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Markets in pre-industrial societies: storage in Hellenistic Babylonia in the medieval English mirror*

Published online by Cambridge University Press:  13 June 2011

Bas van Leeuwen ,
Peter Földvári  and
Reinhard Pirngruber
Bas van Leeuwen
Affiliation:
Faculty of Arts, VU University, De Boelelaan 1081 HV, Amsterdam, The Netherlands; Faculty of Humanities, Utrecht University, 3512 BL, The Netherlands; Department of Economics, Warwick University, CV4 7AL, UK E-mail: bas.vanleeuwen1@googlemail.com
Peter Földvári
Affiliation:
Faculty of Economics and Business Administration, H-4028, Debrecen University, Hungary; Faculty of Humanities, Utrecht University, 3512 BL, The Netherlands E-mail: peter.foldvari@econ.unideb.hu
Reinhard Pirngruber
Affiliation:
Faculty of Arts, VU University, De Boelelaan 1081 HV, Amsterdam, The Netherlands E-mail: r.pirngruber@let.vu.nl
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Abstract

At least some ancient civilizations used various risk-management strategies to minimize price volatility. In this article, we examine one such strategy, grain storage, by means of a dataset recently made available that provides agricultural prices for Babylonia during the Late Achaemenid and Hellenistic periods (c.400–65 BCE). A comparative analysis of medieval England and Hellenistic Babylonia reveals a low level of inter-annual storage in both economies, and helps us to compare the costs and benefits in each society. Costs are largely equated with interest rates, and benefits with seasonal price changes. Unlike in England, Babylonia’s dual crop structure (barley and dates) reduced seasonality and thus the potential benefits of storage. There is no evidence, however, that storage costs – that is, interest rates – were likewise lower. This suggests that interest rates were primarily determined in the urban and commercial sectors, not the agricultural one. Consequently, measures of seasonal price changes in pre-modern economies may tell us relatively little about interest rates. While the McCloskey–Nash methodology may be helpful in analysing particular economies, it is perhaps of limited use for comparing them.

Keywords

ancient and medieval economiesBabylonEnglandrisk reductionstorage
Type
Articles
Information
Journal of Global History , Volume 6 , Issue 2 , July 2011 , pp. 169 - 193
Copyright
Copyright © Cambridge University Press 2011

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References

1 See, for example, Persson, Karl-Gunnar, Grain markets in Europe, 1500–1900: integration and deregulation, Cambridge: Cambridge University Press, 1999CrossRefGoogle Scholar; Peter Temin, ‘Price behavior in ancient Babylon’, Explorations in Economic History, 39, 1, 2002, pp. 46–60; Roman Studer, ‘India and the great divergence: assessing the efficiency of grain markets in eighteenth- and nineteenth-century India’, Journal of Economic History, 68, 2, 2008, pp. 393–437.

2 See Stefano Fenoaltea, ‘Risk, transaction costs, and the organization of medieval agriculture’, Explorations in Economic History, 13, 2, 1976, pp.129–51; Stefano Fenoaltea, ‘Transaction costs, Whig history, and the common fields’, Politics & Society, 16, 2–3, 1988, pp. 171–240; Donald N. McCloskey and John Nash, ‘Corn at interest: the extent and cost of grain storage in medieval England’, American Economic Review, 74, 1, 1984, pp. 174–87; John Komlos and Richard Landes, ‘Anachronistic economics: grain storage in medieval England’, Economic History Review, 44, 1, 1991, pp. 36–45; Donald N. McCloskey, ‘Conditional economic history: a reply to Komlos and Landes’, Economic History Review, 44, 1, 1991, pp. 128–32; Nicholas Poynder, ‘Grain storage in theory and history’, unpublished paper for third conference of European Historical Economics Society, Lisbon, 1999; Jordan Claridge and John Langdon, ‘Storage in medieval England: the evidence from purveyance accounts, 1295–1349’, Economic History Review, forthcoming, http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0289.2010.00564.x/full (consulted 10 April 2011).

3 Exceptions are, for example, Pomeranz, Kenneth, The making of a hinterland: state, society, and economy in inland north China, 1853–1937, Berkeley, CA: University of California Press, 1993, pp. 32–3Google Scholar.

4 See, for example, Giovanna Vitelli, ‘Grain storage and urban growth in imperial Ostia: a quantitative study’, World Archaeology, 12, 1, 1980, pp. 54–68; Levine, Terry Y., Inka storage systems, Norman, OK: University of Oklahoma Press, 1992Google Scholar; Detlef Groneborn, ‘An ancient storage pit in the SW Chad Basin, Nigeria’, Journal of Field Archaeology, 24, 1997, pp. 431–9.

5 Important studies of price data of antiquity include Dominic Rathbone, ‘Prices and price formation in Roman Egypt’, in Andreau, J., Briant, P., and Descat, R., eds., Économie antique: prix et formation des prix dans les économies antiques, Saint-Bertrand-de-Comminges: Musée archéologique départemental, 1997, pp.183–244Google Scholar; Reger, Gary, Regionalism and change in the economy of independent Delos, Berkeley, CA: University of California Press, 1994Google Scholar; Sitta von Reden, ‘Price fluctuations in Babylonia, Egypt, and the Mediterranean world, third to first centuries BC’, unpulished paper for ‘Too Many Data? Generalizations and Model-building in Ancient Economic History on the Basis of Large Corpora of Documentary Evidence’ conference, Vienna, 17–19 July 2008.

6 H. Hunger and A. Sachs, Astronomical diaries and related texts from Babylonia, 3 vols, Vienna: Verlag der Österreichischen Akademie der Wissenschaften, vol. 1, 652– 262 BC, 1988; vol. 2, 261–165 BC, 1989; vol. 3, 164–61 BC, 1996.

7 For prior analyses of the data, see Slotksy, Alice L., The bourse of Babylon: market quotations in the Astronomical diaries of Babylonia, Bethesda, MD: CDL Press, 1997Google Scholar (with the important review by R. J. Van der Spek and C. Mandemakers, ‘Sense and nonsense in the statistical approach of Babylonian prices’, Bibliotheca Orientalis, 60, 2003, pp. 521–7); Peter Vargyas, Les prix des denrées alimentaires de première nécessité en Babylonie à l’époque achémenide et hellénistique, in Andreau, Briant, and Descat, Économie antique, pp. 335–54. For additional price data, see Slotksy, Alice L. and Wallenfels, Ronald, Tallies and trends: the late Babylonian commodity price lists, Bethesda, MD: CDL Press, 2010Google Scholar.

8 Peter Földvári and Bas van Leeuwen, ‘The structural analysis of Babylonian price data: a partial equilibrium approach’, unpublished paper for World Economic History Congress, Utrecht, 2–7 August 2009.

9 McCloskey and Nash, ‘Corn at interest’. See also Gregory Clark, ‘The cost of capital and medieval agricultural technique’, Explorations in Economic History, 25, 3, 1988, pp. 265–94; Poynder, ‘Grain storage’.

10 McCloskey and Nash, ‘Corn at interest’; Poynder, ‘Grain storage’.

11 McCloskey and Nash, ‘Corn at interest’; Clark, ‘Cost of capital’.

12 On the other hand, some authors argue for a much larger role for storage. For example, Stefano Fenoaltea, ‘Risk’, p. 139, suggests that storage in England could easily be in the order of magnitude of 1.5 times the annual consumption. However, two preconditions for such a high storage rate are sharply higher grain-yield variances and the disappearance of the phenomenon of recurrent famine, both of which are extremely unlikely.

13 Dates played a fundamental part in the dietary habits of the Middle East until well into the twentieth century. According to a study quoted in Michael Jursa, Aspects of the economic history of Babylonia in the first millennium BC: economic geography, economic mentalities, agriculture, the use of money and the problem of economic growth (with contributions by J. Hackl, B. Janković, K. Kleber, E. E. Payne, C. Waerzeggers, and M. Weszeli), AOAT 377, Münster: Ugarit Verlag, 2010, p. 50, an Iraqi small-scale farmer consumed 65.1 kg of dates a year compared to 75.3 kg of wheat, barley, and rice; the two commodities together accounted for about two-thirds of total caloric intake. A similar proportion in antiquity is indicated by the ‘ration’ system of the Ebabbar temple of Sippar, in northern Babylonia, which ideally provided workers with equal amounts of barley and dates: see M. Jursa, ‘The remuneration of institutional labourers in an urban context in Babylonia in the first millennium BC’, in Briant, P., Henkelman, W. F. M., and Stolper, M., eds., L’archive des fortifications de Persépolis : état des questions et perspectives de recherches, Persika 12, Paris: De Boccard, 2008Google Scholar.

14 A third possibility, outlined in Komlos and Landes, ‘Anachronistic economics’, is that when it comes to storage small-scale farmers may be hampered by socioeconomic limitations, even if not by the opportunity costs to large-scale producers and traders.

15 Steve Broadberry, Bruce Campbell, Alex Klein, Mark Overton, and Bas van Leeuwen, ‘British economic growth, 1300–1850: some preliminary estimates’, unpublished paper for World Economic History Congress, Utrecht, 2–7 August 2009.

16 Mark Overton and Bruce Campbell, ‘Production et productivité dans l’agriculture anglaise, 1086–1871’, Histoire et Mesure, 11, 3–4, 1996, pp. 255–97, table 12.

17 Aperghis, G. G., The Seleukid royal economy: the finances and financial administration of the Seleukid empire, Cambridge: Cambridge University Press, 2004CrossRefGoogle Scholar, and the literature quoted therein; Jursa, Aspects. See also the information provided above, n. 13. An important corroboration is the finding in Vargyas, Les prix, that the date harvest constituted a relief in the supply situation of the food market, resulting in higher barley equivalents, that is, lower barley prices. As we explain later, this assumption can be defended in times of famine, when the vital need is for any calories. Barley and dates are thus considered simply as sources of kilocalories, and hence as substitutes.

18 See, for instance, V. H. W. Dowson, Dates and date cultivation of the ‘Iraq, Agricultural Directorate of Mesopotamia, part 1, 1921, p. 41.

19 McCloskey and Nash, ‘Corn at interest’.

20 Ibid., p. 174.

21 William H. Beveridge, ‘The yield and price of corn in the Middle Ages’, Economic History Review, 1, 1927, pp. 155–67.

22 Jursa, Aspects, pp. 591–2.

23 That is, specified by neither ‘old’ nor ‘new’.

24 S/W text x: text number in Slotsky, Alice and Wallenfels, Ronald, Tallies and trends: the late Babylonian commodity price lists, Bethesda, MD: CDL Press, 2010Google Scholar.

25 Drexhage, Hans-Joachim, Preise, Mieten/Pachten, Kosten und Löhne in römischen Ägypten, St Katharinen: Scripta Mercaturae Verlag, 1992, p. 36Google Scholar.

26 Peter Garnsey, ‘Famine in history’, in Garnsey, P., ed., Cities, peasants and food in classical antiquity, Cambridge: Cambridge University Press, 1998, p. 275CrossRefGoogle Scholar. Note, however, that the Babylonian famine threshold employed seems to meet one important criterion of famine as defined more narrowly, namely a ‘collapse of the social, political, and moral order’ (Garnsey, ‘ Famine’, p. 275). This, at least, is how we would interpret the fact that parents were reported to sell their children in order to fend off starvation. Ó’Gráda, Cormac, Famine: a short history, Princeton, NJ: Princeton University Press, 2009, pp. 3–7Google Scholar, likewise offers a pragmatic definition of famine.

27 W. G. Hoskins, ‘Harvest fluctuations and English economic history 1480–1619’, Agricultural History Review, 12, 1964, pp. 28–46; idem, ‘Harvest fluctuations and English economic history 1620–1759’, Agricultural History Review, 16, 1968, pp. 15–31. Hoskins defines famine years as those when the price was more than 10% above a thirty-one-year moving average.

28 Vargyas, Les prix; Robartus van der Spek, ‘How to measure prosperity? The case of Hellenistic Babylonia’, in Descat, R. et al., eds., Approches de l’économie hellénistique, Paris: Entretiens d’Archéologie et d’Histoire, St Saint-Bertrand-de-Comminges, 2006, pp. 287–310Google Scholar.

29 Donald N. McCloskey, ‘English open fields as behavior towards risk’, in Uselding, P., ed., Research in economic history, vol. 1, Greenwich, CT: JAI Press, 1976, p. 144Google Scholar.

30 A. Leo Oppenheim, ‘Siege documents from Nippur’, Iraq, 17, 1955, pp. 69–89.

31 This has also been shown by Eph’al, IsraelThe city besieged: siege and its manifestations in the ancient Near East, Leiden: Brill, 2009CrossRefGoogle Scholar; he argues that these prices are best considered as literary topoi of little historical value.

32 Van der Spek, ‘How to measure prosperity?’. His estimate confirms the earlier assumption of Peter Vargyas, who made 50 litres per shekel the famine threshold: Vargyas, Les prix.

33 See also the text above and notes 13 and 17 on the important role of dates in the Mesopotamian diet and more particularly on the price-alleviating effect of the date harvest on barley prices.

34 Jursa, Aspects, p. 51.

35 McCloskey and Nash, ‘Corn at interest’, p. 176. Their estimates of the parameters and the average waiting time between two famines are based on McCloskey, ‘English open fields’.

36 This estimate is based on the data underlying Broadberry et al., ‘British economic growth’.

37 Bruce M. S. Campbell (2007), ‘Three centuries of English crops yields, 1211–1491’, http://www.cropyields.ac.uk/ (consulted 10 April 2011).

38 Cormac Ó Grádá, ‘Making famine history’, Journal of Economic Literature, 45, 1, 2007, p. 8. See also the distinction between food shortage and famine made by Garnsey, ‘Famine’.

39 Jursa, Aspects, pp. 48–53. Both values come from the northern Babylonian town of Sippar.

40 Calculated from the Food and Agricultural Organization (FAO), ResourceSTAT: land-use domain, 2010, http://faostat.fao.org/site/377/default.aspx#ancor (consulted 10 April 2011), taking into consideration only those countries where the two crops have an almost identical share in total output.

41 Calculated from the FAO, ProductionSTAT: crop-use domain, 2010, http://faostat.fao.org/site/567/default.aspx#ancor (consulted 10 April 2011), taking into consideration only those Middle Eastern countries where the two crops have almost identical shares in total output.

42 McCloskey and Nash, ‘Corn at interest’.

43 Ibid.; Clark, ‘Cost of capital’.

44 For example, for September–October, the growth rate is the average of September–October, September–November, September–December, etc. For October–November, the growth rate is the average of October–November, October–December, October–January, etc., and September–November, September–December, etc.

45 For example, for February–March we take the averages of February–March, February–April, and February–May, and January–March, January–April, and January–May.

46 We calculate the average of the north-east corner separately from that of April (i.e., the barley harvest) onwards. For January and February, we omit the high growth rates, since they were caused by the switch from fresh to dried dates.

47 Slotsky, The bourse.

48 Temin, ‘Price behavior’; Foldvari and van Leeuwen, ‘Structural analysis’.

49 McCloskey and Nash, ‘Corn at interest’, pp. 182–3.

50 Gregory Clark, ‘The condition of the working-class in England, 1209–2004’, Journal of Political Economy, 113, 6, 2005, pp. 1307–40.

51 Jursa, Aspects, p. 686.

52 Fussel, G. E., ed., Robert Loder’s farm accounts: 1610–20, London: Camden Society, 1936, pp. 158–9Google Scholar.

53 Overton and Campbell, ‘Production’.

54 P. B. Adamson, ‘Problems over storing food in the ancient Near East’, Welt des Orients, 16, 1985, pp. 5–15.

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56 See Michael Jursa, ‘Agricultural managing, tax farming and banking: aspects of entrepreneurial activity in Babylonia in the late Achaemenid and Hellenistic periods’, in Briant, P. and Joannès, F., eds., La transition entre l’empire achéménide et les royaumes hellénistiques, Persika 9, Paris: De Boccard, 2006, pp. 137–222Google Scholar.

57 Homer, Sidney and Sylla, Richard, in A history of interest rates, 4th edn, Hoboken, NJ: John Wiley, 2005, p. 27Google Scholar, point out that the Hammurabi Code had already set a higher maximum interest rate on loans in grain than on loans in silver.

58 Ibid., p. 89.

59 See also Clark, ‘Cost of capital’.

60 See also McCloskey and Nash, ‘Corn at interest’, p. 183.

61 Homer and Sylla, History, p. 17.

62 McCloskey and Nash, ‘Corn at interest’, pp. 183–4.

63 Ibid.

64 G. G. Aperghis, ‘ABACUS historical modeling system’, unpublished paper for ‘Long-term Quantification in Ancient Mediterranean History’ conference, Brussels, November 2009.

65 Dennis Flynn and Arturo Gíraldez, ‘Cycles of silver: global economic unity through the mid-eighteenth century’, Journal of World History, 13, 2, 2002, pp. 391–427.

66 The system was first described by Stolper, Matthew, Entrepreneurs and empire: the Murašû archive, the Murašû firm, and Persian rule in Babylonia, Istanbul: Nederlands Historisch-Archaeologisch Instituut te İstanbul, 1985Google Scholar; regarding credit, see pp. 104–7. The most recent description of the system is to be found in Jursa, Aspects, pp.198–203. Jursa, Aspects, pp. 60, 252, emphasizes that the dependence of these small-scale farmers ‘on outside funds in order to be able to fulfil their tax obligations’ was considered ‘potentially disruptive to the economy’.

67 Michael Jursa and Caroline Waerzeggers, ‘On aspects of taxation in Achaemenid Babylonia: new evidence from Borsippa’, in Briant, P. and Chauveau, M., eds., Organisation des pouvoirs et contacts culturels dans les pays de l’empire achéménide, Persika 14, Paris: De Bocard, 2009, pp. 237–69Google Scholar.

68 Jursa, Aspects, pp. 206–8. On the distinction between rural consumption loans and urban credit for business activities, see also the summary remarks in C. Wunsch, ‘Debt, interest, pledge, and forfeiture in the Neo-Babylonian and early Achaemenid period: the evidence from the private archives’, in Hudson, M. and van der Mieroop, M., eds., Debt and economic renewal in the Ancient Near East, Bethesda, MD: CDL Press, 2002, pp. 249–50Google Scholar.

69 Jursa, Aspects.

70 For a similar argument regarding subsistence and famine frequency, see Ó Grádá, ‘Making famine history’, p. 8.

71 McCloskey and Nash, ‘Corn at interest’, p. 183.