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The Chinese Market Economy, 1000-1500

Author(s):Liu, William Guanglin
Reviewer(s):Pomeranz, Kenneth

Published by EH.Net (June 2017)

William Guanglin Liu, The Chinese Market Economy, 1000-1500. Albany, NY: State University of New York Press, 2015.  xviii + 374 pp., $30 (paperback), ISBN: 978-1-4384-5568-6.

Reviewed for EH.Net by Kenneth Pomeranz, Department of Economics, University of Chicago.

William Guanglin Liu has written a valuable book on a big, important, topic: the general trajectory of the Chinese economy from roughly 1000-1650.  (The title says 1500, but the argument goes beyond that date.) The research is excellent, and the author comes up with some original and inventive ways to use his data.  At times, however, it frames its arguments in overly stark forms, and makes claims that go beyond what it can prove.  But despite these concerns, this is a book well worth reading, which will stimulate very useful debate on fundamental questions of Chinese economic history.

As a first approximation, Liu’s theses are hard to argue with.  The author shows that China experienced very impressive growth during the Song dynasty (ca. 960-1279), a period in which there was also a striking expansion of the role of markets in Chinese society.  He also show that the policies of Zhu Yuanzhang (r. 1368-1398), founder of the Ming Dynasty (1368-1644) dealt a major blow to China’s economy by trying to resurrect an idealized world of largely autarkic and demonetized villages.  It took a long time for China to recover from this: in contrast to many scholars who think that by 1500 China had returned to a market economy generating at least a Song level of prosperity, Liu argues that this did not happen until at least 1600, and quite likely not even then.  Moving beyond China, Liu then suggests that this historical case shows the centrality of market institutions for stimulating economic growth, beginning at a very low level of development.

The first three of these points — the marketization and relative prosperity of Song times, and the damaging effects of early Ming policies — are broadly accepted.  The first controversy concerns matters of degree: how prosperous? How marketized?  How big and lasting a blow did the early Ming inflict?  A second set of controversies centers on causation, and thus on the role of other factors.  For instance, Liu says very little about the many technological innovations during the Song — including the invention of gunpowder, the magnetic compass, paper money, and the importation (from Southeast Asia) of early-ripening rice — except to note that some of the most important innovations did not diffuse rapidly.  Some others would assign those innovations (and some that began in the Tang, such as printing) a good deal of credit for the growth that occurred in the Song, and continued into the Yuan (1279-1368) in some parts of the empire. While we will never have the data necessary to arrive at a precise allocation of growth to different factors, there is still room for further productive discussion about relative weights. Likewise, it is possible to show that the Mongol conquests of the mid-thirteenth century had a devastating impact in some places (especially North China and Sichuan), and very little elsewhere (the Middle and Lower Yangzi Valley, and in the far south); the relative weight of those different regional stories is still unsettled, and matters greatly in whether Liu is justified in placing an overwhelming emphasis on early Ming anti-market policies in explaining an apparent stagnation or decline in living standards between the eleventh and sixteenth centuries.

One of the book’s contributions is to concentrate in one place the arguments for transformational change concentrated in the Song period, and followed by a later reversal: a once popular view (e.g. Elvin 1973) that has lately given way to a tale of more gradual progress across several centuries (Smith and Von Glahn 2003).  Making the best of flawed data, Liu estimates population growth of 0.92% per year between 980 and 1109, a remarkable rate for a pre-modern society.  And drawing on a large body of secondary scholarship, he points to considerable evidence for changes in agriculture — capital deepening, especially in the form of massive investments in irrigation, and increasing use of oxen – which should, logically, have raised agricultural yields significantly, allowing a population that had more than tripled to eat as well or better than its forebears.

Unfortunately, however, we lack much good data on actual yields in the Song.  Liu notes that Dwight Perkins’ well-known estimates are (like most others for this period) inferences from agricultural rents, and that much of the land in question was land used to support schools; he further argues that school land was often rented out at below-market rates, depressing these inferred yields, and that the land which families donated to schools was often their least fertile property, anyway.  Meanwhile several of Perkins’ later data points come from agricultural handbooks, and probably represent optimal results.  Thus Liu argues, the impression of slow but steady growth across centuries that emerges from Perkins’ highly influential work may well be a statistical illusion. He prefers the older idea of a Song boom followed by little progress in subsequent dynasties.   Building on work by Zhou Shengchan, Liu tries to work backwards from data on population and average food consumption to estimate thirteenth century yields in the Lower Yangzi region; the results vary considerably among prefectures, but are generally near the high end of our range of estimates for any period before the arrival of modern farm inputs.  They would therefore leave little room for continued growth in the Yuan, Ming, or even Qing.

If verified, this would be a very important finding, but I have my doubts.  In part, my doubts come from personal experience, as adopting a similar methodology for estimating eighteenth century output of various crops led to extremely high estimates.[1]  There are also technical problems with some of this data (particularly in Table 7.8), though probably not big enough to change the results dramatically.[2]   The most we can say with strong confidence, I think, is that some Song farmers achieved yields near the pre-modern maximum, and more and more of their neighbors caught up over time — though whether this happened over decades or centuries remains very uncertain.

For most non-food items, we simply lack the data to generate serious estimates of per capita consumption in Song times; and while anecdotal evidence of rising consumption exists, Liu prefers not to rely on it.  Instead, he relies on an estimate of real wages for unskilled workers to show that living standards in the Song were as high as they ever got in China prior to the twentieth century.  Because we have not found for China any very long series of wages for privately-hired workers in a relatively standardized occupation in a particular place — like the long runs of wages for construction workers on European cathedrals and colleges, for instance — Liu constructs a long-run series of military wages, for which data are comparatively rich; and because we lack data for enough commodities to construct a long-run price index, he uses grain prices as the denominator for his series.  The resulting series peaks at its very beginning (in 1004) and fluctuates wildly while declining overall for the next roughly 170 years. It is then relatively stable until another steep drop in the early Ming, and recovers slightly in the late Ming before declining again in the early Qing (Figure E-1).

Liu has done us a considerable service by piecing this data series together, but as a proxy for the living standards of ordinary people it must be taken with a very large grain of salt.  Governments did not engage soldiers through a true labor market, nor did the institutional setting of military recruitment or the conditions of being a soldier (aside from the wage) remain constant over time.  Moreover, even if we had a reliable private sector wage series, it would not necessarily follow that this was a reliable basis for estimating popular living standards, much less per capita GDP, as Liu argues (p. 133).  Wage earners were never more than 15 percent of the labor force in late imperial China, and most farmers either owned their own land or had a relatively secure tenancy (especially in Qing times).  Consequently, they earned far more than unskilled laborers did — perhaps three times as much on average, according to preliminary estimates I have made for the eighteenth century (and for the early twentieth, where the data are better). (Among other things, this is confirmed by the fact that tenants and smallholders could support families, while unskilled laborers could rarely afford to marry. And for GDP per capita, we would also have to average in the earnings of well-to-do families.  Last but not least, if the ratio between wages and average farm earnings changed over time — as it might well have, given a gradual strengthening of tenant usufruct rights over the course of the late empire — even a much better wage series might not tell us what we want to know about general living standards.

But if Liu does not prove his most ambitious claims, he does succeed in proving many of his smaller empirical claims.  In particular, the evidence for relative prosperity in the Song and a sharp decline in the early Ming seems too much to explain away, even if one can raise doubts about each individual measurement.  The money supply contracted very sharply in early Ming times, followed by the introduction of government notes (for state payments) that soon became almost worthless; customs receipts (and presumably long-distance trade declined; and the wage decline between ca. 1050 and ca. 1400 is too big to be explained entirely by data problems.  A separate estimate, later in the book, suggests that per capita income in North China might have fallen by as much as half between 1121 (on the eve of the Song loss of the North) and 1420, though output per capita seems to have remained stable in the Yangzi Delta.  Liu also makes a strong case that Song people were freer than their early Ming counterparts, and perhaps even less unequal economically (though Song writing shows so much worry about inequality that one is tempted to believe there was fire behind so much smoke).

This brings us to the problem of explaining these differences.  Liu provides a straightforward answer: Song reliance on the market worked while the early suppression of it backfired.  Moreover, this represents a timeless truth, most recently vindicated by the sharp contrast between the Maoist and post-Maoist periods.  Here. I think, Liu lets his argument outrun his evidence, focusing too exclusively on one broad-brush contrast.

It would be hard to deny that the increased influence of market principles in the Song stimulated growth: above all, probably, the agricultural growth of the south, which required significant investment (especially for water management) that would surely have been more modest had earlier dynasties’ restrictions of private landowning remained in force; and given the surpluses that southern agriculture soon generate, and the relatively easy transportation that its rivers offered, impressive commercial and urban growth soon followed.  Since the coastline south of the Yangzi also has far more good sites for ports than the coastline north of the Yangzi, the southward shift of China’s economic center of gravity was also propitious for foreign trade, which boomed under both the Song and the (Mongol) Yuan.

Even in the south, however, the state provided essential infrastructure (though its role declined over time), and often played a very active role in foreign trade. In the north, meanwhile, both the enormous system of canals built by the Song government and the huge concentration of demand in the capital region were crucial, both for consumer markets and the growth of a precocious iron industry stimulated by unprecedented levels of military spending.   A variety of inventions also must have contributed something to the robust growth of the Song period.

Nor, I think, would many people deny that the early Ming attempt to return to local autarky had serious and lasting negative consequences. But we should bear in mind that the North, where Liu’s decline in estimated output between 1121 and 1420 was concentrated, suffered a number of  major shocks in this period, all of which bypassed or fell much more lightly on the south (except for Sichuan). These included conquests by three sets of northern invaders (including, most devastatingly, the Mongols); the prolonged turmoil that toppled the Mongols and brought the Ming to power; a civil war between supporters of two Ming heirs; and repeated, enormous, Yellow River floods, including two that dramatically shifted the river’s course (out of six such incidents in the last 4,000 years) and made it impossible to rebuild the Song-era canal system.   Ming policies certainly did great damage, too, but the relative size of these setbacks needs more detailed analysis before we can accept Liu’s almost exclusive emphasis on the Ming founder’s anti-market policies.

I would also caution against lumping all the parts of Ming anti-commercialism under the heading “command economy,” and comparing it to an ideal type of “market economy,” as Liu often does (e.g. pp. 1, 4-12, 134-136, 197, 199).  No pre-modern state could maintain the vigorous intervention needed to run a true command economy for long.  The Ming may have been more effective than most, but their massive redistribution of property and forced migration was over by about 1425, with land and labor again being exchanged in private markets;[3] the system of artisan conscription unraveled during the fifteenth century; foreign trade outside the official tribute system gradually returned; and so on.  This did not mark the end of Ming anti-commercialism as an attitude, or of its effects: among other problems, the dynasty never tried to provide the money supply that the private economy needed, saddling its subjects with costs that lingered for centuries.[4]   But even if this failure was originally part of an aggressive state’s attempt at command economy, it soon evolved into something else: the failure of a relatively weak state to undertake even those interventions that could have benefited both itself and the private economy.  The succeeding Qing dynasty (1644-1912) certainly had no dream of a command economy, and often (though not always) sought to encourage markets;  and the state’s share of GDP may have slipped as low as 2 percent, compared to at least 10 percent and perhaps as much as 20 percent at the peak of Song military-fiscalism.[5]  Yet the Qing provided the most stable bronze currency — the money used for most everyday transactions — China had ever known, while uncoined silver provided a reasonably adequate currency for big transactions; and it mobilized impressive resources for various physiocratic projects, from water control to grain price stabilization to promotion of best practices in agriculture and handicrafts. (That it spent much less, proportionately, on its military than the Song or Ming had facilitated this combination of low extraction and significant services.[6])  And for about a century and a half, they presided over impressive demographic and economic growth, Interestingly,  three prominent economic historians — Loren Brandt, Debin Ma, and Thomas Rawski, none of them remotely anti-market — have argued that the principal reason why Qing economic development was not even better was that the government was too minimalist: that a small government spread across a vast area was unable to prevent all sorts of local actors — from bandits to local elites employing private enforcers to rogue government clerks — from interfering with local markets and property rights.[7]  Such interference was clearly a problem in the late Ming as well, though it is not precisely measurable in either period.  It does, however, remind us that a simple contrast between “market economy” and “command economy” does not give us enough tools to understand the different relationships between state and market in imperial China, or anywhere else.

Nonetheless, the book does an impressive job of demonstrating how much dynamism the marketizing economy of the Song generated, and how much of those gains had been lost by the mid-Ming, at least in certain regions.  The author’s efforts to quantify trends that many others have been content to describe qualitatively are impressive; this is a book where the appendices are often as thought-provoking as the text.  The results are not as revolutionary or dispositive as the book sometimes suggests, but they will stimulate productive debates for years to come.


1. Lacking data on the acreage devoted to non-grain crops in certain areas, I decided to estimate how much land must have been devoted to non-grain crops, relying on generally accepted numbers for population, grain consumption, and imports, and then multiply the acreage left over by conservative estimates of yields for the non-grain crops.  The results came out so high that I cut them in every way I could think of — including, in one case, arbitrarily reducing the estimate of non-grain acreage by half. The results I came up with were still at the high end of the existing range of estimates, or in some cases significantly beyond it.  I am not ready to toss out those estimates completely, and would be happy to see this approach vindicated; but I am inclined to be cautious here, especially since Liu has not made the same efforts to depress his results as I did.

2. The conversions from Zhou’s numbers, which mostly use Yuan dynasty measurements, is complicated. Trying to reproduce his results for one prefecture after an email exchange with me, Prof. Liu got a figure about 1 percent lower.

3. A rare set of household-level records, for instance, shows a family with modest landholdings in Huizhou engaged in no less than 18 land purchases or sales between 1391 (not long after the Ming came to power) and 1432.  See Von Glahn 2016: 291-293.

4. Von Glahn 1996 and Kuroda 2000 suggest that this was finally addressed with moderate success in the Qing.

5. Perkins 1967: 492; Wang 1973: 133 for the Qing; Golas 1988: 93-94 comes up with 24 percent for the Song, but admits that this seems unlikely.  Hartwell 1988: 79-80 suggests a bit over 10 percent.

6. On military spending compare Hartmann 2013: 29 with Zhou 2000: 36-38.

7. Brandt Ma and Rawski 2014: 60, 76, and 79.


Brandt, Loren, Debin Ma and Thomas Rawski. 2014.  “From Divergence to Convergence: Reevaluating the History behind China’s Long Economic Boom,” Journal of Economic Literature 52(1):45-123.

Elvin, Mark. 1973.  The Pattern of the Chinese Past.  Stanford: Stanford University Press.

Goals, Peter, 1988. “The Sung Economy: How Big?”  Bulletin of Sung-Yuan Studies 20: 89-94.

Hartmann, Charles. 2013.  “Sung Government and Politics,” in John Chafee and Dennis Twitchett, eds., The Cambridge History of China, Volume V Part 2: Sung China, 960-1279 (Cambridge: Cambridge University Press):19-133.

Hartwell, Robert. 1988. The Imperial Treasuries: Finance and Power in Song China,” Bulletin of Sung-Yuan Studies 20: 18-89

Kuroda Akinobu. 2000. “Another Monetary Economy: The Case of Traditional China,” in A.J. H. Latham and Heita Kawakatsu, eds, Asia-Pacific Dynamism, 1500-2000 (London: Routledge): 187-198.

Perkins, Dwight. 1967. “Government as an Obstacle to Industrialization: The Case of Nineteenth-Century China,” Journal of Economic History 27 (4): 478–92

Perkins, Dwight. 1969. Agricultural Development in China, 1368-1968.  Chicago: Aldine Publishing.

Smith, Paul, and Richard Von Glahn, eds., 2003. The Song-Yuan-Ming Transition in Chinese History.  Cambridge:  Harvard Asia Center.

Von Glahn, Richard. 1996.  Fountain of Fortune: Money and Monetary Policy in China, 1000-1700.  Berkeley: University of California Press.

Von Glahn, Richard. 2016.  The Economic History of China: From Antiquity to the Nineteenth Century.  Cambridge: Cambridge University Press.

Wang Yeh-chien. 1973. Land Taxation in Imperial China, 1750-1911.  Cambridge, MA: Harvard University Press.

Zhou Yumin. 2000.  Wan Qing caizheng yu shehui bianqian (Late Qing Fiscal Administration and Social Change).   Shanghai: Shanghai renmin chubanshe.

Kenneth Pomeranz is University Professor of History at the University of Chicago.  His best known book is The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, 2000).  His most recent publication is “The Data We Have vs. the Data We Want: A Comment on the State of the Divergence Debate,” Pt. I and Pt II New Economics Papers (June 8, 2017) Forthcoming publications include “Water, Energy, and Politics: Chinese Industrial Revolutions in Global Environmental Perspective,” in Gareth Austin, ed., Economic Development and Environmental History in the Anthropocene (forthcoming, 2017: Bloomsbury Academic).

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (June 2017). All EH.Net reviews are archived at

Subject(s):Economic Development, Growth, and Aggregate Productivity
Economywide Country Studies and Comparative History
Geographic Area(s):Asia
Time Period(s):Medieval
16th Century
17th Century

The Economic History of China: From Antiquity to the Nineteenth Century

Author(s):von Glahn, Richard
Reviewer(s):Deng, Kent G.

Published by EH.Net (June 2016)

Richard von Glahn, The Economic History of China: From Antiquity to the Nineteenth Century. Cambridge: Cambridge University Press, 2016. xiv + 461 pp. $40 (paperback), ISBN: 978-1-107-03056-5.

Reviewed for EH.Net by Kent G. Deng, Department of Economic History, London School of Economics.

This book carries on a great scholarly tradition in three dimensions: a macro-level outlook (taking a huge land mass as a single unit), a long-term vision (using one millennium as a basic unit), and a critical synthesis (examining the fields of history from a commanding height) — something that is best suited for study of remarkably long-lasting civilizations and economies like China and yet has become less available (or, to put it bluntly, less popular) among economic historians in the recent decades. One should be considered fortunate to be able to master one such a dimension. To have all three in one is a heroic undertaking. Not only that, the great care that has been taken in selecting and evaluating a wide spectrum of historical factors/facts and views in the on-going scholarly debate and then in weaving them together in a consistent and coherent fashion makes for a masterpiece of scholarship. In this new book, Richard von Glahn of the University of California, Los Angeles, has achieved just that.

The book’s main achievement is three-fold. First, the author gives qualitative data a deserved fair share rather than treating them as inferior evidence. In doing so, a good balance is maintained between quantifiable and non-quantifiable evidence in Chinese history. This is vital for an evenhanded understanding of the China over the very long term. The author’s emphasis on the nature, function, evolution and impact of the imperial state is deeply rooted in such an approach.

Second, the book is based on  “real data” from China’s written records instead of “pseudo-data” made of often dodgy estimates or, even worse, meaningless guesstimates. Here, the author’s unmitigated integrity, as well as his elevated proficiency in handling historical records written in the classical Chinese language, becomes most noticeable. With it, the author demonstrates what a good historical study requires: nonnegotiable training in history plus encyclopedic knowledge. The message from the author is that the heavy lifting in studying and understanding the basics in Chinese history cannot be and should not be skipped.

Third, despite the potentially dull nature of the subject area (i.e. an economic history of the long run) and the dense text and historical data (110 maps, figures and tables), the book is surprisingly an easy read compared to its counterparts. In addition, each chapter is self-contained which makes it highly suited for a layperson or a student.

Structurally, this book has ten substantial chapters, organized with a new periodization according to China’s economic performance rather than the old-fashioned pattern of regime changes from unification to fragmentation to re-unification and then to re-fragmentation (commonly known as fenjiu bi he, hejiu bi fen). What really mattered was China’s economic performance, with a great deal of flexibility in society. After a comprehensive review of the literature in the introduction (covering scholarship in English, Chinese and Japanese languages), the book moves to technology (chapter 1), empire-building (chapters 2-3), maturity in institutions (chapters 4-6), maturity in the economy (chapters 7-8), and ends with crises and challenges from the outside world (chapter 9).

Although the author decides not to offer final conclusions or remarks, the main argument put forward is that despite numerous changes in the state and society, economic life adapted and continued. People’s choices were highly rational — in the short run at least. In explaining China’s comparative “slowing down,” the usual clichés of “Oriental despotism,” “Confucian conservativism,” “dynastic cycle,” “rice economy,” and “high-level equilibrium trap” are not resorted to by the author. Even “Chinese-ness” is not considered anything mysteriously inferior (pace Max Weber). Rather, the author provides us with a new insight: China’s growth trajectories in the long run were either state-led or state-dependent. The market, and with it the general population, played but a limited role. In the Marxian jargon, therefor the “superstructure” determined the “economic base” in China.

For the interest of global or trans-national historians, von Glahn convincingly demonstrates that most elements that have been seen as unique in pre-modern Western Europe or Japan were present in pre-modern China, including technology, feudalism, the fiscal-military state, mercantilism, markets and capitalism. The only difference was that they appeared earlier in China. Such observation resonates the more radical views of Joseph Needham (Science and Civilization in China, Cambridge 1954-2015) and John Hobson (Eastern Origins of Western Civilization, Cambridge, 2004).

This is the kind of book that will almost certainly enjoy a long shelf life, like some of the most recognizable titles on China’s long-term history — such as Joseph Needham’s The Grand Titration (London, 1969), Mark Elvin’s The Pattern of the Chinese Past (Stanford, 1973), and Kang Chao’s Man and Land in Chinese History (Stanford, 1986). I strongly recommend this book to students of Chinese history, East Asian history and world/global history.

Recent publications by Kent G. Deng ( include Mapping China’s Growth and Development in the Long Run, 221 BC to 2020 (London: World Scientific Press and Imperial College Press, 2015) and (with Patrick O’Brien) “Establishing Statistical Foundations of a Chronology for the Great Divergence: A Survey and Critique of the Primary Sources for the Construction of Relative Wage Levels for Ming-Qing China,” Economic History Review.

Copyright (c) 2016 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (June 2016). All EH.Net reviews are archived at

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Asia
Time Period(s):Ancient
16th Century
17th Century
18th Century
19th Century

Routledge Handbook of Global Economic History

Editor(s):Boldizzoni, Francesco
Hudson, Pat
Reviewer(s):Mitch, David

Published by EH.Net (September 2017)

Francesco Boldizzoni and Pat Hudson, editors, Routledge Handbook of Global Economic History. New York: Routledge, 2016. xv + 471 pp. $240 (cloth), ISBN: 978-1-138-83803-1.

Reviewed for EH.Net by David Mitch, Department of Economics, University of Maryland, Baltimore County.
Francesco Boldizzoni (University of Turin) and Pat Hudson (Professor Emeritus, Cardiff University) have compiled a fascinating collection of 24 historiographical surveys on the economic history of countries and regions from six out of seven continents of the world bookended by their introductory essay (“Global Economic History: Toward an Interpretive Turn”) and their concluding essay (“Culture, Power, and Contestation: Multiple Roads from the Past to the Present”). Antarctica is presumably excluded due both to the absence of indigenous economic historians and the paucity of scholarly literature on the region. (See however, Bjorn L. Basberg, “Perspectives on the Economic History of the Antarctic Region,” International Journal of Maritime History (December 2006): 285-304.) The focus of each of these essays is on the historiography or alternatively history of economic history including the institutional setting for the practice of economic history for the geographical area under consideration rather than a survey of economic history as such. For twenty of the essays, the geographical entity considered is the nation state. The other four essays include Huri Islamoglu’s survey of what she calls “Middle Eurasia,” Luis Bertola and Javier Rodriguez Weber’s survey of Latin America, Ayedoji Olukoju’s survey of West Africa and Patrick Manning’s survey of Africa as a whole

A central defining feature of the volume is that in selecting authors for these pieces, the editors are explicit about their preference for indigenous economic historians. Boldizzoni and Hudson offer the following definition of an indigenous economic historian (p. 9): “Whenever possible historians who were trained and/or had based their career within their indigenous culture were favoured.” They offer the following justification for this principle of selection: “A distinctive contribution of the chapters therefore comes from their privileged access to sources. This is an aspect overlooked by global historians who have got accustomed to interpretations based upon cherry-picked secondary materials and upon inadequate, partial and delayed translations. We are not suggesting that indigenous scholars are inevitably more qualified than others to interpret their native cultures although we do accept, other things equal, that they have the opportunity to be better informed and that indigenous and external perspectives are likely to differ.” By my rough and ready reckoning, only two of the contributors clearly do not meet the indigenous criteria, Patrick Manning, the author of the Africa survey mentioned already, and Prasannan Parthasarathi who completed his Ph.D. at Harvard and has been in the History Department at Boston College since 1998. At any rate, the overwhelming majority of the authors in the volume would seem to meet the indigenous criteria as just described.

An important consequence of this for the surveys is that less attention than might otherwise occur is accorded to work by foreign scholars on the relevant territorial unit and, it would appear as a consequence, by cliometricians. The extent of inclusion of foreign and/or cliometric scholarship actually varies considerably across these pieces. Some chapters give no mention whatever to work by cliometricians or foreign scholars while others do so quite extensively. Thus both Naomi Lamoreaux’s chapter on the U.S. and that of Inaki Iriarte-Goni on Spain do give extensive coverage to cliometric work.

At first blush, it struck me that many of the chapters were thus wildly imbalanced by their lack of coverage of recent cliometric contributions or of major works by non-indigenous non-cliometric historians. Having heard, this past April, Bishnu Gupta deliver what I considered a tour de force Tawney Lecture featuring recent cliometric contributions to the economic history of India at the annual Economic History Society conference and having recently read Richard von Glahn’s magisterial The Economic History of China as well as having a sense of the considerable impact of Kenneth Pomeranz’s The Great Divergence, I found it quite jarring to read the chapters on India and China and to find minimal mention of cliometric or foreign scholarship in either — including no mention of the contributions of Gupta, Pomeranz, or von Glahn. The chapter by Parthasrathi on India does mention the scholarship of Eric Stokes and Indian expat Amartya Sen, and Li Bozhong’s chapter on China does cite John Fairbanks and Angus Maddison. I do not find it obvious that any advantage associated with better access to primary sources or superior language skills should so fully outweigh other advantages associated with historical, social science and quantitative training in leading global academic centers as to either fully exclude or at least minimize the contributions of such perspectives.

It was only after I read Li Bozhong’s chapter on China that the case for economic history as done by indigenous scholars became compelling to me, although Boldizzoni and Hudson in their introduction indeed refer to an “interpretive turn” in history in which the perspective of the participant becomes central. Li makes the case that there is a 2000-year tradition of a genre that has been termed Shi Huo studies or food and money/commerce studies (p. 293-94). While not organized in terms of more modern concepts of economic history, these treatises did provide records and descriptions of “economic activities, events, and institutions” (p. 295). While this literature established a long tradition of Chinese antecedents for economic history, Li acknowledges that economic history in China was not indigenous but was introduced from the modern West in the first half of the twentieth century. However, he argues that the field developed in China in response to the distinctively Chinese self doubts of the time and an indigenous Chinese desire “to understand what was wrong with traditional Chinese society and economy and their failure to make China a ‘modern nation’” (p. 296). Similar arguments arise for the emergence of economic history in the Soviet Union and in Latin America in the early twentieth century and in South Africa in the mid-twentieth century. Indeed some of the most poignant passages in the volume are those by Leonid Borodkin and Li relating how Soviet and Chinese economic historians lost their lives — not to mention their career positions — for advocating approaches to economic history that were viewed by those in authority as not adhering to an orthodox line. Kaoru Sugihara in his chapter on Japan similarly relates how scholarly participants in debates in 1930s were subject to arrest and torture by the Special Thought Police (p. 316). The influence of political economy concerns broadly defined is also emphasized in Bill Freund’s chapter on South Africa.

Rather than seeing economic history as a field involving standard practices that have simply diffused from more advanced to less advanced societies of the world, the alternative view is that even if influenced by what at the time seem more advanced societies, the particular mix of issues and approaches to addressing them by economic historians develop indigenously. Thus the case for economic history in a given geographic area being practiced by indigenous scholars seems to me more one of awareness and responsiveness to distinctively local issues rather than readier access to primary sources. And the issue is less whether indigenous is intellectually superior to foreign but that in developing an intellectual history of the field, greater awareness of indigenous influences and driving factors gives an important advantage over either foreigner or practitioner of universal cliometric methods in providing an account of indigenous developments. Furthermore, it is useful to have accounts of how economic history has emerged in indigenous circumstances over and above whatever contributions to the economic history of a given geographical area have been made by foreigners. It is precisely in providing a compilation of such accounts that the contribution of this volume lies.

And despite my initial reservations, I do find this a quite worthwhile and successful volume. The scholarship in each of the chapters is excellent and the editors are to be saluted for their efforts in recruiting such strong scholars from all corners of the globe. Those with serious interests in economic history will want to consult this volume and at a minimum request it for their library’s reference collection.

However, some further limitations of the volume do warrant comment. First, the nation state emphasis at points becomes awkward insofar as relevant geographic units for coverage do not fall into current nation state categories and this may explain some of the exceptions to it. Thus, it seems odd that the chapters on the Czech Republic by Antonie Dolezalova, Slovakia by Roman Holec, and Hungary by Gyorgy Kover make only minimal reference to the extensive literature on the economic history of the Austro-Hungarian Empire and indeed no chapter is included on Austria. The compelling chapter on Middle Eurasia by Huri Islamoglu seems to acknowledge that much is lost by an exclusive focus either on nation states such as Turkey or Iran or empires such as the Ottoman. She alludes to the value of a civilizational perspective in doing economic history in mentioning the neglect of the work of Marshall Hodgson as a scholar of Islamicate civilization as a whole. And the Latin American and African chapters alternate between country foci and continent wide or regional foci presumably reflecting the larger vistas one can obtain from a more regional or continental perspective than just considering an individual nation state.

Second, an apparent follow-on consequence of the nation state focus is a focus on the modern period since roughly the onset of the British industrial revolution from the mid-eighteenth century. So no coverage is given the literature on pre-eighteenth century economic history. This makes sense if the emphasis is on indigenous present-centered issues. But one misses the issue of how awareness of ancient, medieval and early modern roots can inform more contemporary historical analysis.

Third, while overtly aiming at overcoming disciplinary boundaries, the emphasis is on the economic history tradition. Karl Marx figures prominently and to a lesser extent Max Weber. Many of the chapters refer to the work of Fernand Braudel and the Annales School as well as the work of Immanuel Wallerstein. However, associated traditions in other social sciences seeking to integrate the economic with more general dimensions, including political science and sociology, are given minimal attention. For example, the major intellectual tradition of historical sociology reflected in the work of such prominent scholars as Charles Tilly and Michael Mann is hardly integrated into the accounts at all. No consideration is given to larger social science influences through organizations such as the Social Science History Association in the U.S. or the European Social Science History Conference. However, informative coverage is provided in the Dutch chapter by Ulbe Bosma on the origins and influence of the International Institute of Social History, based in Amsterdam and a key sponsor of the ESSHC.

Returning to the greater sensitivity of indigenous scholars to local issues raises the question of the general versus the particular in economic history. As both social science and history, there is presumably a case to be made for the presence of both. One place where this tension arises but is not considered as fully as it could have been in this volume concerns the extent to which economic historians should take up issues which have significance for the present within which they are working. This is what Claudia Goldin has called “Exploring the Present through the Past.” (See Claudia Goldin, “Exploring the Present through the Past: Career and Family across the Last Century,” American Economic Review 87, no. 2 (1997): 396-399.)

And this is a factor has had an influence on cliometric work in U.S. economic history. Thus one factor contributing to the intensity of the debate over slavery among U.S. economic historians in the late 1960s and early 1970s was concerns about racial unrest in American cities at this time. Major strands of research have developed since on issues concerning black economic progress in the advent of the Civil Rights movement and Great Society programs and on the impact of urban renewal and housing policies in the U.S. Similarly, another major strand of research focusing on the role of gender in the economy can be seen as reflecting increasing contemporary concerns with this issue. Yet the concern can arise that this infuses a presentism and whigishness into economic history with a neglect of perspectives of historical actors or longer-term general issues.

Given their preference for indigenous scholarship and a desire to avoid privileging occidental, metropole approaches, Boldizzoni and Hudson appear to have hoisted themselves by their own petard with regard to the organization of chapters in the volume. The area coverage essays is grouped into four parts. It starts with a lead section on “Anglo-American Traditions,” which includes chapters on Britain, the U.S., Canada, and Australia. Then it proceeds to “West European Roots and Responses” (which includes chapters on Germany, France, Italy, Sweden, Spain, and the Low Countries). Part III is a “Turning to the East,” which is actually the second world of former Soviet Bloc countries including not only the Russian Federation but also Poland, the Czech Republic, Slovakia, and Hungary. Finally, Part IV ends with “The Wider World,” which consists of an undifferentiated set of ten chapters but proceeding from Asia to Latin America and ending with three chapters on African regions. No explanation is provided for this sequencing but what is conveyed — even if unintentionally through this grouping and ordering — is a sense of hierarchy and diffusion from more enlightened Anglo-American regions down to more backward eastern European and then Asian and Latin American regions with African regions at the very bottom. However, many of the indigenous issues regarding national identity in economic history come through especially forcefully in the African and Latin American cases as well as those in Asia. Given the indigenous theme of the volume, highlighting more fully these latter cases at the outset would seem to be warranted.

Finally, it should be noted that an important contribution of the volume’s chapters is to consider the infrastructure supporting research and teaching in economic history — including not just the academic location of faculty and research positions in economic history but also the presence of government statistical agencies in collecting the data that can be seen as foundational for economic history research. In their concluding assessment, Boldizzoni and Hudson do make useful observations on the mix of demand- and supply-side factors including the role of government and foundation support for economic history. While there is much more that could be done in generalizing these findings, the material assembled in these essays provide an important foundation for considering the role of infrastructure in supporting the development of economic history research.

I hope these comments convey some of the respects in which this volume is both stimulating and provocative. I have not attempted to convey the full richness of its various essays. While not systematically a handbook in the sense of comprehensively surveying a gamut of methodological issues, the variety of levels of analysis and approaches taken by contributors does provide a quite valuable overview of the approaches that can be taken to the history of economic history. Not many readers perhaps will end up reading the volume cover to cover. Nevertheless, the contrasting assessments even within given geographic areas make browsing through the volume intriguing. For example, Inaki Iriarte-Goni’s and Sandra Kuntz Ficker’s upbeat assessments for Spain and Mexico respectively regarding the vibrant blending of various historical methodologies for the economic historiography of their countries present striking contrasts with Boldizzoni’s depiction of a field in decline for the case of Italy or Luiz Felipe de Alencastro’s portrait of involuted tendencies in the case of Brazilian economic history. Even cliometrically inclined scholars could potentially benefit from reading about the perspectives of those who remain resistant to their methodologies.

David Mitch is Professor of Economics at the University of Maryland, Baltimore County. He is the author of “Economic History in Departments of Economics: The Case of the University of Chicago 1892 to the Present,” Social Science History (2011) and “A Year of Transition: Faculty Recruiting at Chicago in 1946,” Journal of Political Economy  December (2016)

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Subject(s):Development of the Economic History Discipline: Historiography; Sources and Methods
Geographic Area(s):General, International, or Comparative
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Money in the Medieval English Economy: 973-1489

Author(s):Bolton, Jim
Reviewer(s):Munro, John

Published by EH.Net (June 2013)

Jim Bolton, Money in the Medieval English Economy: 973-1489.? Manchester: Manchester University Press, 2012.? xv + 317 pp.? $35 (paperback), ISBN: 978-0-7190-5040-4.

Reviewed for EH.Net by John Munro, Department of Economics, University of Toronto.

Embracing a most impressive range of research, cogently organized, penetrating in its analysis of all aspects of the medieval English economy related to money, and elegant in its prose, Bolton?s Money in the Medieval English Economy: 973-1489 is one of the most important books published in English medieval economic history during the past two decades.? Indeed, I do not know of any other comparable and equally comprehensive study of English medieval monetary history. The book is cast into two unequal parts.? Part I (pp. 3-86) is theoretical, beginning with the Fisher Identity and the relationships between money, population, and prices in the medieval economy, followed by uniformly excellent chapters on the roles of money in a developing market economy: in terms of? bullion supplies, coinage, and credit instruments.? The longer Part II (pp.? 87-309), analyses the changes in coinage and other forms of money, and then in more detail the changing roles of money in the actual economy, sector by sector, over three distinct eras: 973-1158, 1158-1351, and 1351-1489.
This section thus begins with the monetary reforms of Edgar of Mercia, first to be crowned and remain king of England, in 973; and it ends with Henry VII?s issue of the first gold sovereign coin, representing the value of one pound sterling, in October 1489 (the shilling came later).? A far more logical end-point would have been the onset of Henry VIII?s Great Debasement in 1542-44, as in Martin Allen?s recent, magisterial Mints and Money in Medieval England (2012), to which Bolton acknowledges his great indebtedness. Manchester University Press?s severe space limitations evidently prevented Bolton from extending his study beyond 1489, and also from including his 25-page bibliography, now available only online (URL on p.? 310).
Beyond the general objectives just outlined, Bolton?s book has two other major goals.? The first is achieved with great success: to prove, in chapters 6 and 7, that England did not acquire a fully-developed money economy until the era from 1158 to 1351, i.e., up to the onset of the Black Death.? In his fully justifiable view, a money economy essentially meant a well-functioning market economy, one that required not only a considerable expansion in the circulating coinage but also rapid population growth and the concomitant development of towns and villages with urban and regional fairs, the establishment of effective forms of royal taxation, the development of the requisite commercial, financial and legal institutions, especially those needed for various forms of credit; and for the latter, the spread of both literacy and numeracy.? He demonstrates that, while population growth from 1086 (Domesday Book) to 1300 at least doubled and may have tripled (from 2.0/2.5 million to 5.0/6.0 million), the money supply expanded by 27 to 40 fold: from ?25,000/?37,500 to more than ?1.0 million ? most of that from the 1220s, though attributing the major increases in coinage to the Central European silver mining booms of ca. 1160 to ca. 1230.? He cites Mayhew?s estimates (2004) that per capita GDP rose from ?0.18 in 1086 to ?0.78 in 1300 (and to ?1.52 in 1470: Table 9.2, p. 295). Depending on sources,? methodology, and population estimates, he contends that per capita supplies of silver coin rose from 3.2d/6.0d in 1042-1066 to 65.5d/101.3d in 1310 (Table 2.2, pp. 25-27).? Thereafter, the introduction of gold coinages (from 1343-51) created significant problems for both our estimates of money supplies and the well-being of the English domestic economy, especially since the English government consistently and seriously overvalued gold to the severe detriment of silver coinage supplies (in effect, England exported silver to acquire gold), given that silver coin was the chief mechanism for transacting domestic trade, wages, and other such payments.
That problem, however, leads us to his second goal, for which he is much less successful: to refute the current ?monetarist? views that later fourteenth- and fifteenth-century England experienced severe monetary scarcities (whether seen in terms of stocks or flows), most especially in silver coin supplies.? A disclaimer is in order: I am evidently one of those so-called monetarists under attack.? The tenor of the book becomes most evident in his statement (p. 75) that: ?It [the money supply] was not the sole determining factor [of price levels] as monetarist historians argue.?? I do not know of anyone who now does so.? That negative viewpoint may be deduced from his lengthy discussion, in his opening chapter, of the well-known and much abused Fisher Identity: M.V = P.T.? Thus, if one accepts the view that changes in V (velocity) and T (volume of transactions) cancel each other out, one might deduce that the price level P ? usually measured by the Consumer Price Index (CPI) ? is directly and proportionately a function of changes in M.?? But, even if some historians still use this antiquated formula, few if any economists do so, preferring? the modernized version in the form M.V = P.y (the occasionally-used equation M.V = GNP is unacceptable as an analytical tool). In this version, y, representing real net national income (or output), thus replaces the completely unmeasurable T; and V thus becomes the income velocity of high-powered money (however defined). Most economists now prefer even more to use the Cambridge ?cash balances? approach, with a demand-for-money equation: M = k.P.y, in which M, P, and y remain the same, while k represents that proportion of national income that the public collectively chooses to hold in non-earning real cash balances, according to determinants of liquidity preference, so that k is often sensitive to changes in interest rates.? Mathematically k is the reciprocal of V.

As may be deduced from either (revised) formula, an expansion in M may have been offset by some decline in V (with a lesser need to economize on coin use) and thus by some increase in k, and also by an increase in y:? especially if an increased M led to a decline in interest rates (with no changes in liquidity preference) and to a greater stimulus for investment and trade, so that P would have risen less than proportionately, if at all.? But the converse was not necessarily true, for the various forces contracting monetary stocks may also have constricted monetary flows: i.e., also reducing V and thereby increasing k.? These revised formulae clearly demonstrate that any analysis of changes in the price levels requires a detailed understanding of changes in both money stocks and money flows (especially liquidity preferences) but also changes in the real economy, as represented by y:? i.e., changes in population, technology, economic organizations, real capital investments, etc.? In my recent publications involving coinage debasements, I have sought to prove that in late-medieval and early-modern Europe, increases in M never resulted in proportional increases in the price level, even during Henry VIII?s Great Debasement (Munro 2011, 2012a, 2012b). None of this constitutes the supposed ?monetarism? that Bolton portrays, except to indicate that ?money matters? (a proposition that Bolton admittedly never denies).
Bolton?s specific goal, in the final two chapters, 8 and 9, is to prove that increases in the supply and use of various credit instruments fully offset the two supposed ?bullion famines?: those from ca. 1375 to ca. 1420 and from ca. 1440 to ca. 1480.? Indeed, his focus on the expanding role of credit allows him fully to accept the nature and extent of these two ?bullion famines? as portrayed by so-called ?monetarists,? in contrast to the published views of the current group of ?anti-monetarist? historians (such as Sussman 1990, 1993, 1995, 1998, 2003).? He thus accepts the three prevailing theses to explain that coinage scarcity: a severe decline in outputs of European silver and gold mines; the disruptions in the trans-Saharan African gold trade to the Mediterranean; and increased bullion outflows to the East, particularly for purchases of Asian spices and other luxury goods.? But this third thesis seems inconsistent with his view that late-medieval England always enjoyed a surplus in its balance of payments with the continent. I myself am far from convinced that any payments deficit with the East, so chronic from Roman times, became proportionately worse during the later-Middle Ages, especially because the specific evidence adduced in favor of this thesis (from Ashtor 1971, 1983) comes from the 1490s, when the Central European mining boom, having commenced in the 1460s (peaking in the 1530s) was supplying vast new quantities of silver to promote increased Venetian trade with the Levant (Munro 2003a).? The more significant of these factors, therefore, may have been the reduction in European inflows of African gold, from the 1370s: a trade that the Portuguese later sought to restore, from the 1440s, and with considerable success from the 1470s.
What Bolton neglects to consider as a major factor in these ?bullion famines? is changes in Cambridge k (and thus in V): i.e., an increased liquidity preference in the form of hoarding ? not by burying precious metals in the ground but by converting them into plate and jewelry, readily changeable back to coin, in times of war-induced taxation.? The one (other) historian who has given such emphasis to changes in liquidity preference and hoarding (?thesaurisation?), as a reaction to general economic pessimism and risk aversion in times of chronic plague, other forms of depopulation, economic contraction and periodic depressions, is Peter Spufford (1988); but Spufford still places greater emphasis on the roles of the European mining slump and bullion outflows to the East.

Bolton obviously does not wish to entertain the Spufford thesis ? which necessarily implies a decrease in the income velocity of money ? because he seeks to show that an increased use of credit fully offset the bullion famines by increasing either V or M or both.? In this debate, on the role of credit, his chief opponent is Pamela Nightingale (1990, 1997, 2004, 2010), and indeed the two have continued this debate is recent issues of the British Numismatic Journal (2011, 2013).? I continue to support Nightingale.? That might seem obvious for one accused of being a ?monetarist,? so that readers of this review must judge for themselves by a careful examination of their respective publications (and the others cited here).? In my view, Bolton fails to refute or contradict Nightingale?s two major propositions.? The first, and most important, is that the supply of credit remained essentially a function of the coined money supply, because most (if not all) credit transactions depended on the use of coin, and especially on the creditor?s confidence of being fully repaid in coin:? so that credit generally expanded with increases in the coined money supply and conversely contracted with any decline in the supply or circulation of coined money, often disproportionately.? On this important issue, Nightingale receives full support from many other monetary historians: Peter Spufford (1988), Nicholas Mayhew (1974, 1987, 1995, 2004), Reinhold Mueller (1984: for Italy), Frank Spooner (1972: for France), and most recently (if less strongly) Chris Briggs (for England: 2008, 2009).? Nightingale?s? second proposition, also endorsed by most of these historians, is that the wide variety of credit instruments used in late-medieval England were not yet negotiable, and thus, while affecting velocity (V), they did could not and did not add to the money supply (M) ? though the differences between the two may here be moot.? To be sure, many of these credit instruments were, and long had been, assignable ? transferable to third parties.? But as Eric Kerridge (1988) ? whom Bolton cites for other purposes ? long ago stressed: ?transferability is not negotiability,? a point that Michael Postan had also earlier made (1928, 1930), despite Bolton?s assertions to the contrary. The fully developed legal institutions required for secure negotiability of commercial bills, in protecting the full rights of assignees and bearers to claim and enforce payment on redemption, were first established in the Habsburg Netherlands by imperial legislation enacted in 1537 and 1541, as Herman Van der Wee has clearly demonstrated (1963, 1967, 1975, 2000),? Not until the early seventeenth century do we find comparable full-fledged English acceptance of negotiability and no national legislation until the Promissory Notes Act of 3 & 4 Anne c. 8 (1704).
Equally essential for full negotiability was the legal acceptance of discounting, a problem related to the issue of usury, given short shrift not only by Bolton but also by Nightingale and most other financial historians (except, notably, De Roover 1967, also in Kirschner 1974).? To be sure, we may fairly assume that many medieval creditors did disguise interest in a loan by increasing the amount stipulated for repayment; but disguising such implicit interest was far more difficult to achieve in discounting (selling a bill for less than face value before redemption).? As Van der Wee has also demonstrated for the Habsburg Netherlands, discounting, along with multiple transfers by endorsement, spread only after an imperial ordinance, issued in October 1540, explicitly permitted interest payments on commercial loans up to 12%.? He also demonstrated that nominal interest rates in the Netherlands dropped sharply in this era, by almost half: from 20.5% in 1511-15 to 11.0% in 1566-70; real rates dropped even further with the inflation of the Price Revolution.? Similarly, according Norman Jones (1989), an even sharper fall in English interest rates on commercial bills took place after Elizabeth I, in 1571, restored her father?s abortive statute (1545) permitting interest payments up to 10%: from about 30% in the 1560s to 10% by 1600, with further declines in the seventeenth century, to about 5% (see also Homer and Sylla 1997, pp. 89-143; Munro 2012c).? Bolton has also not taken account of the significantly increased restrictions on the use of credit in fifteenth century England, from both anti-usury and bullionist legislation, and also the prevailing social attitudes that remained deeply imbedded until the early Stuart era. As Lawrence Stone (1965) so aptly commented on Elizabethan England: ?Money will never become freely or cheaply available in a society which nourishes a strong moral prejudice against the taking of any interest at all. ? If usury on any terms, however reasonable, is thought to be a discreditable business, men will tend to shun it, and the few who practise it will demand a high return for being generally regarded as moral lepers.?
If we were to accept, instead, Bolton?s contentions that an increased use of credit fully offset the coined money scarcity evident in the two bullion famines, then we would then be hard pressed to explain the sharp deflation of these two periods.? Bolton evidently sees no need to do so, for his book, most surprisingly, contains no tables or graphs on the price level (CPI); he provides only one price graph, on relative prices for just wheat and oxen, from 1160 to 1350 (p. 183).? Demographic decline cannot itself explain the periods of deflation (apart from its possible impact on V).? For note that the Black Death (1348-49), quickly reducing population by about 40%, was followed by three decades of rampant inflation: when the Phelps Brown and Hopkins CPI (1451-75 = 100) rose from a quinquennial mean of 85.53 in 1341-45 to one of 136.40 in 1366-70, falling slightly to 127.35 in 1371-75.? Thereafter, the CPI fell to a low of 103.70 in 1421-25, for an overall decline of 23.94%, despite the 16.67% silver debasement of 1411-12.? Rising thereafter to a peak of 124.22 in 1436-40, the CPI fell by 25.40 % during the second ?bullion famine?: to a nadir of 92.667 in 1476-80, again despite the 20.0% silver debasement of 1464.? Recent alternative historical consumer prices indexes ? those by Robert Allen (2001) and Gregory Clark (2004, 2007), neither cited by Bolton ? show the same patterns of inflation and deflation demonstrated in the older Phelps Brown and Hopkins Composite Price index (1956, 1981: revised by Munro).
Bolton consequently does not take full account of the negative economic consequences of deflation.? If all relative prices had moved together in tandem, with proportional changes, then neither deflation nor inflation would matter. But price changes have never done so, especially factor prices in relation to commodity prices.? In general, deflation raises the burden of factor costs for borrowers and entrepreneurs, while inflation reduces that cost burden.? The most familiar such phenomenon is downward nominal-wage stickiness ? so widespread throughout Western Europe, unaffected by demographic factors, and persistent in England itself until 1920 (Smith 1776/1937; Phelps Brown and Hopkins 1955/1981; Munro 2003b).? But nominal interest rates and land rents were generally also sticky in this era, especially when defined by contracts, though for much shorter periods.? Thus all these real factor costs rose, at least in the short run, with the fall in the Consumer Price Index. If creditors were more reluctant to lend in times of monetary scarcity and depression, for fear of non-payment, debtors were also reluctant to borrow more in facing prospects of higher real costs in payments of both interest and the principal.? For both creditors and debtors that reluctance, in especially the mid fifteenth century, may have been due as much to the adverse circumstances of the commercial depressions that accompanied that bullion ?famine? and deflation (Hatcher 1996; Nightingale 1997; Bois 2000).
A final problem, and one that pervades much of the book, concerns the proper distinctions between bullion, coinage, and moneys-of-account, and the closely related problem of coin debasements.? Bolton ought to have followed the model set forth long ago by Sir Albert Feavearyear (1931/1963), whose absence from the bibliography is astonishing.? By this model, silver and gold coins, bearing the official stamp of the ruler, generally circulate by tale (official face value), commanding an agio or premium over bullion.? That agio represents the sum of the minting costs of brassage (for the mint-master) and seigniorage (a tax for the ruler), added to the mint?s bullion price; but also, for the public, it represents their savings on transaction costs in not having to weigh the coins and assay their proper fineness.? As Douglass North (1984, 1985) has demonstrated, transaction costs are always subject to considerable scale economies: thus they are a major burden in small-scale, low-valued silver transactions in retail trade and wage payments, but far less so in very large volume, high-valued transactions, especially those involving gold in wholesale and foreign trade and major debt transactions.? Bolton is very ambiguous on whether coins circulated by weight or by tale, ignoring the scale economies of transactions, but seemingly supporting the former view (despite his evidence presented on pp. 120-21).?
An increased tendency for coins to be accepted only by weight, in higher-valued transactions, arose when the quality of the circulating coinage inevitably deteriorated over the years and decades following a general recoinage: when its silver contents diminished through normal wear and tear, but especially when? the coinage became more and more corrupted by the nefarious practices of clipping, ?sweating? and counterfeiting ? none of which would? have been profitable had coins earlier circulated by weight. Such deterioration, the loss of public confidence, and growing refusals to accept coins by tale meant that all coins lost their former agio, with four consequences.? First, merchants, still accepting coins by tale, sought compensation for perceived silver losses by raising their prices; second, good, higher-weight coins were culled and hoarded or exported, often in exchange for foreign counterfeits (Gresham?s Law); and third, bullion ceased to flow to the mints, so that the king lost? his seigniorage revenues.? Fourth, the king consequently had no alternative but to debase his coinage to bring it in alignment with the current depreciated circulation, thereby restoring the agio and resuming the flow of bullion to the mints.? In Feavearyear?s view, this purely defensive reaction to coinage deterioration explains all English silver debasements before Henry VIII?s Great Debasement of 1542-52: in particular, the 10.00% silver reduction of 1351; the 16.66% reduction of 1411/12; the 20.00% reduction of 1464; and the 11.11% reduction of 1526 ? so that fine silver content of the penny fell from 1.332 g in 1279 to just 0.639 g in 1526.? Henry VIII?s Great Debasement was undertaken, however, for purely fiscal motives (as had long been the continental pattern): to augment seigniorage revenues. But the evidence on seigniorage rate changes indicates that such fiscal motives had also prevailed in Edward IV?s silver and gold debasements of 1464-65 (Munro 2011).
None of this analysis or any credible explanation for debasement can be readily found in Bolton, who even denies that English kings debased their coinages before the Great Debasement, on the overly literal grounds that the sterling silver fineness (92.5%) was always maintained (except for the 1336 issue of 10 dwt halfpence = 83.33% silver halfpence).? Almost all monetary historians define debasement instead as the reduction of the quantity of fine silver or gold in the money-of-account unit (pence, pound). That was achieved by a diminution in fineness (adding more base metal), and/or by a reduction in weight ? but also, for gold coins, by an increase in their official exchange rates.? Thus Edward IV?s initial debasement of gold in August 1464 was achieved by increasing the value of the traditional, physically-unchanged gold noble, from 6s 8d to 8s 4d.? In this respect, I also regret the absence, for a book on money in the medieval economy, of tables on English mint outputs (except for one graph on the Calais mint), in both pounds sterling and kilograms of fine metals, with related details on specific coinage issues in terms of weight, fineness, and mint charges ? though much of that information can be found in both Christopher Challis (1992) and Martin Allen (2011, 2012). ???
Other readers may, however, place much less emphasis on the issues raised in this review; and some, suspecting an unwarranted ?monetarist? bias in this review, may well support Bolton?s views, especially on the role of credit in the late-medieval economy.? Indeed, I must stress the significant contributions that Bolton has made in this field, especially those based on his ongoing research on the Borromei bankers (Milan), and the roles of other Italian merchant-banking firms in both English foreign and domestic trade, i.e. in London. As I indicated at the outset of the review, this book is one of the most important published in English economic history in the past two decades, and one in which the virtues well outweigh the defects.? I recommend that you buy it; if so, get the online bibliography now, before it disappears from the web.


Allen, Martin (2011), ?Silver Production and the Money Supply in England and Wales, 1086 – c. 1500,? Economic History Review, 64: 114-31.
Allen, Martin (2012), Mints and Money in Medieval England. Cambridge and New York: Cambridge University Press.
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Allen, Robert (2001), ?The Great Divergence in European Wages and Prices from the Middle Ages to the First World War,? Explorations in Economic History, 38: 411-47.

Ashtor, Eliyahu (1971), Les m?taux pr?cieux et la balance des payements du Proche-Orient ? la basse ?poque.? Paris: S.E.P.E.N.

Ashtor, Eliyahu (1983), Levant Trade in the Later Middle Ages.? Princeton: Princeton University Press.

Bois, Guy (2000), La grande d?pression m?di?vale: XIVe – XVe si?cles: le pr?c?dent d?une crise syst?mique. Paris: Presses Universitaires de France.

Bolton, James (2011), ?Was There a ?Crisis of Credit? in Fifteenth-Century England?? British Numismatic Journal, 81: 146-64.

Briggs, Chris (2008), ?The Availability of Credit in the English Countryside, 1400-1480,? Agricultural History Review, 56: 1-24.

Briggs, Chris (2009), Credit and Village Society in Fourteenth-Century England. Oxford and New York: Oxford University Press.

Challis, Christopher (1992), ed., A New History of the Royal Mint. Cambridge: Cambridge University Press.

Clark, Gregory (2004), ?The Price History of English Agriculture, 1209-1914,? Research in Economic History, 22: 125-81.

Clark, Gregory (2007), ?The Long March of History: Farm Wages, Population, and Economic Growth:? England, 1209-1869,? Economic History Review, 60: 97-135.

De Roover, Raymond (1967), ?The Scholastics, Usury, and Foreign Exchange,? Business History Review, 41: 257-71.
Feavearyear, Albert (1931/1963), The Pound Sterling: A History of English Money, 2nd rev. edn. by E. V. Morgan. Oxford: Clarendon Press, 1963.

Hatcher, John (1996), ?The Great Slump of the Mid-Fifteenth Century,? in Progress and Problems in Medieval England, ed. Richard Britnell and John Hatcher.? Cambridge and New York: Cambridge University Press, pp. 237-72.

Homer, Sidney, and Sylla, Richard, A History of Interest Rates, 3rd rev. edn.? New Brunswick, N.J.: Rutgers University Press, 1996, pp. 89-143

Jones, Norman (1989), God and the Moneylenders: Usury and Law in Early Modern England.? Oxford: Basil Blackwell.

Kerridge, Eric (1988), Trade and Banking in Early Modern England. Manchester, Manchester University Press.

Kirshner, Raymond (1974), ed., Business, Banking, and Economic Thought in Late Medieval and Early Modern Europe: Selected Studies of Raymond de Roover. Chicago, University of Chicago Press.

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Munro, John (2012a), ?The Technology and Economics of Coinage Debasements in Medieval and Early Modern Europe: with Special Reference to the Low Countries and England,? in Money in the Pre-Industrial World: Bullion, Debasements and Coin Substitutes, ed. John Munro, Financial History Series no. 20. London: Pickering & Chatto Ltd., pp. 15-32, 185-89 (endnotes).

Munro, John (2012b), ?Coinage Debasements in Burgundian Flanders, 1384-1482: Monetary or Fiscal Policies?? in Comparative Perspectives on History and Historians: Essays in Memory of Bryce Lyon (1920-2007), ed. David Nicholas, James Murray, and Bernard Bacharach.? Medieval Institute Publications, University of Western Michigan: Kalamazoo, pp. 314-60.

Munro, John (2012c), ?Usury, Calvinism and Credit in Protestant England: From the Sixteenth Century to the Industrial Revolution,? in Religione e istituzioni religiose nell?economia europea, 1000 -1800/ Religion and Religious Institutions in the European Economy, 1000 -1800, ed. Francesco Ammannati. Florence: Firenze University Press, pp. 155-84.
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John Munro is Professor Emeritus of Economics at the University of Toronto, specializing in the economic history of the late-medieval Low Countries and England, with a focus on money and textiles.? His recent publications in monetary history (2011 – 2012) are listed in the bibliography above; he has also recently published:? ?The Rise, Expansion, and Decline of the Italian Wool-Based Cloth Industries, 1100 -1730:? A Study in International Competition, Transaction Costs, and Comparative Advantage,? Studies in Medieval and Renaissance History, 3rd series, 9 (2012), 45-207.

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Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
Time Period(s):Medieval