ABSTRACT
This chapter reveals that, unlike the conventional narrative arising from the notion of Smithian growth, market activities in agricultural societies stratified naturally into interregional trade and local trade. The latter existed to collect agricultural products from peasants in a strong seasonal cycle, while the former distributed commodities at more or less consistent rates. According to the stratified nature of the markets, currencies supplied exogenously exhibited a strong tendency to stagnate at the level of end users. Small-denomination coins disappeared from circulation faster than large-denomination ones. The most common suppliers of currencies were rulers who needed to collect taxes from people. In theory, currencies should always circulate, but even modern investigations in the 1960s UK and US reveal that they often stagnate and disappear from circulation. Archaeological findings from medieval remains from China and the Mediterranean also prove the unidirectional movement of small currencies. When the supply of exogenous currencies failed to satisfy monetary demand for any reason, locals did not hesitate to supplement the shortage on their own. Throughout history, this multiplicity often manifested as a phenomenon in which a circuit of trade dealing in specific goods seems to have been paired with a particular currency. We call this coupling a currency circuit. As shown in account books by a Chinese grocery shop, merchants sharing the same localities employed multi-set-offs through bookkeeping and sometimes invented imaginary money for settling transactions through account books. Although such schemes were seemingly ‘chaotic,’ they were in fact quite rational and effectively mediated exchanges endogenously in their own ways.
