EARLY ECONOMIC HISTORY OF MONGOLIA

EARLY ECONOMIC HISTORY OF MONGOLIA

Until the 7th century and the establishment of Buddhist estates “property” was defined only as movable property.

Historically, the Mongols supplement their economy with trade and raiding. They never really developed a merchant class. The most common trade involved exchanges of animals, fur and hides for grain, tea, silk, cloth and manufactured products from China and Russia.

Naadams have traditionally been a time and place where a great deal of business and trade was conducted. Naadam is a multiday-day festival featuring the traditional Mongolian sports of horse racing, archery and wrestling. Nadaam (meaning "to play" or "have a good time") is the biggest holiday of the year. Usually held in mid July, it is a time when nomads have traditionally gathered at designated places in the country to enjoy long summer days, catch up on news with old friends and enjoy sports and other events. The biggest Nadaam takes place 50 kilometers or so from Ulan Baatar.

Land has traditionally not belonged to individuals but to tribes and clans of herders. Each tribe or clan had its regular grazing grounds and families were allotted space within this scheme. There were — and still are — almost no fences. With horse people and nomads, wealth has traditionally rested with their animals not in land. The value of land was measured by its ability to provide water and pastures for animals.

Nomad Traditions of the Mongols

But despite increasing urbanization and industrialization, a large portion of the population lives either by the traditional methods of pastoral nomadism — moving their herds (sheep, horses, cattle, goats, and yaks) from one area of temporary sustenance to another — or in a close symbiotic relationship with the nomads. Despite its hardships, the nomadic life provides Mongols with national values and a sense of historical identity and pride. [Source: Robert L. Worden, Library of Congress, June 1989 *]

Nomadic peoples of uncertain origins are recorded as living in what is now the Mongolian People's Republic in the third century B.C., and archaeological evidence takes human habitation in the Gobi back a hundred centuries or more earlier. Warfare was a way of life, against other nomadic peoples in competition for land, and in the south against the Chinese, whose high culture and fertile lands were always attractive to the Mongols. China responded with punitive expeditions, which pushed these pre- and proto-Mongol peoples farther north, west, and east and resulted in periods of Chinese hegemony over parts of Inner Asia. *

Until the twentieth century, most of the peoples who inhabited Mongolia were nomads, and even in the 1980s a substantial proportion of the rural population was essentially nomadic. Originally there were many warlike nomadic tribes living in Mongolia, and apparently most of these belonged to one or the other of two racially distinct and linguistically very different groupings.

Mongol Administration

Beginning in the 13th century, after a region was conquered by the Mongols, power was handed over to trusted subordinates. Genghis Khan insisted that booty be centrally collected and equally distributed. Local officials and clerks were often spared as they could help run the city. Records were kept and written communications were conducted in an Uigar script that was adopted by many Turkic-speaking peoples.

The Mongols set up a good transportation and communications network that reached to all corners of their empire. They set up guards and post stations at regular intervals and sent messages using a kind of pony express that could cover almost 200 miles a day. The riders wore bells to warn people to get out their way. Often a single rider traveled with two horses, switching between, often without touching the ground, while the horses surged ahead at full speed. All male herdsmen were required to spend some time working in the system, which continued in operation until 1949.

The Mongols also developed a famine relief scheme, and expanded the expanded the canal system in China which helped to bring grain to the cities. The streets of the cities under control were relatively safe, goods moved relatively unhindered through the kingdom. The achievements of the Mongols and Kublai Khan were described in Marco Polo's Description of the World.

As was true with the horse clans that preceded them, the Mongols were good conquerors but not very good government administrators. After Genghis died and his kingdom was divided up among his four sons and one of his wives and endured in that state forone generation before it was divided further among Genghis's grandchildren. At this stage the empire began to fall apart. By the time Kublai Khan gained control of a large portion of eastern Asia, the Mongol control of "heartland" in Central Asia was disintegrating.

Iqta System and Taxes

The iqta system, in which land was divided up into non-hereditary fiefs, was introduced by the Mongols an endured in dynasties after the Mongols. These fiefs were governed by a sultan or a lord known as pasha who was selected for various reasons including distinguishing oneself in war or by giving gifts or providing women for the Khan's harem.

Compared to feudalism, the disadvantage of the iqta was that pashas were encouraged to get rich quick and hoard their loot since their land would not necessarily end up in the hands of their descendants. This lead to the overtaxation of subjects, "skimping" on military obligations, and negligence. The advantage is that land was granted by some degree by merit and intrigues and wars between pashas was minimized.

The Mongols supported their empire with taxes collected taxes from the cities and kingdoms that came under their power. According to historian Thomas Allen at Trenton State College the Mongols imposed a variety of taxes. In China, there was a head tax paid by every adult male in grain and a household tax paid in silk. Chinese farmers were taxed according to the quality of their land and the number of oxen they owned. Similar taxes were levied throughout the empire.

Merchants were taxed based on their transactions; special levies of flour or rice were imposed to feed the armies in times of war; newly conquered people were expected to turn over a tenth of their possessions. According to Mongol law, merchants or trader that went bankrupt for a third time were given the death penalty.

One of the reason why the Mongols were not as powerful after Genghis died was that local Mongol rules started to tax local people and these leaders kept the booty for themselves instead of sharing it equally.

Mongol Trade and the Silk Road

The Mongols were strong supporters of free trade. They lowered tolls and taxes; protected caravans by guarding roads against bandits; promoted trade with Europe; improved the road system between China and Russia and throughout Central Asia; and expanded the canal system in China, which facilitated the transportation of grain from southern to northern China

Silk Road trade flourished and trade between east and west increased under Mongol rule. The Mongol conquest of Russia opened the road to China for Europeans. The roads through Egypt were controlled by Muslim and prohibited to Christians. Goods passing from India to Egypt along the Silk Road were so heavily taxed, they tripled in price. After the Mongols were gone. the Silk Road was shut down.

The Mongols were the first people to use paper money as their sole form of currency. A piece of paper money used under Kublai Khan was about the size of a sheet of typing paper and had a furry felt-like feel. It was made from the inner bar of mulberry trees and according to Marco Polo was "sealed with the seal of the Great Lord."

Mongols Help Introduce Paper Money to the World

Paper money was first produced in China in 11th century when there was a metal shortage and the government didn't have enough gold, silver and copper to meet the demand for money. It wasn't long before the Chinese government was producing paper currency at a rate of four million sheets a year. By the 12th century paper money was used to finance a defense against the Mongols. Notes produced in 1209 that promised a pay holders with gold and silver were printed on perfumed paper made of silk. [Source: "The Discoverers" by Daniel Boorstin]

A piece of paper money used under Kublai Khan in the 13th century was about the size of a sheet of typing paper and had a furry felt-like feel. It were made from the inner bark of mulberry trees and according to Marco Polo was "sealed with the seal of the Great Lord." The world's largest paper money was a 1 guan note issued by the Ming dynasty of 1368-99 that was 9 by 13-inches

"Of this money," Marco Polo wrote, “the Khan has such a quantity made that with it he could buy all the treasure in the world. With this currency he orders all payments to be made throughout every province and kingdom and region of his empire. And no one dares refuse it on pain of losing his life...I assure you, that all the peoples and populations who are subject to his rule are perfectly willing to accept these papers in payment, since wherever they go they pay in the same currency, whether for goods or for pearls or precious stones or gold or silver. With these pieces of paper they can buy anything and pay for anything...When these papers have been so long in circulation that they are growing torn and frayed, they are brought to the mint and changed from new and fresh ones at a discount of 3 per cent."

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, U.S. government, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.

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© 2008 Jeffrey Hays

Last updated April 2016

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