Function of money in medieval Serbia, part two

The Nemanjic’s dinar was in high demand on foreign markets, just like noble metals from Serbia. Goods and money travelled from Serbia by caravan to the East and by ship to the West. The use of Serbian dinars as a means of payment outside the Nemanjic Serbia is corroborated by medieval documents from Venice, Dubrovnik and Hungary, as well as by the many Serbian coins found in Bulgaria, Bosnia, Greece, Italy, Romania and France. Nemanjic dinars were being taken out of Serbia mostly by the merchants of Dubrovnik, who brought caravans of fabric, salt, spices, glassware, fine clothing and other valuable goods to Serbia. In return, they accepted only good dinars, so that they could get a proper equivalent for the merchandise they sold. By refusing to accept bad coins, the merchants effectively prevented the action of Gresham’s law, according to which good coins were hoarded and bad coins remained in circulation. Had they not, good money would have remained hoarded or been melted down and possibly turned into a greater amount of bad money. Chaos would have hit markets world-wide, because trading would have lost its foundation: a durable standard for measuring and comparing the value of various kinds of goods. Emperor Dusan understood quite well the importance of the principle of optional acceptance of money in circulation, since Article 118 of his Legal Code prohibited anybody from forcing merchants to accept money they did not want in return for their merchandise.
Besides rulers, the Orthodox Church also disposed of coins in the Nemanjic State. Churches and monasteries received donations in coins from rulers on the occasion of construction of new or restoration of old Church buildings. This practice was taken over from Byzantine emperors. The Nemanjic’s also regularly filled the church and monastery treasuries with donations in coins by granting annual subsidies for maintenance of monastery residents. Serbian lords had substantial monetary assets. During Emperor Dusan’s reign, the Serbian nobility was already so wealthy that it became commonplace for nobles economical than the accumulation of cattle or weighed silver.
Emperor Dusan counted on the fact that the nobles, court officials, artisans and merchants possessed assets in monetary form, as demonstrated by the fact that his legislators did not shun the possibility of seizing of such assets in certain conditions.
With the accumulation of monetary assets, conditions were created in Serbia for the lending and deposit coins. The Nemanjic’s accepted the view of the Byzantine emperors that the lending of coins at a given rate was an economic necessity. There is no reference in medieval Serbian documents to any general ban on the lending of money. According to a charter granted by Emperor Dusan to the Monastery of the Holly Archangels near Prizren in 1348-1353, only the clergy were not allowed to lend money. The lending of domestic silver coins against a mortgage on property is to be referred to from the beginning of the XIV century. With the strengthening of economic power and centralized government in the first half of the XIV century, the attitude towards mortgages was accepted without reserve, as a necessary insurance for the lenders. A reserve was later introduced, as mortgage was considered to be an act aimed against the borrowers’ interests.
Domestic lenders mostly extended loans to merchants, because the trading community suffered from a chronic shortage of money. Merchants often financed their transactions by setting up special trading companies. Some members of these companies acted exclusively as financiers, while others were responsible for the organization and conduct business. These companies were usually set up for each project or each trip. More permanent arrangements involving a yearly settlement were much rarer. The merchant companies created by domestic merchants and lenders operated exclusively between the Serbian towns on the Adriatic coast and inland markets. Trade between the Italian city states and the coastal markets of Nemanjic Serbia was controlled by foreigners, who also joined together in merchant companies.
Medieval Serbian documents show that the citizens of Dubrovnik gave valuables for safekeeping to some Serbs in Nemanjic Serbia and that Serbs deposited their money with the city of Dubrovnik and private lenders from Dubrovnik. There are no records of the rate of interests on private loans, but Dubrovnik city paid annual interest rate of five percent on deposits. In order to expand their lending and deposit business, Serbian rulers were prepared to accept foreign citizenship. For instance, King and subsequently Emperor Dusan became a citizen of Venice, regardless of the fact that the title of a Venetian citizen was very much inferior to his royal title. The acquisition of Venetian citizenship involved real benefits. Namely, foreigners were not allowed to engage in financial transaction in Venice.


Function of money in medieval Serbia, part one

Barter trade and use of primitive money prevailed in domestic trading in the Nemanjic’s State, which was a kingdom from 1217 and an empire from 1346. The use of foreign coins was quite rare. The earliest domestic coins date back to the reign of King Radoslav (1228-1233), who issued on rare occasion coins akin to the Byzantine scyphatus. The minting of coins was discontinued after his death and revived toward the end of the reign of King Uros (1243-1276) or at the beginning of that of King Dragutin (1276-1282-1316). It was then that the regular minting of the national silver currency, the dinar, began. The Venetian grosso served as a model. Thanks to widespread use of the dinar in the XIV century, Serbia had one of the highest levels of commodity trading in Europe. Serbia reached its full economic prosperity during Emperor Dusan’s reign in the middle of that century. The dinar continued to be minted until the Serbian medieval state fell under Turkish rule in 1459.
Coins were supplemented in domestic trade by primitive money. Initially, the means of payment was linen, followed by cattle and, finally, weighed silver. The practice of paying in linen came with the Slavs, when they moved to the Balkans from the lands of their origin in the VII century. This practice persisted until the beginning of the XIV century, as is corroborated by a charter granted by King Milutin (1282-1321) to the monastery of St Stefan in Banjska, in 1313-1318. From the IX to the XI century, Serbs also used cattle as money. They took this Roman practice from the Wallachians, Romanized Illyrians and Thracians. Cattle were used as money in domestic trading until the middle of the XIV century and the last reference to cattle as a medium of exchange was made in Dusan’s Code. The only form of primitive money used in domestic trading right up to the fall of the Serbian medieval state under the Turkish rule was weighed silver.
The trading of goods for coins expanded at different rates in the various parts of the state. It was practiced the most on the big markets of the coastal towns, like Kotor, Budva, Ulcinj, Skadar, St Srdj and Drivast and the least in the modest markets of the inland fiefs and monastery estates. In the period in which the mining industry flourished, in the mining towns of Brskovo, Novo Brdo, Rudnik, Trepca and Plana had developed trade. During Emperor Dusan’s reign, intensive trading also went on in Prizren, Lipljan, Skoplje, Veles and Stip, all towns taken from the Byzantine Empire. Big town markets worked every day and small village markets opened only on Sundays and major Church holidays, when fairs were organized. Annual fairs are staged in villages of Serbia to this day.
The penetration of trading goods for coins into the fiefs is corroborated by Article 198 of Dusan’s Code, under which the master of every house had to pay a tax in coins or grain. This tax was introduced in the Serbian common law during King Milutin’s reign, near the end of the XIII century, as a regular tax in money like the Byzantine annona. The rulers of the medieval European states often resolved the problem of the general shortage of coins, by allowing taxes to be paid either in money or kind.
Medieval rulers decided the quantity of produce to be surrendered or the amount of money to be paid to the state as a basic poll tax. In doing so they effectively set a ratio between the value of certain kinds of commodity money and coin money. This is how a system of dual currency began to function as an instrument solely for tax collection purposes. In the dual currency system of the Nemanjic’s State, a pail of grain (about 15 kg) was worth 12 dinars. The system was modeled on the example of the Byzantine Empire, where the annona was set at one modi (pail) of grain or one golden nomisma. When King Milutin introduced similar tax in Serbia at the start of the XIV century, a corrupted nomisma was worth only 12 dinars, having lost a half of its nominal value. King Milutin used this reduced value of a nomisma when setting the poll tax. When Emperor Dusan subsequently allowed the poll tax to be paid in dual currency, he changed neither the sum of money nor the quantity of grain Serbian peasants had to pay.
While Silver coins were used as a medium of exchange in domestic trading, the price of goods, state taxes and fines were nominally expressed in perperas. Like Dubrovnik, medieval Serbia used the perpera as an accounting unit in order to set a permanent ratio between the silver dinar and the price of gold. Although the medieval Serbian state did not mint any gold coins, the ultimate goal of the development of its metallic monetary system was, as in other European states, the minting of gold coins. In Serbia, the perpera was always used as an accounting unit of 12 dinars, regardless of the actual duodecimal measure of silver, whose value could change exclusively in relation to gold.
The perpera was named after the perper, one of the Greek names for the Byzantine gold nomisma. While Dubrovnik, Serbia and Bosnia used the perpera as their accounting unit, many West European states used solidus in the same way. In terms of value, a perpera corresponded to a solidus, so that either accounting unit expressed, for example, half the value of a Venetian ducat. The Italian city states, including the Venetian Republic, kept the nominal (ideal) solidus in their monetary systems in order to preserve a single standard for measuring prices in all of Europe, even when the minting of gold coins became more common in the latter half of the XIII century.