Banking theory: Usury and a trimetalic money system

[tex23236]

No: HPFGUIDX 35053

--- In HPforGrownups at y..., "grey_wolf_c" <greywolf1 at j...> wrote:
> --- In HPforGrownups at y..., "uncmark" <uncmark at y...> wrote:
> > In Book 1, Hagrid explains Wizard Money to Harry as follows, "The 
> > gold ones are Galleons. Seventeen silver Sickles to a Galleon and 
> > twenty-nine Knuts to a Sickle, it's easy enough." 

These values may "float" against each other, and vary over time. 
Gresham's Law must drive the Goblins nuts.

> > I can accept a bronze penny and a silver 43-cent coin (probably 
> > silver clad or colored like a quarter or half-dollar) but a gold
coin 
> > worth $7? At present a 1/10 oz gold coin, barely the size of a
nickel 
> > sells for $45. Is a Galleon the size of a dime? Or is it gold
clad 
> > like the Sacajawea dollar?

Gold may be more abundant in the Wizard World; therefore having
less purchasing power. I've been told that an ounce of gold will
buy a good suit for a man, and that this has been true for as long
as there have been suits.  But that's the Muggle world.

> I always assumed that "gold coins" are adultered in some way (maybe 
> electron: silver and gold), or maybe even just golden, with the
real 
> value stablished by the goverment at more than their intrinsic
value 
> and less than their fabrication cost (basically, like in the muggle 
> world)

I think they may have mixed something in to make the coins more 
durable.

> > Galleons would have to be worth more if only for the fact that in 
> > Chamber of Secrets the Weasleys buy the entire school supplies
for 4 
> > students for "a very small pile of sickles and just one gold
galleon."
> > 
Again, a difference not only in the local value of precious metals,
but in the cost of producing the school supplies.
> 

> Banking in the middle ages...Whatever the reasons, 
> banking in the middle ages was mainly for safe-keeping, at a rate
(they 
> took some of your money in exchange for keeping it safe).

The "Safe Deposit Box" service of modern banks.  I assume the 
Goblins charged rent on the vaults.
> 
> On the other hand, we can also assume that Gringotts works like a 
> modern bank. It still presents quite a lot of problems: ... and the
Weasleys had to go to 
> London to get their money. 

In Diagon Alley, where the main branch was close to places to 
spend the money. We know there is a branch in Egypt, where the 
Goblins are trying to recover treasure from cursed tombs.
> 
> Now for the interesting part: wages. There is no indication about
how 
> people are paid in the wizard world, but I've lately had the
feeling 
> that you're not paid monthly into your bank account, but (as was
the 
> norm in the middle ages), weekly and "on hand", or even dayly.

Daily for laborers, is my guess; Probably yearly for Hogwarts
faculty. Magical services, such as casting or removing curses, 
divination, etc., probably at the time the service is rendered.

>When they arrive, they get ... Arthur 
> gets from the MoM (hopefully someplace safe from the twins).

So Gringott's doesn't lend money deposited with them. That is usury
and, as you said, they just keep the "deposited" money in vaults for a
price.  What they do with the procedes from the vault rentals and 
treasure "recovered" from the Egyptian tombs is anybody's guess.
The Weasleys seem not to be in debt; probably because there is no
consummer credit.  

Money-lending and credit would be a nightmare in a magical world. 
Interest as we know it is based partly on likelyhood of repayment. 
In Roman times, interest rates got up to fifty percent when 
financing sea voyages. The debt was written off if the ship was lost,
so part of the interest was really a form of underwriting.  
Dependable Divination would help, but repayment would be hard 
to predict.

Tex