The World of Horo (Medieval Economy, Historical Setting etc.)
Everything I know about Economics, I learnt from Horo!
Mercantilism is an economic theory which suggests that the prosperity of a nation depends upon its supply of capital, and that the global volume of trade is "unchangeable." Economic assets, or capital, are represented by bullion (gold, silver, and trade value) held by the state, which is best increased through a positive balance of trade with other nations (exports minus imports).
Mercantilism suggests that the ruling government should advance these goals by playing a protectionist role in the economy, by encouraging exports and discouraging imports, especially through the use of tariffs. The economic policy based upon these ideas is often called the mercantile system.
Mercantilism was established during the early modern period (starting in the 16th to the 18th century, which roughly corresponded to the emergence of the nation-state). This led to some of the first instances of significant government intervention and control over market economies, and it was during this period that much of the modern capitalist system was established.
Mercantilism as a whole cannot be considered a unified theory of economics. There were no mercantilist writers presenting an overarching scheme for the ideal economy, as Adam Smith would later do for classical (laissez-faire) economics. Rather, each mercantilist writer tended to focus on a single area of the economy. Only later did non-mercantilist scholars integrate these "diverse" ideas into what they called “mercantilism”.
Mercantilism developed at a time when the European economy was in transition. Isolated feudal estates were being replaced by centralised nation-states as the focus of power. Technological changes in shipping and the growth of urban centers led to a rapid increase in international trade.
Today, mercantilism has seen a resurgence in economic theories that focus on the trade surplus and deficit as determinants of monetary value (ie, trade protectionism), but mercantilism as a whole is rejected by many economists.
To a certain extent, mercantilist doctrine itself made a general theory of economics impossible. Mercantilists viewed the economic system as a zero-sum game, in which any gain by one party required a loss by another. Thus, any system of policies that benefited one group would by definition harm the other, and there was no possibility of economics being used to maximise the common good.
Internationally, mercantilism encouraged the many European wars of the period, and fuelled European imperialism, as the European powers fought over "available" markets.
Early mercantilist writers embraced bullionism, the belief that quantities of gold and silver were the measure of a nation's wealth. Later mercantilists developed a somewhat more sophisticated view.
In an era before paper money, an increase for bullion was one of the few ways to increase the money supply. Simply put, the more gold or silver a country possesses, the richer it is relative to its rivals. Mercantilist trade was thus another way of affecting the balance of power between great powers — early European nation-states attempted to enrich themselves while beggaring their neighbours.
The World of Horo
(or rather, possible real-world inspirations for the WoH)
The Italian Renaissance
The Italian Renaissance began the opening phase of the Renaissance, a period of great cultural change and achievement in Europe that spanned the period from the end of the 14th century to about 1600, marking the transition between Medieval and Early Modern Europe.
Although the origins of a movement can be traced to the earlier part of the 14th century, many aspects of Italian culture and society remained largely Medieval. The Renaissance did not come into full swing until the late 1500s.
The Italian Renaissance began in Tuscany, centered in the cities of Florence and Siena. It later had a significant impact in Venice, where the remains of ancient Greek literature were brought together, leading to the “rebirth” of classical Greek culture.
The Northern Renaissance
Before 1450 the Italian Renaissance had almost no influence outside Italy. After 1500 Renaissance spread around Europe, but Late Gothic influences remained present until the arrival of Baroque.
The Northern Renaissance was distinct from the Italian Renaissance in its centralisation of political power. While Italy was dominated by independent city-states, countries in central and western Europe began emerging as nation-states.
Western Europe was more uniformly under the embrace of feudalism than Northern Italy. This economic system had dominated western Europe for a thousand years, but was on the decline at the beginning of the Renaissance.
The reasons for this decline include the post-plague environment (the bubonic plague, ie, Black Death), the increasing use of money rather than land as a medium of exchange, the growing number of serfs living as freemen, the formation of nation-states, the increasing uselessness of feudal armies in the face of new military technology (such as gunpowder), and a general increase in agricultural productivity due to improving farming technology and methods.
Renaissance’s impact on the Church
Finally, the Renaissance in Western Europe coincided with a weakening of the Roman Catholic Church. The slow demise of feudalism also weakened a long-established policy in which church officials kept the population of the manor under control in return for tribute. (Hmm...debatable, Wiki probably needs a citation here.)
Consequently, the early 15th century saw the rise of many secular institutions and beliefs. Forms of artistic expression which a century ago would have been banned by the Church were now tolerated or even encouraged. Ultimately, the printing press spurred mass production of the Bible, contributing to the Protestant Reformation.
The Age of Discovery
One of the most important technological developments of the Renaissance was the invention of the caravel, the first truly oceangoing ship. This combination of European and Arab ship building technologies for the first time made extensive trade and travel over the Atlantic feasible.
This period of exploration and expansion has become known as the Age of Discovery. North Atlantic states such as Spain, Portugal, France and England began to conduct extensive trade with Africa, Asia and the Americas. This marked the beginning of colonisation activities as the competing European powers sought to monopolise potential markets and lucrative sources of bullion.
It seems I'll have to get out my history of trade papers....
Godfathers of the Renaissance
At this point, I’m not sure whether this background information would be relevant to Horoconomics. But I'm starting to have ideas about what the antagonists in Spice and Wolf are up to. It's a conspiracy! (Isn't that always the case?)
Ah well, the below information can also turn out to be completely irrelevant, but hey, a little bit of knowledge can't hurt that much. ;)
The birth of a dynasty
During the 1400s, Florence was the centre of the Renaissance. By no accident, it was also, at the time, the centre of an industry that has marked the West no less: banking. And at the centre of that sat the Medici family. This one family supplied four popes and two queens of France, and ran Florence, with a couple of interruptions, for almost 400 years. Its power emanated originally from the family bank. 
Set up in 1397 by Giovanni di Bicci de Medici, who had managed a bank in Rome before moving to Florence, the Medici bank lasted until 1494, when it collapsed, a victim of depression, internal strife and French aggression.
How it worked
The Medici were not great innovators in their methods. But they used the techniques newly developed in Italy, or still being so, to their fullest advantage: things like double-entry book-keeping, bills of exchange and book transfers.
The bank, like any modern one, held deposits and made loans, dealt in bills of exchange, changed money and conducted business abroad. Each of its branches was a partnership, under (until 1455) a central holding company. This seems to have been a Medici innovation.
Banking and trade went together. Italian merchants might, for example, lend to English sheep farmers or wool merchants, in return for lower prices. This was also one way for banks to circumvent the Church’s ban on the charging of interest. Another was to use foreign currency: the bank could lend, or accept a bill of exchange, in one currency and collect its debt in another, building a hidden rate of interest into the exchange rate.
The Pope’s banker
The bank grew rapidly. At its widest, it had nine branches outside Florence. It also had many correspondent banks. And it used this network to great effect for what became its biggest client: the Vatican, to which it brought the tithes and taxes due to Rome from other branches of the Church commercial in Europe.
So successful was the bank that under Cosimo de Medici, who ruled it with an iron rod, the Medici were for a long while put in charge of papal finances. Until 1434, more than half of the bank’s revenues came from its Rome “branch” (which followed the pope around on his travels). Its connections with Rome and the Vatican’s reliance on it gave the bank immense clout both with other customers and with the Church itself.
The Medici didn't start out as the most powerful family in Italy. Other families were just as rich, and just as ambitious. But no one knew more about getting ahead — and staying ahead — than the Medici. 
They clawed their way to the top, sometimes through bribery, corruption and violence. Those who stood in their way could end up humiliated — or dead. And the Medici exploited a network of “friends of friends” — hangers on who would do anything to stay close to the family.
Patron of the arts
By 1434, Cosimo de Medici had consolidated power for himself and his family in Florence, all the while maintaining the appearance of democratic government. Cosimo clung to his position as a private citizen, but it was clear to all that he ruled the city of Florence from behind the scenes. 
Though Cosimo maintained his power through the actions of a manipulative schemer, other aspects of his life were nothing if not admirable. He generously supported the arts, commissioning the building of great cathedrals, and commissioning the best artists of the age to decorate them. He demonstrated great support for education, establishing the Platonic Academy for the study of ancient works. It is estimated that before his death in 1464, Cosimo spent approximately 600,000 gold florins supporting architecture, scholarly learning, and other arts. When one considers that the unprecedented fortune left to Cosimo by his father totaled only 180,000 florins, this amount is clearly extraordinary.
Of course, it is possible to question the motives behind such displays of philanthropy. As wealthy and influential citizens, the Medici probably had no choice but to participate in public life. In many Italian societies there is nothing more humiliating than to receive a brutta figura — a loss of face in society.  The fear of public humiliation informs every choice, every argument, every decision in 15th century Italy.
 Florence and the Medici (1397-1495)
 Those Medici
 Medici: Godfathers of the Renaissance
By the way, 95% of what I've contributed so far has been lifted directly from source, so I can't claim credit for what's been written. However, the choice of quotations and the arrangement of points are my own, and so are most of the subheaders. Merely exercising an editor's perogative, as it were. Any faults in these respects are entirely my own.
hey, its not like you don't provide the references and footnotes :)
Sadly, you've done such a slambang job at this point all I can do is watch the series and then provide a "compare and contrast" to see how well the author (and production team) did their homework. :)
Spicy Wolf did not look at things at such a level as stated above. It's Medieval Setting is more akin to World Of Warcraft than real life sans the Supernatural Elements except for Horo (and her kinds).
What we are shown is more down to earth and relevant to real life everyday workings of Corporate Politics like Currency Speculations (demonstarted in the anime), Under The Table Dealings, Blackmailing, Dog-Eat-Dog, Bankruptcy, Contract Breaching (Novel Vol.2), Coporate Esponiage, Pyramid and High Risk Schemes, Absolute Profiting (Novel Vol.3)
I think everyone gets the idea. The Novel does act like an entry level Textbook to the basics of Economics Politics.
But delivered in a far more appealing way than any econ 101 book I've seen :)
Thanks TynyRedLeaf, Amazing job. :D
Financial markets ("currency speculations, under the table dealings, bankcruptcy, high risk schemes, etc") haven't really changed that much since the Middle Ages. ;)
Back on topic. Since I haven't read the novels and mangas, I wouldn't know what aspects of economy that the novelist covered. But I get the feeling that he must have done some research of his own and drawn inspiration from real historical events and personalities — like most good writers do. So, in this sense, I don't feel that the background I've provided is far off-course. In fact, I can point out to instances in the anime which may be referring to similar real-world economic trends.
That said, I don't mind helping fans of Spice and Wolf understand economic/financial terms they are curious about. So, if there's anything from the novels that puzzle you, why not bring them up? I'll see what references I can find.
Next up, probably something about the history of money, or about the implications of currency speculation. :D
Much of what has been portrayed so far in the series fits neatly into early Medici period ... Mid/northern Italy (including the trading motifs, the descriptions of how coinage represented the "market battlefield", the architecture of the cities they visit).
The Church elements seem cranked back from the period... or perhaps we've just not seen much of their part in the play yet. The Church went through more than a few periods of fragmentary dominon when the pope selection got out of whack. The village and their festival seem a bit "behind in time" for the period - though its not impossible that a remnant festival of that sort had escaped the cultural cleansing of the church power brokers.
If they make it up into Germanic territories (I'm kind of assuming Horo's homeland is Scandinavian latitudes) - it'll be interesting to see if the peoples and places reflect that.
Bah, there's simply not enough episodes to cover the sorts of adventures they could have.
However, the impression the novel has given me is that Hasekura does is take examples of Economical Politics in real life, change it's elements (currency, goods,etc) to something Medieval and insert it into the scenarior.
Well, a good author will always fill the "out of sight" background of his world with stuff that makes sense so that what's "on stage" for the story makes sense. LOTR is an excellent example of this. Tolkien invented languages, histories, cultures, etc that were never seen in the main LOTR story or only brief snippets... just enough you knew the story tapestry went way beyond the immediate story.
What Red Leaf is doing is documenting what appear to be the historical elements from which the author drew to create his world. There's nothing to say that the author didn't just cherry-pick what he needed. But Horo and Lawrence's world seem all the more realistic because of what isn't explicitly stated but still there.
Hasekura didn't have to change anything --- the things described in episode 3 are exactly the kind of trading and currency world that existed in the early Middle Ages right down to the coin metal percentage revisions. There's little or nothing *new* about such things in the modern world.
“There are several hundred different currencies, and the silver and gold content is constantly changing. To begin with, the face value of the currency is higher than the silver or gold it’s made of. You can’t use it if it’s not credible.” —Spice and Wolf, Episode 3, “Wolf and Business Sense”
Spoiler for length; sorry, I've tried to keep it as short as possible:
 Forex History
 Origins of Money and Banking
 Legal tender
 Coins cost more to make than face value
 The Bretton Woods Accord
 Global currency speculation and its implications
...something tells me I ought to start a blog...
market sentiment == packs of crazed loonies manipulated by a few powerful players. I could rant on the basic insanities of "the market" for hours. But I'd rather watch Horo, thank you.
Bartering or billing?
“I don’t pay for the salt I buy from a company in Yorentsu. It’s because I sell the same [value] of wheat to a branch from the same company in another city. In exchange for not receiving a fee for the wheat, I don’t need to pay for the salt. Basically, I can fulfill both contracts without exchange any money. This system is called bartering and was invented by merchants to deal with [foreign exchange] in various regions.”
— Spice and Wolf, Episode 2, “Wolf and Distant Past”
Of course, I’m not an economic historian by training, so I could be wrong.
If the various transactions had been done through billing, the process would have been slightly different. Lawrence would not have had to carry so many different commodities — he would only need to carry a single bill of exchange. This could have happened instead:
What's more, it's safer to carry bills of exchange rather than commodities. Commodities have trade value. If Lawrence did encounter bandits, what's to stop them from robbing his wheat/salt/pelts, if they can't get his silver? Either way, he would still be equally bankcrupt.
The most striking feature of Japanese agriculture is the shortage of farmland. However, the land is intensively cultivated, including the remote valleys nestled among the thickly forested mountains. Upland farming communities were able to cultivate rice, wheat and barley by employing terrace cultivation techniques.
In Japan, mountains are dangerous, frightening places that are associated with death, not only as sites of physical burial but also as the abode of the spirits of the dead. Man's presence there is a potential infringement on the kami's territory, and thus potentially provocative.
The mountains form a world with its own separate way of thinking and ethics, one that belongs to the yama no kami (mountain spirits). Similarly, many forest animals are associated with these spirits, including the wolf. The association of the wolf with the mountains is indicated by the many wolf-related place-names found in uplands areas of Japan.
In the mountains of the Kii Peninsula, for example, there are places known as Ōkamitaira (Wolf Plateau), Ōkamizawa (Wolf Marsh), Ōkami'iwa (Wolf Rock) and Kobirotoge (Howling Wolf Pass). These tend to be sites of past encounters with or sightings of the wolf.
Beyond good and evil
The Japanese wolf is neither good nor evil. Rather, like a human being, a wolf can be helpful or dangerous, depending on how humans conduct their relationship with the animal. Provided that a relationship of reciprocity is properly and faithfully maintained, the wolf is a benign beast. Dangerous wolves are more a sign of human infidelity than of the animal's bad nature.
In practice, wolves were on occasion killed in Japan. Indeed, there are tales of villages organising wolf-hunts (inugari) in response to livestock predations. However, through his actions, the wolf-killer exposes himself and his family to the risks of spiritual retribution.
Among the upland farming communities of Japan, the wolf is regarded as a protector of mankind, a sort of banken (watchdog) of the mountains. This watchdog role appears in the benign okuri-ōkami (sending wolf) stories: "When someone is walking along mountain roads at night, sometimes a wolf follows without doing anything. On nearing the house the wolf disappears."
In Japanese folklore, wild animals such as the fox (kitsune), racoon dog (tanuki), and snake are often able to assume human (often female) forms to hide among people. Curiously, Japanese wolf-lore has little to say about wolf shapeshifting. Rather, the Japanese wolf is concealed by the natural environment itself: “The wolf can hide even where there is only a single reed."
A lost era
Today, the Japanese equate the extinction of the wolf with the loss of their connection to nature. (Remember Moro the wolf god of Mononoke Hime?) Perhaps the stubborn refusal in some quarters to accept that the wolf is gone reflects romantic memories of this past. After all, the wolf is kami, able to stay invisible to human eyes, or so the Japanese would like to believe, similar to how Americans like to believe in the existence of Bigfoot.
 Agriculture, forestry, and fishing in Japan
 On the extinction of the Japanese wolf
 Extinct wolf a symbol of what Japan has lost
The Golden Bough, Chapter 48
“It’s the last stack of wheat! Did your greed hide the wheat stack? Check it well or Horo will escape! So who caught the wolf? Who? Who? Who?”
—Spice and Wolf, Episode 1, "The Wolf and Best Clothes"
The Corn Spirit as an Animal
(source: The Golden Bough, by Sir James George Frazer [1854–1941], first published in 1890)
"Amongst the many animals whose forms the corn-spirit is supposed to take are the wolf, dog, hare, fox, cock, goose, quail, cat, goat, cow (ox, bull), pig, and horse. In one or other of these shapes the corn-spirit is often believed to be present in the corn, and to be caught or killed in the last sheaf.
"The person who cuts the last corn or binds the last sheaf gets the name of the animal, as the Rye-wolf, the Rye-sow, the Oats-goat, and so forth, and retains the name sometimes for a year.
"Sometimes the creature is believed to be killed by the last stroke of the sickle or scythe. But oftener it is thought to live so long as there is corn still unthreshed, and to be caught in the last sheaf threshed. The corn-spirit is believed to live wherever the corn is still being threshed.
"Once upon a time, in a village, an abundance of wheat would ripen or sway in the wind, and a Wolf could be seen running through it.
Wheat that fell due to the wind would be trampled upon by the Wolf. When the crop was poor, the Wolf would then eat it."
—Spice and Wolf, Episode 1, "The Wolf and Best Clothes"
The corn-spirit as a Wolf or Dog
"We begin with the corn-spirit conceived as a wolf or a dog. This conception is common in France, Germany, and Slavonic countries. Thus, when the wind sets the corn in wave-like motion the peasants often say, 'The Wolf is going over, or through, the corn,' 'the Rye-wolf is rushing over the field,' 'the Wolf is in the corn.'
"In the neighbourhood of Feilenhof (East Prussia), when a wolf was seen running through a field, the peasants used to watch whether he carried his tail in the air or dragged it on the ground. If he dragged it on the ground, they went after him, and thanked him for bringing them a blessing, and even set tit-bits before him. But if he carried his tail high, they cursed him and tried to kill him. Here the wolf is the corn-spirit whose fertilising power is in his tail.
"In Silesia, when the reapers gather round the last patch of standing corn to reap it they are said to be about 'to catch the Wolf.' In various parts of Mecklenburg, where the belief in the Corn-wolf is particularly prevalent, every one fears to cut the last corn, because they say that 'the Wolf is sitting in it'. Hence every reaper and every woman similarly fears to bind the last sheaf because 'the Wolf is in it.' So both among the reapers and the binders there is a competition not to be the last to finish.
"[To] the woman who binds [the last sheaf] they say, 'The Wolf is biting her,' 'She has the Wolf,' 'She must fetch the Wolf' (out of the corn). Moreover, she herself is called Wolf; they cry out to her, 'Thou art the Wolf,' and she has to bear the name for a whole year.
"The young woman who bound the last sheaf of wheat used to take a handful of stalks out of it and make 'the Wheat-wolf' with them; it was the figure of a wolf about two feet long and half a foot high, the legs of the animal being represented by stiff stalks and its tail and mane by wheat-ears.
"This Wheat-wolf she carried back at the head of the harvesters to the village, where it was set up on a high place in the parlour of the farm and remained there for a long time. In many places the sheaf called the Wolf is made up in human form and dressed in clothes. Generally the Wolf is brought home on the last waggon with joyful cries.
"Again, the Wolf is supposed to hide himself amongst the cut corn in the granary, until he is driven out of the last bundle by the strokes of the flail. The men thresh the last sheaf till it is reduced to chopped straw. In this way they think that the Corn-wolf, who was lurking in the last sheaf, has been certainly killed.
"Sometimes it appears to be thought that the Wolf, caught in the last corn, lives during the winter in the farmhouse, ready to renew his activity as corn-spirit in the spring. Hence at midwinter, when the lengthening days begin to herald the approach of spring, the Wolf makes his appearance once more."
Nice find.... I've not read the Golden Bough in decades.... its a good read for fantasy settings and D&D campaigns even if a fair amount of it is Victorian era pseudo-anthropology.
Interesting find. Never heard of something like that before. But one should be careful to quickly file such customs away under "old pagan religion". The old European religions were AFAIK mainly polytheistic, with patheons of mostly human-like deities that stood outside of nature. The animistic idea of a "corn spirit" doesn't really fit there. These traditions might well be no more "religious" in origin than the belief in Rudolf the red-nosed reindeer.
I'm just saying that because there seems to be a tendency in "neo-pagan" movements to label everything as "old religion" what catches their interest. Much to the dismay of archaeologists and historians i assume.
It's good not to live on an island BTW, so the wolves could take their chance to come back.
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