Credit and State Theories of Money
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Credit and State Theories of Money

The Contributions of A. Mitchell Innes

Edited by L. Randall Wray

In 1913 and 1914, A. Mitchell Innes published a pair of articles that stand as two of the best pieces written in the twentieth century on the nature of money. Only recently rediscovered, these articles are reprinted and analyzed here for the first time.
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Chapter 5: The Archaeology of Money: Debt versus Barter Theories of Money's Origins

Michael Hudson

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5. The Archaeology of Money: Debt versus Barter Theories of Money’s Origins Michael Hudson M ONEY HAS evolved from three traditions, each representing payment of a distinct form of debt. Archaic societies typically had wergild-type debts to compensate victims of manslaughter and lesser injuries. It is from these debts that the verb ‘to pay’ derives, from the root idea ‘to pacify.’ Such payments were made directly to the victims or their families, not to public institutions. They typically took the form of living, animate assets such as livestock or servant girls. Another type of obligation took the form of food and related contributions to common- meal guilds and brotherhoods. This is the type of tax-like religious guild payment described by Laum (1924), who in turn was influenced by G.F. Knapp. Neither of these types of payment involved general-purpose trade money. The kind of general-purpose money our civilisation has come to use commercially was developed by the temples and palaces of Sumer (southern Mesopotamia) in the third millennium BC. This chapter describes how these institutions introduced money prices (and silver money itself) mainly for their own administrative purposes. Their large scale and specialisation of economic functions required an integrated system of weights, measures and price equivalencies to track the crops, wool and other raw materials distributed to their dependent labour force, and to schedule and calculate the flow of rents, debts and interest owed to them. The most important such debts were those owed for consigning handicrafts to merchants for long-distance...

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