Q: Were There Banks in Middle-earth?
ANSWER: J.R.R. Tolkien does not seem to have invested much effort in providing details about the exchange of money in Middle-earth. He does not use the word bank except in the sense of the sloping ground that runs down toward a river or stream. On the other hand, he uses the word treasury in several places and ways. Kings and great nobles (and dragons) made treasuries. The word treasury, according to ancient usage, could refer to a storehouse of anything of value — including books of lore, food, or symbols of wealth such as gold and jewels.
Fëanor’s family built one or more treasuries in Valinor where the Silmarils and other jewels were kept. Thingol also had a treasury, in which he placed the Nauglamir (according to Christopher Tolkien’s story in The Silmarillion). Aragorn referred to the “treasury of Elendil” when claiming the Palantir of Orthanc. Smaug’s hoard was called a “treasury” in The Hobbit.
We do not know the exact origin of the practice of banking, or of any practice that might be associated with banking. We think of banks as institutions that gather and redistribute wealth in a variety of ways. The treasuries of Middle-earth could thus be equated with banks in that sense, especially if the treasuries of the kings were used to distribute wealth to their followers.
It might be that J.R.R. Tolkien felt he had introduced too many sophisticated mechanisms into Middle-earth and that he was drawing a line somewhere. Banking, especially the modern form, did not arise in Europe until the High Middle Ages and the Renaissance. In the Classical world money-changers and priests stored and exchange wealth for most people.
It could be argued that some sort of mechanism for exchange of value must have existed in order to support the trade between Dwarves and Elves, Elves and Men, Men and Dwarves, etc. That mechanism of exchange need not be what we call banking, however. Also, by the end of the Third Age many ancient institutions no longer existed: whole kingdoms and civilizations had been wiped out by the numerous wars.
In the ancient and medieval worlds it was common for travelers to sell their goods and convert them to jewels or other items of small size but great value, and to carry this wealth with them. They would sell or exchange their valuables as required while they travelled. Once the Hobbits get past Bree there is no longer any mention of exchange of coins for goods and services. The Shire and Bree appear to have the most robust economies in Middle-earth; but then we only really see Minas Tirith at a time of siege, when the majority of the population has been sent away and the men of the city all appear to be serving in the army.
Tolkien did write a little bit of material (published in The Peoples of Middle-earth) about Gondorian money, so we know that he had thought about it. But what would have been the value of Shire money in Gondor? Merry’s silver pennies from the north might have been thought of as curiosities more than representations of value. Their intrinsic value would have existed in the quality and purity of their silver content.
Assuming the Hobbits could have exchanged their northern coin for southern coins, they probably would not have received the same value as whatever their coins held. Fortunately for them they were guests of the King, so they probably did not need to spend much money.
I would guess that if Tolkien thought about anything like banking at all, he only meant for there to be a general reliance upon the treasuries of rulers to hold and exchange wealth on behalf of the local people. Hence, merchants would probably be responsible for their own wealth much as Thorin carried some fine gold on his person when visiting the Shire. It might be that one could take jewels and other valuables to the local treasury and exchange them for local coins.
One has to wonder what became of the coins Bilbo brought back from Erebor and the Trolls’ hoard in Eriador. He gave away much of his foreign treasure, according to Frodo; and spent a good deal more of it. So the Shire economy would have absorbed that wealth but we don’t know how much of an impact it would have had. Was the gold and silver melted down? Did people simply use the money? We’ll really probably never know.
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