Note: In chapter 2 and 3, I have used the original pagination of Innes, and excluded the new pagination of Wray



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Credit and State Theory of Money, 2004
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Note: In chapter 2 and 3, I have used the original pagination of Innes, and excluded the new pagination of Wray.

Spine of book:
Credit and State Theories of Money L. Randall Wray
THE COVER shows tallies used in Agricento (Sicily) in 1905-06 (photograph by L. Randall Wray). Tallies represent a special form of the notched sticks of wood that have been used at least since neolithic times for keeping records of quantities. Notches of varying widths were cut across the stick before it was split down the middle to provide a 'foil' (or stub) and a 'stock' (the longer piece, containing the solid stump of the original piece of wood), each with identical notches. The photograph on the cover shows stocks of tallies, with notches and with signatures on the reverse sides (two examples are flipped to display the signatures). These particular tallies were kept by farmers as receipts for grain they had stored with the local Duke. The Duke retained the foils to match against stocks submitted for redemption in grain. Tallies served as much more than receipts or accounting devices. The tally stocks could circulate as currency in markets or to pay debts. Kings learned to 'anticipate' tax revenues by issuing tallies in payment ('raising a tally'). Holders of the tally stocks were then entitled to collect tax revenue, turning over the stocks to those who paid taxes. These would then be returned to the King as evidence that taxes had been paid. Both sovereign and private tallies began to circulate widely in Europe during the later middle ages, taking on the characteristics of negotiable and discountable financial instruments, and were increasingly used as the primary means of financing sovereign spending. The Exchequer Stop of 1672, which repudiated the tallies, brought some discredit to the practice and probably contributed to the creation of the Bank of England in 1694. However, Exchequer tallies continued in use in England until 1826, and were stored in the old Star Chamber at the Palace of Westminster until 1834 when they were 'thrown into the heating stoves of the House of Commons ... so excessive was the zeal of the stokers that the historic Parliament buildings were set on fire and razed to the ground!' (Rudolph Robert, 'A Short History of Tallies', in Studies in the History of Accounting, edited by A.C. Littleton and B.S. Yamey, Richard D. Irwin, Inc., Homewood, Illinois, 1956, pp. 75-85. A Parliamentary Report of 1835 states that the fire started in the House of Lords. See http://www.bopcris.ac.uk/bopl833/ref243.html.)
Credit and State Theories of Money

The Contributions of A. Mitchell Innes




Edited by

L. Randall Wray



Professor of Economics,

University of Missouri - Kansas City, USA


Edward Elgar

Cheltenham, UK • Northampton MA, USA


© L. Randall Wray, 2004; Chapter 6 © Geoffrey Gardiner.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher.

Published by

Edward Elgar Publishing Limited

Glensanda House

Montpellier Parade

Cheltenham

Glos GL50 1UA

UK

Edward Elgar Publishing, Inc.



136 West Street

Suite 202

Northampton

Massachusetts 01060

USA

A catalogue record for this book is available from the British Library



ISBN 1 84376 513 6

Typesetting in Plantin by Geoffrey Gardiner

Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall

Contents




Notes on Contributors vii

Acknowledgements x
1. Introduction 1

L. Randall Wray and Stephanie Bell
2. What is Money? 14

A. Mitchell Innes
3. The Credit Theory of Money 50

A. Mitchell Innes
4. The Social Origins of Money: The Case of Egypt 79 John F. Henry
5. The Archaeology of Money: Debt versus Barter

Theories of Money's Origins 99



Michael Hudson
6. The Primacy of Trade Debts in the Development of

Money 128



Geoffrey W. Gardiner
7. The Emergence of Capitalist Credit Money 173 Geoffrey Ingham
8. Conclusion: The Credit Money and State Money

Approaches 223 L. Randall Wray


Index 263

Contributors



Stephanie Bell,

Assistant Professor of Economics, University of Missouri - Kansas City; email: bellsa@umkc.edu .

Stephanie Bell earned a M.Phil, from Cambridge University and a Ph.D. from the New School for Social Research and is currently Assistant Professor of Economics at the University of Missouri - Kansas City. She has published articles in the Journal of Economic Issues, the Cambridge Journal of Economics, and the Review of Social Economy. Her primary research interests include monetary theory, government finance, social security, and European monetary integration.
Geoffrey W. Gardiner;

email: geoffrey.gardiner@btopenworld.com.

Geoffrey W. Gardiner has been for 20 years a self-financed, independent researcher. Previously, he spent 31 years with Barclays Bank Trust Company Limited, the asset management arm of the international banking group, Barclays PLC. Besides executorship, and personal, corporate and charitable trust administration, his duties included estate planning, taxation advice and negotiation, and investment management. He is an authority on farming economics and taxation, a member of the Cambridge Policy Conference on the Future of British Agriculture, and a contributor to Britain's Future in Farming.

Gardiner is an Associate of the Chartered Institute of Bankers and holds its Trustee Diploma. He is a Fellow of the Institute of Chartered Secretaries and Administrators (ICSA), having taken its diploma in company law and administration, which includes advanced economics, advanced accountancy, and corporate taxation. He was in 1973 elected to the United Kingdom Council of the ICSA, and from 1975 to 1981 served on the committee which formulated the Institute's advice in response to British Government and European Union discussion papers on all financial topics. In the early 1970s Gardiner spent three years in the head office of Barclays Bank Trust Company, and also served on the Marketing Committee, and helped devise and launch new products and services, especially in the realms of financial advice, unit trusts, and insurance-based investment schemes. In his last post with Barclays he was responsible for 8,000 trusts. His clients have included members of the



Vlll
family of John Maynard Keynes, and members of'The Bloomsbury Set'. Currently he follows with care the development of archaeogenetics and archaeometallurgy, and the research of the International Scholars Conference on Ancient Near Eastern Economies.
John F. Henry,

Professor of Economics, California State University, Sacramento; email: henryjf@csus.edu.

John Henry earned his A.B. at Muhlenberg College, and his M.A. and Ph.D. at McGill University, and has been teaching at CSU Sacramento since 1970. He has also been Visiting Professor at Staffordshire University, UK and the University of Missouri, Kansas City. In addition he was Visiting Scholar at the University of Cambridge. He is the author of The Making of Neoclassical Economics (Unwin Hyman) and John Bates Clark (Macmillan), and numerous articles in the Journal of Post Keynesian Economics, Journal of Economic Issues, History of Political Economy, Review of Political Economy, History of Economics Review, Review of Social Economy among other periodicals. In his home university, he has been the recipient of the Outstanding Teacher Award and has presented the annual John C. Livingston lecture, the highest honour the university bestows. His primary research area is the history of economic thought, particularly as it pertains to the development of neoclassical theory. Currently, he is working on the relations among property rights and relations, markets, and economic theory.
Dr Michael Hudson,

President, Institute for the Study of Longterm Economic Trends (ISLET); email: hudsonmi@aol.com.

Michael Hudson's other affiliations include: Distinguished Research Professor of Economics, UMKC, 2001-present; Research Fellow, Peabody Museum (Harvard), 1984-98; and Assistant Professor, The New School, 1969-72. Hudson heads the International Scholars' Conference on Ancient Near Eastern Economies (ISCANEE), and is the author of numerous books on international finance [including Super Imperialism (1972), Global Fracture: The New Economic Order (1979), and Trade, Development and Foreign Debt (1992)].

Geoffrey Ingham, Fellow and Director of Studies in Social and Political Sciences, Christ's College, Cambridge, UK; email: gkil000@hermes. cam.ac.uk.

Geoffrey Ingham is Fellow and Director of Studies in Social and Political Sciences, Christ's College, Cambridge, UK. He received a doctorate in sociology in the Faculty of Economics and Politics, Cambridge, in the 1960s and later spent 25 years there teaching sociology

ix
to economists. His book Capitalism Divided? (1984) on the development of the British economy had popular as well as academic influence. He has worked on a social and political theory of money for several years for several years (The Nature of Money, Oxford: Polity/Blackwell, 2004).
L. Randall Wray,

Professor of Economics, University of Missouri -Kansas City; email: wrayr@umkc.edu.

L. Randall Wray is a Senior Research Associate, the Center for Full Employment and Price Stability (at UMKC), a senior scholar at the Levy Economics Institute, and a visiting professor at the University of Rome, La Sapienza (2002-03). He is a past president of the Association for Institutionalist Thought (AFIT) and a past member of the board of directors of the Association for Evolutionary Economics (AFEE). A student of Hyman P. Minsky, Wray has focussed his research on monetary theory and policy, macroeconomics and employment policy. He has published widely in journals and is the author of Understanding Modern Money: The Key to Full Employment and Price Stability (Edward Elgar, 1998) and Money and Credit in Capitalist Economies (Edward Elgar 1990). He joined the UMKC faculty as Professor of Economics in August 1999, after having taught at the University of Denver for some twelve years. Wray received a B.A. from the University of the Pacific and an M.A. and Ph.D. from Washington University in St. Louis.



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