders, 1750-1910. Gent: Academia Press.

Schofield, Philipp R. and Thijs Lambrecht, Credit and the rural economy in North-western Europe, c. 1200-c.1850. Corn publication series comparative rural history of the North Sea area 12.Turnhout: Brepols

Thoen, Erik and Tim Soens (2009), ‘Credit in rural Flanders c. 1250-c.1600: its variety and significance’ in: Schofield and Lambrecht, Credit and the rural economy pp. 19-38.

Vermoesen, Reinoud (2010), ‘Paardenboeren in V laanderen’, Tijdschrift voor sociale en economische geschiedenis 7-1, pp. 3-37

Vermoesen, Reinoud (2011), Markttoegang en commerciële netwerken van rurale huishoudens. De regio Aalst 1650-1800. Gent: Academia Press.

Zuijderduijn, Jaco (2009), ‘Village indebtedness in Holland in the fifteenth and sixteenth centuries’ in: Schofield and Lambrecht, Credit and the rural economy pp. 39-62