TURMEL: David Graeber's DEBT: The First 5,000 Years Chap08
ISBN: 978-1-61219-129-4
https://www.amazon.com/Debt-Updated-Expanded-First-Years/dp/1612194192
All reports at http://SmartestManOnEarth.Ca/debt5000
Chapter Eight
P211 CREDIT VERSUS BULLION AND THE CYCLES OF HISTORY
Bullion is the accessory of war, and not of peaceful trade.
- Geoffrey W. Gardiner
ONE MIGHT WELL ASK: If our political and legal ideas really
are founded on the logic of slavery, then how did we ever
eliminate slavery? Of course, a cynic might argue that we
haven't; we've just relabeled it. The cynic would have a
point: an ancient Greek would certainly have seen the
distinction between a slave and an indebted wage laborer as,
at best, a legalistic nicety..1
1. "Debt, n. An ingenious substitute for the chain and whip of
the slavedriver," wrote the notorious cynic Ambrose Bierce
(The Devil's Dictionary, 1911:49).
JCT: Abolitionism was the anti-slavery movement. It's also the
reason I chose Abolitionist Party of Canada when I had a
chance to found a new party. Sure, the old Abolitionists got
rid of the metal chains but they didn't see the invisible debt
chains. We new Abolitionists want to use the LETS timebank
currency to break the debt chains. while Jubilee 2000 was
targeting forgiveness of debt for the poorest 43 nations, I
was focusing on the growth of debt:
http://johnturmel.com/j2k01.gif
The truly remarkable thing, if one consults the historical
record, is that slavery has been eliminated- or effectively
eliminated- many times in human history.
In Europe, for instance, the institution largely vanished in
the centuries following the collapse of the Roman empire- an
historical achievement rarely recognized by those of us used
to referring to these events as the beginning of "the Dark
Ages."2 No one is quite sure how it happened.
P212 What's more, the demise of ancient slavery was not
limited to Europe. Remarkably, right around the same time- in
the years around 600 AD- we find almost exactly the same thing
happening in India and China, where, over the course of
centuries, amidst much unrest and confusion, chattel slavery
largely ceased to exist. What all this suggests is that
moments of historical opportunity- moments when meaningful
change is possible- follow a distinct, even a cyclical
pattern, one that has long been far more coordinated across
geographical space than we would ever have imagined. There is
a shape to the past, and it is only by understanding it that
we can begin to have a sense of the historical opportunities
that exist in the present.
Jct: Imagine, a cyclical pattern to slavery.
The easiest way to make these cycles visible is to re-examine
exactly the phenomenon we've been concerned with over the
course of this book: the history of money, debt, and credit.
The moment we begin to map the history of money across the
last five thousand years of Eurasian history, startling
patterns begin to emerge.
In the case of money, one event stands out above all others:
the invention of coinage. Coinage appears to have arisen
independently in three different places, almost
simultaneously: on the Great Plain of northern China, in the
Ganges river valley of northeast India, and in the lands
surrounding the Aegean Sea, in each case, between roughly 600
and 500 BC. This wasn't due to some sudden technological
innovation: the technologies used in making the first coins
were, in each case, entirely different.4
4. The Aegean coins were stamped; the Indian, punched; and the
Chinese, cast. This suggests that we are not talking about
diffusion here. Speaking of Indian coins, for instance, one
historian remarks: "If there is one thing that seems clear
from a punch-marked coin, it is that the person who thought it
up had never seen a Greek coin- or if he had seen one, it had
not impressed him. The punch-marked coin is made by an
entirely different metallurgical process" (Schaps 2006:9).
It was a social transformation. Why this happened in exactly
this way is an historical mystery. But this much we know: for
some reason, in Lydia, India, and China, local rulers decided
that whatever longstanding credit systems had existed in their
kingdoms were no longer adequate, and they began to issue tiny
pieces of precious metals- metals that had previously been
used largely in international commerce, in ingot form- and to
encourage their subjects to use them in day- to- day
transactions.
JCT: David Astle shows that "rulers decided to" was really
"rulers were fooled into" by the metal money cabal.
P213 From there, the innovation spread. For more than a
thousand years, states everywhere started issuing their own
coinage. But then, right around 600 AD, about the time that
slavery was disappearing, the whole trend was suddenly thrown
into reverse. Cash dried up. Everywhere, there was a movement
back to credit once again. If we look at Eurasian history over
the course of the last five thousand years, what we see is a
broad alternation between periods dominated by credit money
and periods in which gold and silver come to dominate- that
is, those during which at least a large share of transactions
were conducted with pieces of valuable metal being passed from
hand to hand.
Why? The single most important factor would appear to be war.
Bullion predominates, above all, in periods of generalized
violence. There's a very simple reason for that. Gold and
silver coins are distinguished from credit arrangements by one
spectacular feature: they can be stolen.
Jct: In a pure credit world, no would stick up a store and
say: Credit my account. (Actually, "debit." Accounts use
"debit" for more to an account, "credit" for less!!! The exact
opposite of what people are led to believe that debit is the
debt when the increased use of credit increases your debt.
Think that use of words opposite to general meaning is
accidental?)
A debt is, by definition, a record, as well as a relation of
trust. Someone accepting gold or silver in exchange for
merchandise, on the other hand, need trust nothing more than
the accuracy of the scales, the quality of the metal, and the
likelihood that someone else will be willing to accept it. In
a world where war and the threat of violence are everywhere-
and this appears to have been an equally accurate description
of Warring States China, Iron Age Greece, and pre-Mauryan
India- there are obvious advantages to making one's
transactions simple. This is all the more true when dealing
with soldiers.
On the one hand, soldiers tend to have access to a great deal
of loot, much of which consists of gold and silver, and will
always seek a way to trade it for the better things in life.
On the other, a heavily armed itinerant soldier is the very
definition of a poor credit risk. The economists' barter
scenario might be absurd when applied to transactions between
neighbors in the same small rural community, but when dealing
with a transaction between the resident of such a community
and a passing mercenary, it suddenly begins to make a great
deal of sense.
For much of human history, then, an ingot of gold or
silver,stamped or not, has served the same role as the
contemporary drug dealer's suitcase full of unmarked bills: an
object without a history, valuable because one knows it will
be accepted in exchange for other goods just about anywhere,
no questions asked. As a result, while credit systems tend to
dominate in periods of relative social peace, or across
networks of trust (whether created by states or, in most
periods, transnational institutions like merchant guilds or
communities of faith), in periods characterized by widespread
war and plunder, they tend to be replaced by precious metal.
What's more, while predatory lending goes on in every period
of human history, the resulting debt crises appear to have the
most damaging effects at times when money is most easily
convertible into cash.
P214 let me propose the following breakdown of Eurasian
history according to the alternation between periods of
virtual and metal money. The cycle begins with the Age of the
First Agrarian Empires (3500- 800 BC), dominated by virtual
credit money. This is followed by the Axial Age (800 BC- 600
AD), which will be covered in the next chapter, and which saw
the rise of coinage and a general shift to metal bullion. The
Middle Ages (600- 1450 AD), which saw a return to virtual
credit money, will be covered in Chapter Ten; Chapter Eleven
will cover the next turn of the cycle, the Age of Capitalist
Empires, which began around 1450 with a massive planetary
switch back to gold and silver bullion, and which could only
really be said to have ended in 1971, when Richard Nixon
announced that the U.S. dollar would no longer be redeemable
in gold. This marked the beginning of yet another phase of
virtual money, one which has only just begun, and whose
ultimate contours are, necessarily, invisible.
MESOPOTAMIA (3500- 800 BC)
We have already had occasion to note the predominance of
credit money in Mesopotamia, the earliest urban civilization
that we know about. In the great temple and palace complexes,
not only did money serve largely as an accounting measure
rather than physically changing hands, merchants and
tradespeople developed credit arrangements of their own. Most
of these took the physical form of clay tablets, inscribed
with some obligation of future payment, that were then sealed
inside clay envelopes and marked with the borrower's seal. The
creditor would keep the envelope as a surety, and it would be
broken open on repayment. In some times or places, at least,
these bullae appear to have become what we would now call
negotiable instruments, since the tablet inside did not simply
record a promise to pay the original lender, but was
designated "to the bearer"- in other words, a tablet recording
a debt of five shekels of silver (at prevailing rates of
interest) could circulate as the equivalent of a five-shekel
promissory note- that is, as money.5
JCT: David Astle notes how these promissory clay notes were
loaned out at interest like real gold money!
P215 We don't know how often this happened, how many hands
such tablets would typically pass through, how many
transactions were based on credit, how often merchants
actually did weigh out silver in rough chunks to buy and sell
their merchandise, or when they were most likely to do so. No
doubt all this varied over time. Promissory notes usually
circulated within merchant guilds, or between inhabitants of
the relatively well- off urban neighborhoods where people knew
one another well enough to trust them to be accountable, but
not so well that they could rely on one another for more
traditional forms of mutual aid.6
6. They appear to have been widely used by Old Assyrian
merchants operating in Anatolia (Veenhof 1997). We know even
less about the marketplaces frequented by ordinary
Mesopotamians, except that tavern-keepers operated on credit,
and hawkers and operators of market stalls probably did as
well.7
7. Powell (1978, 1979, 1999:14- 18) provides an excellent
assessment of the evidence, emphasizing that Babylonians did
not produce scales accurate enough to measure the tiny amounts
of silver they would have had to use to make ordinary
household purchases like fried fish or cords of firewood in
cash. He concludes that silver was largely used in
transactions between merchants. Market vendors therefore
presumably acted as they do in smallscale markets in Africa
and Central Asia, today, building up lists of trustworthy
clients to whom they could extend credit over time.
The origins of interest will forever remain obscure, since
they preceded the invention of writing. The terminology for
interest in most ancient languages is derived from some word
for "offspring," causing some to speculate that it originates
in loans of livestock, but this seems a bit literal-minded.
More likely, the first widespread interest-bearing loans were
commercial: temples and palaces would forward wares to
merchants and commercial agents, who would then trade them in
nearby mountain kingdoms or on trading expeditions overseas.8
8. Hudson 2002:21- 23, who hypothesizes that the time element
was important as merchants would presumably otherwise delay to
employ the funds as long as possible.
The practice is significant because it implies a fundamental
lack of trust.
JCT: Bingo. Paul Corr II, 8:14 explained the Christian lending
ethos: Lend unto others as you would have them lend unto you."
(My interpretation of his mission.): Your abundance should at
the present time be a supply for his want so your abundance
may later be a supply for his want. So do not ask for a share
of the win of the man you supported, just expect help back
should you need it. Don't trust him? Ask for reward to cover
your lack of trust.
After all, why not simply demand a share in the profits?
JCT: Again, no need if he's there to help you should you need
it. And if you'll never need it, why would you have asked for
more before finding out?
This seems more fair (a merchant who came back bankrupt would
probably have little means of paying anyway), and profit-
sharing partnerships of this sort became common practice in
the later Middle East.9
JCT: OK, though handing over a piece of your win to someone
who helped you seems justified unless the "lend it back" bank
of the Jesus "The Poor" commune was pretty reliable. "Give
your money to the poor" wasn't hand it out to the drunks and
the bums, it meant hand it over to the Treasurer of The Poor.
But without such a sure help-back network, sharing in the
profits for the risk in a risky world seems fair.
The answer seems to be that profit-sharing partnerships were
typically contracted between merchants, or anyway people of
similar background and experience who had ways of keeping
track of one another. Palace or temple bureaucrats and world-
roaming merchant adventurers had little in common, and the
bureaucrats seem to have concluded that one could not normally
expect a merchant returned from a far-off land to be entirely
honest about his adventures. A fixed interest rate would
render irrelevant whatever elaborate tales of robbery,
shipwreck, or attacks by winged snakes or elephants a creative
merchant might have concocted. The return was fixed in
advance. This connection between borrowing and lying,
incidentally, is an important one to history. Herodotus
remarked about the Persians: "To tell a lie is considered by
them the greatest disgrace, and next to that to be in debt...
especially because they think that one in debt must of
necessity tell lies."10
Jesus's parable of the unforgiving servant makes a joke out of
the matter ("Ten thousand talents? No problem. Just give me a
little more time"), but even here, one can see how such
endless falsehoods contributed to a broader sense that a world
in which moral relations are conceived as debts is also, while
in certain ways entertaining, necessarily a world of
corruption, guilt, and sin.
P216 By the time of the earliest Sumerian documents, this
world may not yet have arrived. Still, the principle of
lending at interest, even compound interest, was already
familiar to everyone. In 2402 BC, for instance, a royal
inscription by King Enmetena of Lagash- one of the earliest we
have- complains that his enemy, the King of Umma, had been
occupying a huge stretch of farmland that had rightfully
belonged to Lagash for decades. He announces: if one were to
calculate the rental fees for all that land, then the interest
that would have been due on that rent, compounded annually, it
would reveal that Umma now owes Lagash four and a half
trillion liters of barley. The sum was, as in the parable,
intentionally preposterous.12
12. Mieroop 2002:63, 2005:29. He notes that Enmetena's total
grain income in any one year was roughly 37 million liters,
making the sum he claims to be owed more than one thousand
times his own palace's annual revenue.
JCT: I've found other clearer laws on interest, the rates.
From: Law Collections from Mesopotamia and Asia Minor (Marth
T. Roth) ISBN 978-0-7885-0378-8)
Laws of Lipit-Ishtar Prologue: 1930 BCE
"I liberated the sons and daughters who were subjugated by the
yoke.."
Laws of X 2050-1800 BCE
(m) if a man gives another 300 silas of grain as an interest-
bearing loan, its interest rate per annum is 100 silas (=33%).
(n) if a man gives another man 10 shekels of silver as an
interest-bearing loan, its interest rate per annum is 2
shekels of silver (=20%).
Sumerian Laws Handbook of Forms 1700BCE
(vii 37-45) Interest... Acrrues as interest..
Laws of Eshnunna 1770 BCE
(18A) Per 1 shekel of silver interest accrues at the rate of
36 barleycorns (=20%); per 300 silas of grain, interest
accrues at the rate of 100 silas (=33%).
Laws of Hammurabi 1750 BCE
(48) If a man has a debt and the storm-god devastates his
field or a flood sweeps away the crops.. in that year he will
not repay grain to his creditor.. and he will not give
interest payments for that year.
(49) If a man borrows silver... he shall give grain equivalent
to the silver he borrowed and the interest on it.
(50) he shall repay the silver and the interest..
(51) If he does not have silver to repay, he shall give either
grain or sesame according to their market value for his silver
borrowed and the interest on it.
JCT: Being able to pay off debts with product is the ideal, it
even nullifies the death-gamble effects that Debt greater
Principal causes. Lucky them.
(65GapA) If a man borrows silver, he shall satisfy with silver
and the interest..
(65GapL) If a man borrows silver, he shall deliver his silver
and the interest on it, if he has nothing to give, he shall
give any of his property, any commodity or grain; ..
(65GapT) If a merchant gives grain or silver as an interest
bearing loan, he whall take 33% as interest. If he gives
silver, he shall take 20%.
(65GapU) If a man who has an interest-bearing loan does not
have silver with which to repay it, he shall take grain and
silver and the interest on it at the annual rate of 20%; if a
merchant should attempt to increase and collect the interest
on the silver loan up to the grain interest rate of 33% or
anyway beyond 20% of silver, he shall forfeit whatever he had
given.
(65GapV) If a merchant gives grain or silver at interest
or silver at interest...
(65GapW) If a merchant should take interest...
(65GapX) If a merchange gives grain or silver as an interest-
bearing and..
(65GapZ) If a man borrows grain or silver and does not have
grain or silver but has other goods, the merchant will not
object...
(65GapCC) If a man gives silver to another for investment...
(65GapDD) If a man gives silver to a trading agent... he shall
calculate the total interest..
I've added so much detail because I want to get it on record
how interest-bearing loans have made it to the great law
codes. So, any educated person in those days, had to know
about how interest worked.
DG: It was just an excuse to start a war. Still, he wanted
everyone to know that he knew exactly how to do the math.
Usury- in the sense of interest-bearing consumer loans-
JCT: Usury causes death-gamble whether on the poor or the
business communities.
DG: was also well established by Enmetena's time. The king
ultimately had his war and won it, and two years later, fresh
off his victory, he was forced to publish another edict: this
one a general debt cancellation within his kingdom. As he
later boasted, "He instituted freedom (amargi) in Lagash. He
restored the child to its mother, and the mother to her child;
he canceled all interest due."13
JCT: Great, hadn't heard of Enmetena. What kingdom? How far
back?
This was, in fact, the very first such declaration we have on
record- and the first time in history that the word "freedom"
appears in a political document.
JCT: More to Enmetena's credit that he understood the
liberation he was fulfilling.
Enmetena's text is a bit vague on the details, but a half-
century later, when his successor Uruinimgina declared a
general amnesty during the New Year's ceremonies of 2350 BC,
the terms are all spelled out, and they conform to what was to
become typical of such amnesties: canceling not only all
outstanding loans, but all forms of debt servitude, even those
based on failure to pay fees or criminal penalties- the only
thing excepted being commercial loans.
JCT: Too bad businessmen don't get any relief. But at least
their citizen debts are gone.
DG: Similar declarations are to be found again and again, in
Sumerian and later Babylonian and Assyrian records, and always
with the same theme: the restoration of "justice and equity,"
the protection of widows and orphans, to ensure- as Hammurabi
was to put it when he abolished debts in Babylon in 1761 BC-
"that the strong might not oppress the weak."14
JCT: Notice how loansharking is not only called oppression of
the weak and poor in these older texts but in Bible too. The
yoke of oppression is enslaving unpayable debt growth.
P217 Over the next several thousand years, this same list-
canceling the debts, destroying the records, reallocating the
land- was to become the standard list of demands of peasant
revolutionaries everywhere. In Mesopotamia, rulers appear to
have headed off the possibility of unrest by instituting such
reforms themselves, as a grand gesture of cosmic renewal, a
recreation of the social universe- in Babylonia, during the
same ceremony in which the king re-enacts his god Marduk's
creation of the physical universe. The history of debt and sin
was wiped out, and it was time to begin again. But it's also
clear what they saw as the alternative: the world plunged into
chaos, with farmers defecting to swell the ranks of nomadic
pastoralists, and ultimately, if the breakdown continued,
returning to overrun the cities and destroy the existing
economic order entirely.
JCT: Throughout all history, usury has been the destroyer of
all civilizations that allowed the Pandora's Box to be opened
releasing untold numbers of demons on the debtors.
Egypt (2650- 716 BC)
Egypt represents an interesting contrast, since, for most of
its history, it managed to avoid the development of interest-
bearing debt entirely.
JCT: So what kind of chips did they use?
DG: Egypt was, like Mesopotamia, extraordinarily rich by
ancient standards, but it was also a self-contained society, a
river running through a desert, and far more centralized than
Mesopotamia. The pharaoh was a god, and the state and temple
bureaucracies had their hands in everything: there were a
dazzling array of taxes and a continual distribution of
allotments, wages, and payments from the state. Here, too,
money clearly arose as a means of account. The basic unit was
the deben, or "measure"- originally referring to measures of
grain, and later of copper or silver.
JCT: When they finally switched to metal instead of clay or
glass, the metal brokers controlled how many chips there could
be for their casino.
P218 A few records make clear the catch-as-catchcan nature of
most transactions:
In the 15th year of Ramses II [c. 1275 BC] a merchant offered
the Egyptian lady Erenofre a Syrian slave girl whose price, no
doubt after bargaining, was fixed at 4 deben 1 kite [about 373
grams] of silver. Erenofre made up a collection of clothes and
blankets to the value of 2 deben 2 1/3 kite- the details are set
out in the record- and then borrowed a miscellany of objects
from her neighbors- bronze vessels, a pot of honey, ten shirts,
ten deben of copper ingots- till the price was made up.16
Most merchants were itinerant, either foreigners or commercial
agents for the owners of large estates. There's not much
evidence for commercial credit, however; loans in Egypt were
still more likely to take the form of mutual aid between
neighbors.17
JCT: I find it doubtful they had no major credit-creation
institutions for commercial relations within their empire.
Substantial, legally enforceable loans, the kind that can lead
to the loss of lands or family members, are documented, but
they appear to have been rare- and much less pernicious, as
the loans did not bear interest. Similarly, we do occasionally
hear of debt- bondservants, and even debt slaves, but these
seem to have been unusual phenomena and there's no suggestion
that matters ever reached crisis proportions, as they so
regularly did in Mesopotamia and the Levant.18
18. One authority states categorically: "I do not know of
debt- annulment decrees issued by any Pharaoh" (Jasnow
2001:42), and adds that there is no evidence for debt-bondage
until the very late Demotic period. This is the same period
when Greek sources begin to speak of both.
JCT: I find it amazing Egypt could have operated an interest-
free credit system and not exported it to the whole growing
empire. Who wouldn't want to be citizen under a government
that is not a debt to private bullion brokers demanding
interest.
In fact, for the first several thousand years, we seem to be
in a somewhat different world, where debt really was a matter
of "guilt" and treated largely as a criminal matter:
When a debtor failed to repay his debt on time, his creditor
could take him to court, where the debtor would be required to
promise to pay in full by a specific date. As part of his
promise- which was under oath- the debtor also pledged to
undergo 100 blows and/or repay twice the amount of the
original loan if he failed to pay by the date specified.19
The "and/or" is significant. There was no formal distinction
between a fine and a beating. In fact, the entire purpose of
the oath (rather like the Cretan custom of having a borrower
pretend to snatch the money) seems to have been to create the
justification for punitive action: so the debtor could be
punished as either a perjurer or a thief.20
20. This in certain ways resembles the legal loopholes created
in both the Medieval Christian and Islamic worlds, where
interest was formally banned: see chapter 10 below.
P219 By the time of the New Kingdom (1550-1070), there is more
evidence for markets, but it's only by the time we reach the
Iron Age, just before Egypt was absorbed into the Persian
empire, that we begin to see evidence for Mesopotamian-style
debt crises. Greek sources, for instance, record that the
Pharaoh Bakenranef (reigned 720-715 BC) issued a decree
abolishing debt bondage and annulling all outstanding
liabilities, since "he felt it would be absurd for a soldier,
perhaps at the moment when he was setting forth to fight for
his fatherland, to be hauled off to prison by his creditor for
an unpaid loan"- which, if true, is also one of the earliest
mentions of a debt prison.21
JCT: Steel chains when you can't beat the debt chains.
DG: Under the Ptolemies, the Greek dynasty that ruled Egypt
after Alexander, periodic clean slates had become
institutionalized. It's well known that the Rosetta Stone,
written both in Greek and Egyptian, proved to be the key that
made it possible to translate Egyptian hieroglyphics. Few are
aware of what it actually says. The stela was originally
raised to announce an amnesty, both for debtors and for
prisoners, declared by Ptolemy V in 196 BC.22
22. The history of the dissemination of interest-bearing debt
is only beginning to be reconstructed. It does not yet appear
in Ebla (c. 2500 BC), in Old or Middle Kingdom Egypt, or in
Mycenaean Greece, but it eventually becomes common in the
Levant in the late Bronze Age, and also in Hittite Anatolia.
As we'll see, it came quite late to Classical Greece, and even
later to places like Germany.
JCT: As we can see from the previous law codes, 33% on
grain and 20% on silver was pretty historic, though only the
unpayable interest on sterile silver caused the usurious
death-gamble, interest on grain could be physically paid.
China (2200- 771 BC)
We can say almost nothing about Bronze Age India, since its
writing remains indecipherable, and not much more about Early
China. What little we do know- mainly culled from dribs and
drabs in later literary sources- suggests that the earliest
Chinese states were far less bureaucratic than their western
cousins.23
23. In Chinese historiography, in fact, this whole epoch is
known as "the feudal period.")
There being no centralized temple or palace system with
priests and administrators managing the storerooms and
recording inputs and outputs, there was also little incentive
to create a single, uniform unit of account. Instead, the
evidence suggests a different path, with social currencies of
various sorts still holding sway in the countryside and being
converted to commercial purposes in dealings between
strangers.
JCT: They'd set up their own LETS social currencies.
Later sources recall that early rulers "used pearls and jade
as their superior method of payment, gold as their middle
method of payment, and knives and spades as their lower method
of payment."24
The author can only be talking about gifts here, and
hierarchical ones at that: kings and great magnates rewarding
their followers for services in theory rendered voluntarily.
In most places, long strings of cowrie shells figure
prominently, but even here, though we often hear of "the
cowrie money of early China," and it's easy enough to find
texts in which the value of sumptuous gifts are measured in
cowries, it's never clear whether people were really carrying
them around to buy and sell things in the marketplace.25
25. Yung- Ti (2006) has recently argued that they weren't,
though we wouldn't really know. Thierry (1992:39- 41) simply
assumes they were, providing much evidence of their use both
as units of account and means of payment, but none of their
use for buying and selling.
JCT: When buying and selling could usually be done with in-
head tabs.
26. At any rate, cowries were definitely being used as the
equivalent of coins in later periods, and the government
periodically either suppressed their use or reintroduced them
(Quiggin 1949, Swann 1950, Thierry 1992:39- 41, Peng 1994.)
Cowrie money survived, alongside tally sticks, as a common
form of currency in Yunnan province in the far south until
relatively recent times (B. Yang 2002), and detailed studies
exist, but- as far as I can tell- only in Chinese.
JCT: Makes sense, who cares what the IOUs are based on?
At any rate, all sources insist that there was a wide variety
of currencies in circulation. As David Scheidel, one of the
premier contemporary scholars of early money, notes:
In pre- imperial China, money took the form of cowrie shells,
both originals and- increasingly- bronze imitations, tortoise
shells, weighed gold and (rarely) silver bars, and most
notably- from at least 1000 BC onward- utensil money in the
shape of spade blades and knives made of bronze.27
These were most often used between people who didn't know each
other very well.
JCT: People who did know each other well could use in-head.
For tabulating debts between neighbors, with local vendors, or
with anything having to do with the government, people appear
to have employed a variety of credit instruments: later
Chinese historians claimed that the earliest of these were
knotted strings, rather like the Inca khipu system, and then
later, notched strips of wood or bamboo.28
28. Kan 1978:92, Martzloff 2002:178. I note in passing that a
study of the Inca khipu system itself would itself be quite
fascinating in this regard; the strings were used to record
both obligations we would consider financial, and others we
would consider ritual, since as in so many Eurasian languages,
the words "debt" and "sin" were the same in Quechua as well
(Quitter & Urton 2002:270).
As in Mesopotamia, these appear to have long predated writing.
JCT: So tokens of IOU predated writing. Sure.
We don't really know when the practice of lending at interest
first reached China either, or whether Bronze Age China came
to see the same sorts of debt crises as occurred in
Mesopotamia, but there are tantalizing hints in later
documents.29
29. L. Yang (1971:5) finds the first reliable literary
reference to loans at interest in the fourth century BC. Peng
(1994:98-101) notes that the earliest surviving records (the
oracle bones and inscriptions) do not mention loans, but
there's no reason they would; he also assembles most of the
available literary references, finds many references to loans
in early periods, and concludes that there's no way to know
whether to take them seriously. By the Warring States period,
however, there is abundant evidence for local usurers, and all
the usual abuses.
For instance, later Chinese legends about the origin of
coinage ascribed the invention to emperors trying to relieve
the effects of natural disasters. One early Han text reports:
In ancient times, during the floods of Yu and the droughts of
Tang, the common people became so exhausted that they were
forced to borrow from one another in order to obtain food and
clothing. [Emperor] Yu coined money for his people from the
gold of Mount Li and [Emperor] Tang did likewise from the
copper of Mount Yan. Therefore the world called them
benevolent.30
JCT: And indeed they were benevolent rulers, unlike debtor
rulers.
Other versions are a little more explicit. The Guanzi, a
collection that in early imperial China became the standard
primer on political economy, notes, "There were people who
lacked even gruel to eat, and who were forced to sell their
children. To rescue these people, Tang coined money."31
JCT: Gave them access to their own credit?
The story is clearly fanciful (the real origins of coined
money were at least a thousand years later), and it is very
hard to know what to make of it.
JCT: Why could using metal chips only occur later?
Could this reflect a memory of children being taken away as
debt sureties? On the face of it, it seems more like starving
people selling their children outright- a practice that was
later to become commonplace in certain periods of Chinese
history.32
32. So around 100 BC, "when flood and drought come upon
them... those who have grain sell at half value, while those
who have not borrow at exorbitant usury. Then paternal acres
change hands; sons and grandsons are sold to pay debts;
merchants make vast profits, and even petty tradesmen set up
business and realize unheard of gains" (in Duyvendak 1928:32).
Loans at interest are first documented in the fourth century
BC in China but may have existed before that (Yang 1971:5).
For a parallel case of child-selling for debt in early India,
Rhys Davids 1922:218.
JCT: Hard to believe they weren't aware of the Mesopotamian
20/33% laws.
But the juxtaposition of loans and the sale of children is
suggestive, especially considering what was happening on the
other side of Asia at exactly the same time. The Guanzi later
goes on to explain that these same rulers instituted the
custom of retaining 30 percent of the harvest in public
granaries for redistribution in emergencies, so as to ensure
that this would never happen again. In other words, they began
to set up just the kind of bureaucratic storage facilities
that, in places like Egypt and Mesopotamia, had been
responsible for creating money as a unit of account to begin
with.
JCT: The only difference being whether they issued chips for
the grain or whether private bankers did. Anyway, I think it's
impossible for most rules in antiquity not to have been
familiar with the most-known legal codes on both interest on
sterile money (usury) and interest reproducible grain. One
reason why Ezekiel condemned "he who takes usury or excessive
interest." He knew the difference between usury on silver and
excessive interest on grain. Most preachers never noticed his
distinction between the two, one causing mort-gage and the
other not.
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