Wednesday, March 21, 2012

Philip Grierson on the Origin of Money

The late Philip Grierson (1910–2006), historian and professor of numismatics at Cambridge University (from 1971), wrote an essay called The Origins of Money (London, 1977). The monograph is very short (only 33 pages of main text), but it has become something of a classic. Grierson, of course, to some extent relied on the findings of earlier literature, especially anthropologists like A. H. Quiggin (1949) and Dalton (1965), and economists with a knowledge of the anthropological literature like Einzig (1948 and 1949).

A summary of The Origins of Money is here:
(1) Grierson is careful to emphasise that the origin of coinage is not the origin of money (Grierson 1977: 7). Coinage in Western civilization makes its appearance in the third quarter of the 7th century BC in Asia Minor (that is, what is now Western Turkey), and then spread to Greece and other areas. The first coins were of electrum, an alloy of gold and silver. As Grierson says, “money lies behind coinage,” and coins often replaced “some earlier form of ‘primitive’ money” (Grierson 1977: 12).

(2) Grierson, from the writings of anthropologists like Quiggin (1949), is aware of the existence of “primitive” money, which includes “non-commercial money”, “social currency”, “social money” or “special-purpose money” (Grierson 1977: 15). “Primitive” money might include “general purpose money” (or what I would call commercial money) but there is a useful distinction between
(i) non-commercial money/social currency, and
(ii) general purpose money/commercial money.
Non-commercial money/ social currency is mainly used in social interactions, often formal social events such as marriage, wergild and bloodwealth payments, political relations (potlatch, moka), and fines and compensations (compensation for adultery, or for things lost), and may only be rarely used, if at all, for everyday purchases or commercial transactions.

(3) Grierson (1977: 16) contends that the property common to both non-commercial money/social currency and general purpose money/commercial money is the measure of value function. Grierson makes an important point: the task of the historian or scholar studying the origin of money is
“… is not essentially different from that of the student of other systems of measurement, though it is a much more complex one. Of the basic measures of length, area, volume, and weight, only those of length proved easy for our forebears to devise, since only for them did the human body, or simple human activities, like walking, running, and ploughing, provide satisfactory units. Units of value, like units of area, volume, and weight, could only be arrived at with great difficulty, in part because natural units are absent, in part because of the much greater diversity of commodities that had to be measured and the consequent difficulty of finding common standards in terms of which they could reasonably be compared.” (Grierson 1977: 18).
(4) Grierson notes how in the Homeric poems the Iliad and Odyssey, which to some extent reflect the social realities of late Dark Age (c. 1200–800 BC) and early Archaic period (800–480 BC) Greece, cattle or oxen are the unit of account (or measure of value). Goods are priced in terms of oxen, but oxen do not appear as a general or common physical medium of exchange (Grierson 1977: 16; for more recent work of the origin of money in Greece, see Peacock 2006 and 2011). The state of affairs where some thing functions as a standard of value but not a general, physical medium of exchange is in fact a not uncommon phenomenon in history (Grierson 1977: 17). The existence of non-commercial money/social currency very probably precedes commercial money in many societies.

(5) So where does the origin of non-commercial money as a measure of value come from? Grierson (1977: 19) proposes that the social custom of wergeld and wergeld-like customs are the answer. Wergeld (literally, “man-money”) is the paying of compensation for murder or other injuries and even theft of personal property. The object of wergild is to stop blood feuds and violence in revenge, and to provide an adequate measure of the things lost and compensation. The objects that arose as standards of value as non-commercial money in tribal wergild payments did not necessarily arise by barter spot trade of the most saleable commodity (Grierson 1977: 21; 28–29). Often in tribal societies objects of high social status or conferring “prestige” will function as non-commercial money, not simply common barter goods. Most interesting is the linguistic evidence from many societies which shows how the word for money arose etymologically from concepts related to wergild and debt. The English word “pay” comes via French payer from the Latin word pacare, meaning “to pacify,” “make peace with.” In certain societies, non-commercial money arose as a standard for measuring value related to wergild-like customs and possibly even things like bride-wealth, but did not develop into general purpose money/commercial money. Where commercial money arose from non-commercial money, Grierson makes the following argument:
“… where societies have developed the notion of money as a general measure of value, it will, I believe, most often be found that a system of legal compensation for personal injuries, at once inviting mutual comparison and affecting every member of the community, lay behind them.”(Grierson 1977: 29).
(6) I should emphasise how none of this really contradicts the chartalist or credit theories of money. What it means is that money often has a history before it becomes a creature of the state, but this history is quite frequently not what neoclassical and Austrian economists suppose it is, with their dogmatic universal barter spot trade origin of money theory (e.g., Menger 1892) and the cult of metallism.

Dalton, G. 1965. “Primitive Money,” American Anthropologist 67: 44–65.

Einzig, Paul. 1948. “New Light on the Origin of Money,” Nature 162.4130 (25 December): 983–985.

Einzig, Paul. 1949. Primitive Money: In Its Ethnological, Historical, and Economic Aspects, Eyre & Spottiswoode, London.

Grierson, P. 1977. The Origins of Money, Athlone Press and University of London, London.

Menger, C. 1892. “On the Origin of Money,” Economic Journal 2: 238–255.

Peacock, M. S. 2006. “The Origins of Money in Ancient Greece: The Political Economy of Coinage and Exchange,” Cambridge Journal of Economics 30: 637–650.

Peacock, M. S. 2011. “The Political Economy of Homeric Society and the Origins of Money,” Contributions to Political Economy 30: 47–65.

Quiggin, A. H. 1949. A Survey of Primitive Money: The Beginnings of Currency, Methuen, London.


  1. In the film, Unforgiven, the cowboys who attacked a prostitutes were required to give her some of the horses they were rearing. That didn't mean the horses were "money" in the modern sense of the word. Clearly, they had a different function to the dollar bills people used to trade goods and services.

  2. Found through another blog (increasingmu): Selgin lecture on the history of money and banking within the U.S. specifically.