Gifting and exchange

Tolkien indicated that gifting and exchange are important in parts of Middle-earth. In the Shire, the Hobbits have "mathoms" (Old English: māþum, treasure, gift), objects passed from hand to hand as valued or sometimes unvalued gifts. Many were stored in the museum or Mathom-house at Michel Delving.^{[T 1]}

The scholar Jennifer Culver states that Tolkien based his account of gifting and exchange on the Germanic gifting tradition,^[2][3] as described in medieval works such as Beowulf, familiar to Tolkien. There, a lord could "broaden his reach" by giving gifts, while the visible exchange of gifts defined the relative status of the people involved. Culver explores the significance of Sauron's gift of magical rings to the nine Ringwraiths – in exchange for their lives – and the nature of the One Ring itself as an item of exchange.^[2]

Money and treasure

Barliman Butterbur makes a payment of 30 silver pennies.^{[T 2]} Early medieval silver penny of Offa of Mercia shown.

Tolkien mentions money and items of value in his Middle-earth writings. The Hobbits used money: in The Hobbit, Bilbo Baggins, leaving the Shire in a hurry, is recorded as forgetting to take any money with him.^{[T 3]} In The Lord of the Rings, Barliman Butterbur pays 30 silver pennies compensation for the loss of horses and ponies stolen from The Prancing Pony inn at Bree; one pony cost some four silver pennies.^{[T 2]} Further, Bilbo gives away "a few pennies" before the birthday party, while at the Council of Elrond, Gandalf uses the phrase "worth a gold piece" of significant news.^[4] There is however no indication where such coins might have been minted.^[4] The people of Gondor used silver coins as currency. The main coinage was the Castar; a quarter of a Castar was a Tharni.^{[T 4]}

The Dwarves of Moria valued precious materials such as gold and jewels, but most especially the rare metal mithril, which they used to mine:

For here alone in the world was found Moria-silver, or true-silver as some have called it: mithril is the Elvish name. The Dwarves have a name, which they do not tell. Its worth was ten times that of gold, and now it is beyond price; for little is left above ground, and even the Orcs dare not delve here for it.^{[T 5]}

The Wizard Gandalf startles the Dwarf Gimli with a mention of a mail shirt made of mithril:^{[T 5]}

"Bilbo had a corslet of mithril-rings that Thorin gave him. I wonder what has become of it? Gathering dust still in Michel Delving Mathom-house, I suppose."
"What?" cried Gimli, startled out of his silence. "A corslet of Moria-silver? That was a kingly gift!"
"Yes", said Gandalf. "I never told him, but its worth was greater than the value of the whole Shire and everything in it."^{[T 5]}

Clashing economic patterns

Film set of Hobbiton in the Shire, often described as a pastoral idyll.^[5][6]

Steven Kelly argues that while Tolkien's world is generally viewed as a medieval fantasy world, hence implied to be a pre-capitalistic society, it has some elements of capitalistic society. This is a result of the clash of two major themes in Tolkien's world-building: "the old Northern European world of fairy-tale and a relatively modern world represented in the Shire", partly modelled on 19th century England. While the former, such as the land of Gondor,^[7] has been described as feudal or pre-feudal, with concepts like fiefs. The Shire, on the other hand, has an economy that is both deceptively simple, a self-sufficient agrarian society resistant to capitalism, described even as communist, but with trade and other economic patterns resembling those found in modern capitalist systems. In particular, Kelly argues that the handling of hobbit's pipe-weed can be seen as a case of modern commodity fetishism.^[8] Jay Atkins writes in Mallorn that the Shire functions as a distributist economy, as defined by G. K. Chesterton and Hilaire Belloc in the early 20th century: it is respectful of nature, and families own the small-scale means of production. Atkins comments that "The Scouring of the Shire" alludes to socialism, as under Sharkey's unjust rule, sharing is advocated: only it is all one way, as Sharkey takes away Hobbit property without returning anything.^[9]

Isengard is industrial: "...hammers thudded. At night plumes of vapour steamed from the vents, lit from beneath with red light".^{[T 6]} Steam hammer at work, England

The wizard Saruman's Isengard, on the other hand, is industrial: it produces weapons and machinery made of iron, smelted and forged using trees as fuel; an unusually large and powerful breed of Orcs, able as Treebeard says to fight in daylight, produced rapidly, apparently by some kind of cloning; and a gunpowder-like explosive.^{[10][11][12][T 6][T 7]} Lianne McLarty describes Isengard as a war economy with a military-industrial system to produce the materiel of war.^[13]

Resistance to soulless economic progress

The Tolkien scholar Patrick Curry links the search for economic progress in Middle-earth to industrialisation and a dark sort of magic, that of the wizardry of Sauron and Saruman with wheels and fires and labouring workers, writing that "the Enemy is thus 'Lord of magic and machines'". He contrasts this with the Elvish magic of "enchantment", stating that "in contemporary terms, the domination of financial and technological magic over enchantment ... is something we see confirmed everywhere in Middle-earth today ... [and that] Progress is not only good for us but unavoidable". In Curry's view, Tolkien's Middle-earth writings "invite the reader into a compelling and remarkably complete pre-modern world, saturated with ... values .. of respect ... nature, and ... the spirit", retaining "personal integrity and responsibility and [not] decanted into a soulless calculus of financial profit-and-loss." In short, he writes, "Wisdom in Middle-earth is not a matter of economic, scientific or technological expertise, but of practical and ethical wisdom."^[14]

Economic interpretations

The financial journalist John Carney takes a humorous look at the economic effect of Smaug the dragon and his hoard of treasure captured from the Dwarves. He notes that Francis Woolley, professor of economics at Carleton University, suggested that Smaug's withdrawal of so much gold from circulation represented a severe tightening of monetary policy, which would cause "deflation and depressed economic activity".^[15][16] Against this view, the 150 years between Smaug's capture of the Lonely Mountain and the events in The Hobbit would have allowed the economy to adjust to the shock.^[15] On the other hand, the economist Nick Rowe argues on New Keynesian terms that prices might stay high as businesses could hold out awaiting Smaug's downfall.^[15] Yet another viewpoint is set out by Eric Crampton, who suggests that the economic shock was on the supply side, as Smaug consumed "thousands of very skilled Dwarven craftsmen", depriving Dale of much of its trade in farm commodities which it had exchanged for Dwarf-produced industrial products.^[15] Carney himself suggests that the wizard Gandalf could have used his powers to replace the gold "out of thin air", but just as the Federal Reserve refused to refund the wealth lost to Bernard Madoff's fraudulent Ponzi scheme, Gandalf did not do this.^[15]

Diane Coyle writes in the Financial Times that the "sharing economy" of the Shire could be improved with a "mathom.com" noticeboard site. Coyle suggests that a sharing site could enable mathoms to circulate more efficiently.^[17]

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