“Throughout the greater part of the immense region which includes Europe to the West and stretches to Further India in the East, cattle were the chief form of wealth, and, as is seen in Africa, where cattle form the standard of value, varieties of primitive money are undeveloped. .... Cattle, however satisfactory as wealth, as a standard of value, or even as a medium of exchange in the larger affairs of life, cannot properly be called money; and need must often have been felt for some more easily transportable and divisible form.” (Quiggin 1949: 187–188).In many societies, cattle or oxen, then, appear to have been an important form of wealth, but also fundamentally important first as ceremonial or non-commercial money in social customs like marriage and blood money, and they also often had a religious character.
“The inclusion of Europe in the cattle-currency-complex has been noted above (p. 187). Ridgeway showed that in the regions of Asia, Europe and Africa, where the system of weight standards which has given birth to all the systems of modern Europe had its origin, the cow was universally the chief object of barter (1892, p. 387).
Cattle were the standard of wealth and unit of value; they had a sacred character and were offered to the gods as well as presented to potentates; they were exchanged for slaves and extorted as tribute. The ‘bride-price’ of a woman and the wergeld of a man were calculated in cattle.
Evidence of the cattle standard can be found in the Rig Veda of India and the Zend Avesta of Persia (as seen above), in the Brehon Laws of Ireland and the Ancient Laws of Wales. We have seen it actively at work in Eastern Asia and in Eastern Africa, and though it has vanished from more progressive Europe, traces are still obvious. There is the familiar literary evidence in the equation of cattle and money, pecus and pecunia. Ulfilas translates pecunia by the Gothic faihu, cattle, whence our word ‘fee’, which meant cattle, wealth or money in King Alfred’s day. Gothic skatts, meaning cattle, tribute or coin, becomes the O.E. coin sceat, or the ‘scat’, still known as a tax in the North.
Ridgeway notes (1892, p. 4) how accounts were kept in cows a generation or so ago in the Caucasus, as they were also in Scotland; in Hungary the prospective bridegroom's conventional opening is ‘Pray tell me if you have a cow to sell?’ (Kovalensky, 1891, p. 27) and ‘bride-price’ is still paid in cattle in Albania (Hasluck, 1933).
Where a cattle standard exists, this is adequate, and discourages the growth of primitive currencies, as has been already seen. It is noteworthy that the largest and most varied collections of primitive money come from cattle-less areas.‘A traveller once asked a patriarch [in Mongolia] owner of several thousand horses why he did not sell some every year. He replied, “Why sell what I delight in? I do not need money. If I had any I would shut it up in a box where no one would see it. But when my horses run over the plain everyone sees them and knows that they are mine and is reminded that I am rich” (Bureau, 1888, p. 71).Cattle cannot, however, provide all the requisites for money. They set the standard of value, they are less often units of exchange, and never sufficiently portable or divisible.” (Quiggin 1949: 277).
In African societies, for example, cattle and other goods were used for bride-price and fines (Quiggin 1949: 96, 99–100, 102) and were used in an abstract standard of value, but were not, generally speaking, an actual general medium of exchange:
“North, East and South Africa have been for so long the home of cattle-keeping peoples that cattle, whether in the form of camels, sheep, goats or cows, but chiefly cows, are the standard of value. The larger animals are rarely and reluctantly sold, but everything is calculated on a cattle basis. They constitute real wealth, and are parted with only in important transactions such as ‘bride-price’, or under compulsion, as for fines and compensations.” (Quiggin 1949: 92–93).Such was more or less the situation in ancient Greece in the Dark (or Geometric) Age from c. 1200–800 BC and the early Archaic period (800–480 BC).
The Greeks appear to have had a rudimentary cattle or ox unit of account in these centuries, but the actual means of payment were in kind and tended to be many other types of goods, not just cattle (Peacock 2011: 49–54; Peacock 2013: 81).
In other words, the situation in early Greece was very similar to that in certain tribal African societies: cattle were used to some limited extent as an abstract standard of value, but not an actual general medium of exchange.
This if we define money as a commodity that is generally used as
(1) a common medium of exchange, andthen one cannot really speak of cattle as full-bodied money in ancient Greece, nor in other societies. How, then, can the orthodox Mengerian theory of the origin of money explain it?
(2) a unit of account, and
(3) store of purchasing power.
Even if the origin of such cattle standards of value lay in cattle as the most important barter good, there are still problems with the orthodox barter spot trade theory of the origin of money.
If, for example, cattle had arisen in the Mengerian fashion, then oxen would surely have been used as full-bodied money as the most saleable commodity in real and widespread barter spot trades, but must then, for some reason, have later ceased to have this role in many societies.
Secondly, cattle are of rather high value in an agrarian society and cannot be used for small transactions that are often the basis of trade. Cattle are not physically divisible into smaller units (and even conceptually this presents difficulties).
In many societies, cattle remain an abstract standard of value to some degree, but not a general medium of exchange, and their actual exchange is confined to social events of importance like bride-price, dowry, compensations such as wergeld, ceremonial gifts, or fines. They were often also important as sacrificial animals, as in Greece (Peacock 2013: 89–92).
The high value of cattle as an important source of wealth and also as a prestige good seems more fitted for exchanges in certain social customs, where indeed that exchange was largely maintained, rather than in general commercial life.
And, above all, why did cattle not emerge as a general commercial medium of exchange in such societies? Indeed, why did the cattle standard seem to discourage “the growth of primitive currencies”? (Quiggin 1949: 277).
All of this presents difficulties for the Mengerian theory of the origin of money as applied to cattle.
Peacock, Mark S. 2011. “The Political Economy of Homeric Society and the Origins of Money,” Contributions to Political Economy 30: 47–65
Peacock, Mark S. 2013. Introducing Money. Routledge, London.
Quiggin, A. H. 1949. A Survey of Primitive Money: The Beginnings of Currency. Methuen, London.
A very recent example: The Masai donated 14 cows to the USA after the 9/11 attacks! http://news.bbc.co.uk/2/hi/africa/2022942.stmReplyDelete
Also a good example ancient israelis used cattle (from the reasons you mentioned) and silver (as common medium of exchange) both of them used side by side (and not excluded each other)ReplyDelete
I cannot agree with your argument here, LK. Menger's account concerns the evolution of money understood simply as generally accepted exchange media. Ridgeway's theory concerns the evolution of a standard money unit from the prior barter unit of account. These are complementary theories. Cattle were never money in Menger's sense. They did, however, supply a convenient basis for the evolution of standard units for metallic monies.ReplyDelete
If you will look at my and Larry's paper on "The Evolution of a Free Banking System" you will see how we treat the Ridgeway and Menger theories as complements there. It never occurred to me, and it still doesn't, that Ridgeway's view posed a challenge to Menger's. (This is not to say that I consider Menger's theory a complete account of money's historical origins. The paper I refer to assumes away any role for the state.)
Here is the relevant paragraph from the paper I mention, as it appears in Theory of Free Banking:ReplyDelete
"Historically cattle were often the most frequently exchanged commodity. Yet, owing to their lack of transportability and their nonuniformity, cows left much to be desired as a general medium of exchange (Burns 1927a, 286-88). Their chief contribution to the evolution of money seems to have been as a unit of account (Menger 1981, 263-66; Ridgeway 1892, 6-11). It was the discovery of methods for working metals which finally allowed money to displace barter on a widespread basis.3 So we assume that Ruritania’s first money is some metallic medium."
“Yet, owing to their lack of transportability and their nonuniformity, cows left much to be desired as a general medium of exchange (Burns 1927a, 286-88). Their chief contribution to the evolution of money seems to have been as a unit of account (Menger 1981, 263-66…)”ReplyDelete
Of course, I can’t argue with that, and I agree with it, but was this really Menger’s view?
Were “Cattle were never money in Menger’s sense”?
On p. 263ff. of the Principles of Economics, Menger does seem to hold that cattle were a real and widespread means of payment/medium of exchange that was then replaced by metal:
“In the earliest periods of economic development, cattle seem to have been the most saleable commodity among most peoples of the ancient world. Domestic animals constituted the chief item of the wealth of every individual among nomads and peoples passing from a nomadic economy to agriculture. Their marketability extended literally to all economizing individuals, and the lack of artificial roads combined with the fact that cattle transported themselves (almost without cost in the primitive stages of civilization!) to make them saleable over a wider geographical area than most other commodities. A number of circumstances, moreover, favored broad quantitative and temporal limits to their marketability. A cow is a commodity of considerable durability. Its cost of maintenance is insignificant where pastures are available in abundance and where the animals are kept under the open sky. And in a culture in which everyone attempts to possess as large herds as possible, cattle are usually not brought to market in excessive quantities at any one time. In the period of which I am speaking, there was no similar juncture of circumstances establishing as broad a range of marketability for any other commodity. If we add to these circumstances the fact that trade in domestic animals was at least as well developed as trade in any other commodity, cattle appear to have been the most saleable of all available commodities and hence the natural money of the peoples of the ancient world.
The trade and commerce of the most cultured people of the ancient world, the Greeks, whose stages of development history has revealed to us in fairly distinct outlines, showed no trace of coined money even as late as the time of Homer. Barter still prevailed, and wealth consisted of herds of cattle. Payments were made in cattle. Prices were reckoned in cattle.” ….
Among our own ancestors, the old Germanic tribes, at a time when, according to Tacitus, they held silver and earthen vessels in equal esteem, a large herd of cattle was considered identical with riches. Barter stood in the foreground, just as it did among the Greeks of the Homeric age, and cattle again and, in this case, horses (and weapons too!) already served as means of exchange.” ….
With the progress of civilization, therefore, cattle lost to a great extent the broad range of marketability they had previously had with respect to the number of persons to whom, and with respect to the time period within which, they could be sold economically. At the same time, they receded more and more into the background relative to other goods with respect to the spatial and quantitative limits of their marketability. They ceased to be the most saleable of commodities, the economic form of money, and finally ceased to be money at all. In all cultures in which cattle had previously had the character of money, cattle-money was abandoned with the passage from a nomadic existence and simple agriculture to a more complex system in which handicraft was practiced, its place being taken by the metals then in use.”
Menger, C. 2007. Principles of Economics (trans. Grundsätze der Volkswirtschaftslehre [1st edn. 1871] by J. Dingwall and B. F. Hoselitz), Ludwig von Mises Institute, Auburn, Alabama. pp. 263–265.
Maybe I am mistaken, but, as far as I can see, Menger did in fact say that cattle functioned as real money/a proper commercial money, and general medium of exchange.Delete
He doesn’t seem to say that they were never a real money, or that they were once a general medium of exchange but then receded into being a mere abstract standard of value.
If we distinguish exchange media from _generally accepted_ exchange media, and consider "real" money to refer only to the latter, as is the modern understanding, I don't think Menger can be understood to mean that cattle were in fact "money" in the strict sense. There is, of course, always a most saleable good. And that good is, in Menger's view, most likely to become money, other things equal. But the obviously disadvantages of cattle in that rule made them a limited means of indirect exchange only, coexisting with other forms of barter exchange, to eventually be overtaken by other goods, including metals, that were more fit to become money in the proper sense of the term. Indeed, had cattle themselves been capable of developing very far in the same direction,network effects might have been expected to take them all the way, while ruling out even more fit rivals.Delete
Also, on p. 259 of Principles of Economics, Menger also envisages cattle among the Greeks as being used a regular medium of exchange:ReplyDelete
“Assume that a smith of the Homeric age has fashioned two suits of copper armor and wants to exchange them for copper, fuel, and food. He goes to market and offers his products for these goods. He would doubtless be very pleased if he were to encounter persons there who wish to purchase his armor and who, at the same time, have for sale all the raw materials and foods that he needs. But it must obviously be considered a particularly happy accident if, among the small number of persons who at any time wish to purchase a good so difficult to sell as his armor, he should find any who are offering precisely the goods that he needs. He would therefore make the marketing of his commodities either totally impossible, or possible only with the expenditure of a great deal of time, if he were to behave so uneconomically as to wish to take in exchange for his commodities only goods that have use value to himself and not also other goods which, although they would have commodity-character to him, nevertheless have greater marketability than his own commodity. Possession of these commodities would considerably facilitate his search for persons who have just the goods he needs. In the times of which I am speaking, cattle were, as we shall see below, the most saleable of all commodities. Even if the armorer is already sufficiently provided with cattle
for his direct requirements, he would be acting very uneconomically if he did not give his armor for a number of additional cattle. By so doing, he is of course not exchanging his commodities for consumption goods (in the narrow sense in which this term is opposed to “commodities”) but only for goods that also have commodity-character to him. But for his less saleable commodities he is obtaining others of greater marketability. Possession of these more saleable goods clearly multiplies his chances of finding persons on the market who will offer to sell him the goods that he needs. If our armorer correctly recognizes his individual interest, therefore, he will be led naturally, without compulsion or any special agreement, to give his armor for a corresponding number of cattle. With the more saleable commodities obtained in this way, he will go to persons at the market who are offering copper, fuel, and food for sale, in order to achieve his ultimate objective, the acquisition by trade of the consumption goods that he needs.”
Menger, C. 2007. Principles of Economics (trans. Grundsätze der Volkswirtschaftslehre [1st edn. 1871] by J. Dingwall and B. F. Hoselitz), Ludwig von Mises Institute, Auburn, Alabama. p. 259.
I am grateful for the reference to your paper on “The Evolution of a Free Banking System”. Will read it carefully.ReplyDelete