How were large monetary transactions conducted in medieval Europe?

Question

Recently, I have read in the news about a large hoard of Norman coins in England being found. Apparently, all of these coins were silver pennies. And then it occurred to me that small silver coins were the only coins minted in Western Europe for centuries (AD 700s to 1200s).

How would large payments be commonly made back then? Did people use a medley of ancient and foreign gold coins? Or bags and bags of silver pennies?

And why did it take so long to mint a higher value silver coins like shilling (1503)? I would expect any king would want to mint high value coins, even if gold is scarce.

Answer 1

As almost always: Large money transfers were done in medieval Europe just in the manner this was done since Sumerian times. By transferring debt. These obligations were not only transferrable but also transmutable. From the concrete "400 barrels of wine" to 2000 bushels of grain", or even weirder, "400 barrels of wine" to "some metal with primitive pictures on it".

What we call "money" is not "money", and never was. It isn't real and without inherent value. It was only ever an extension to debt.

It is precisely the other way around than commonly told, the levels of astraction go from debt comes before money, then 'money', then barter.

In this sense, the 'economic middle ages' arrived in Europe only in the second half of the high middle ages. During the 'commercial revolution'. Before that, we have to note that the exchange and 'transfer of large sums' was not really on the agenda. And certainly not really in metal objects, as their value was in constant flux and therefore unreliable.

Europe, as I mentioned, came rather late to the Middle Ages and for most of it was something of a hinterland. Still, the period began much as it did elsewhere, with the disappearance of coinage. Money re­ treated into virtuality. Everyone continued to calculate costs in Roman currency, then, later, in Carolingian "imaginary money"-the purely conceptual system of pounds, shillings, and pence used across Western Europe to keep accounts well into the seventeenth century. Local mints did gradually come back into operation, producing coins in an endless variety of weight, purity, and denominations. How these related to the pan-European system, though, was a matter of manipulation. Kings regularly issued decrees revaluing their own coins in relation to the money of account, "crying up" the currency by, say, declaring that henceforth, one of their ecus or escudos would no longer be worth 1/12 but now 1/s of a shilling (thus effectively raising taxes) or "crying down" the value of their coins by doing the reverse (thus effectively reducing their debts). The real gold or silver content of coins was endlessly readjusted, and currencies were frequently called in for re-minting. Meanwhile, most everyday transactions dispensed with cash entirely, operating through tallies, tokens, ledgers, or transactions in kind. As a result, when the Scholastics came to address such matters in the thirteenth century, they quickly adopted Aristotle's position that money was a mere social convention: that it was, basically, whatever human beings decided that it was.

All this fit the broader Medieval pattern: actual gold and silver, such of it as was still around, was increasingly laid up in sacred places; as centralized states disappeared, the regulation of markets was in­creasingly in the hands of the Church.

All of these sermons-and there were many of them-left certain critical questions unanswered. What should the rich man do when receiving a visit from his troubled neighbor? True, Jesus had said to give without expectation of return, but it seemed unrealistic to expect most Christians to do that. And even if they did, what sort of ongoing relationships would that create? St. Basil took the radical position. God had given us all things in common, and he had speci cally instructed the rich to give their possessions to the poor. The communism of the Apostles-who pooled all their wealth, and took freely what they needed-was thus the only proper model for a truly Christian soci­ ety.105 Few of the other Christian Fathers were willing to take things this far. Communism was the ideal, but in this fallen and temporary world, they argued, it was simply unrealistic. The Church must accept existing property arrangements, but also come up with spiritual argu­ ments to encourage the rich to nonetheless act with Christian charity. Many of these employed distinctly commercial metaphors.

The reader may be wondering how it could have been possible for usury laws to move in two opposite directions simultaneously. The answer would seem to be that politically, the situation in Western Europe was remarkably chaotic. Most kings were weak, their holdings fractured and uncertain; the Continent was a checkerboard of baronies, principalities, urban communes, manors, and church estates. Jurisdic­ tions were constantly being renegotiated-usually by war. Merchant capitalism of the sort long familiar in the Muslim Near West only real­ ly managed to establish itself-quite late, compared with the situation in the rest of the Medieval world-when merchant capitalists managed to secure a political foothold in the independent city-states of northern Italy-most famously, Venice, Florence, Genoa, and Milan-followed by the German cities of the Hanseatic League.126 Italian bankers ulti­ mately managed to free themselves from the threat of expropriation by themselves taking over governments, and by doing so, acquiring their own court systems (capable of enforcing contracts) and even more criti­ cally, their own armies.127 What jumps out, in comparison with the Muslim world, are these links of nance, trade, and violence. Whereas Persian and Arab think­ ers assumed that the market emerged as an extension of mutual aid, Christians never completely overcame the suspicion that commerce was really an extension of usury, a form of fraud only truly legitimate when directed against one's mortal enemies. Debt was, indeed, sin-an the part of both parties to the transaction. Competition was essential to the nature of the market, but competition was (usually) nonviolent war­ fare. There was a reason why, as I've already observed, the words for "truck and barter" in almost all European languages were derived from terms meaning "swindle," "bamboozle," or "deceive." Some disdained commerce for that reason. Others embraced it. Few would have denied that the connection was there. One need only examine the way that Islamic credit instruments­ or for that matter, the Islamic ideal of the merchant adventurer-were eventually adopted to see just how intimate this connection really was.

It is often held that the rst pioneers of modern banking were the Military Order of the Knights of the Temple of Solomon, commonly known as the Knights Templar. A ghting order of monks, they played a key role in nancing the Crusades. Through the Templars, a lord in southern France might take out a mortgage on one of his tenements and receive a "draft" (a bill of exchange, modeled on the Muslim suftaja, but written in a secret code) redeemable for cash from the Temple in Jerusalem. In other words, Christians appear to have first adopted Islamic financial techniques to finance attacks against Islam.
_{–– David Graeber: "Debt The First 5000 years", Melville House: New York, 2011.}

–– Robert S. Lopez: "Commercial Revolution of the Middle Ages 950–1350", Cambridge University Press, Cambridge, New York, 1976.
–– Maya Shatzmiller: "The Role Of Money In The Economic Growth Of The Early Islamic Period (650–1000)", American Journal of Comparative Law, 2005.
–– A. Mitchell Innes: "What is Money?", "The Credit Theory of Money"; Geoffrey W. Gardiner: "The Primacy of Trade Debts in the Development of Money" in: L. Randall Wray (Ed) "Credit and State Theories of Money", Edward Elgar: Cheltenham, Northampton, 2004.

Answer 2

The Medieval Europe section of the Wikipedia article "History of Banking" mentions a key point in the context of the Crusades.

In the 12th century, the need to transfer large sums of money to finance the Crusades stimulated the re-emergence of banking in western Europe. In 1162, Henry II of England levied a tax to support the crusades—the first of a series of taxes levied by Henry over the years with the same objective. The Templars and Hospitallers acted as Henry's bankers in the Holy Land. The Templars' wide flung, large land holdings across Europe also emerged in the 1100–1300 time frame as the beginning of Europe-wide banking, as their practice was to take in local currency, for which a demand note would be given that would be good at any of their castles across Europe, allowing movement of money without the usual risk of robbery while traveling.

The Wikipedia article "Banknote" elaborates better on what came a little later in Italy.

In medieval Italy and Flanders, because of the insecurity and impracticality of transporting large sums of cash over long distances, money traders started using promissory notes. In the beginning these were personally registered, but they soon became a written order to pay the amount to whomever had it in their possession. These notes are seen as a predecessor to regular banknotes by some but are mainly thought of as proto bills of exchange and cheques. The term "bank note" comes from the notes of the bank ("nota di banco") and dates from the 14th century; it originally recognized the right of the holder of the note to collect the precious metal (usually gold or silver) deposited with a banker (via a currency account). In the 14th century, it was used in every part of Europe and in Italian city-state merchants colonies outside of Europe. For international payments, the more efficient and sophisticated bill of exchange ("lettera di cambio"), that is, a promissory note based on a virtual currency account (usually a coin no longer physically existing), was used more often. All physical currencies were physically related to this virtual currency; this instrument also served as credit.

The general point here is that extensive merchant networks and growing urban financial centers allowed for increasing use of negotiable instruments over time. Otherwise, yes, the means of payment would have varied widely by time with coins and precious metals playing a dominant role.