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The Merchants of Middle-earth - Page 8© Michael Martinez
The Dunedain are not much of an economic power at the end of the Third Age, but their occasional traffic combined with Dwarves passing on the road would have helped to keep Bree's inn, the Prancing Pony, in business. But it seems clear that traffic was insufficient by itself. Barliman seems to have served as the hostler for the village of Bree, since many of the local horses and ponies were kept in his stable.
Commerce did exist elsewhere in the northern world. The Northmen of Laketown traded with the Elves of northern Mirkwood and some unnamed Northmen living farther south on the Celduin. The mysterious land of Dorwinion on the northwestern shores of the Inland Sea of Rhun provided these peoples with a potent wine. The re-establishment of Dale and Erebor in the 30th century strengthened the regional economy considerably, but it was still a largely isolated region. Bilbo's special orders for gifts from Dale and Erebor were most likely made for sentimental reasons rather than as a matter of custom. In The Hobbit it seems Bilbo had never heard of Dale and Erebor before Thorin told him the story of how Smaug destroyed the two kingdoms.
Despite all these visions of trade and commerce passing along the roads of Middle-earth, there was a limit to the economy of Tolkien's storied world. The Shire developed some sort of government but it apparently lacked the wealth to maintain a large bureacracy. Such officials as the Shire had answered to the Mayor of Michel Delving, and he oversaw the Messenger Service and the Watch (which consisted of the Shirriffs and the Bounders).
Tolkien writes in the Prologue to The Lord of the Rings "the Shire at this time had hardly any 'government'. Families for the most part mamanged their own affairs. Growing food and eating it occupied most of their time. In other matters hey were, as a rule, generous and not greedy, but contented and moderate, so that estates, farms, workshops, and small trades tended to remain unchanged for generations."
Although the Messenger Service employed more Hobbits than the Watch, when Bilbo's invitations and orders for the Party flooded the Hobbiton and Bywater post offices, "voluntary assistant postmen were called for". The fact volunteers were needed implies there was no budget for hiring extra (even if only temporary) workers, and whatever revenues were generated by the mail were insufficient to provide additional salaries.
Lotho Sackville-Baggins' secretive trade with Isengard also seems to imply there were no export fees. It's not clear how the Shire paid for the twelve Shirriffs, much less the greater number of Bounders and the Messenger Service. Some sort of fees or tithes must have gone to provide for their upkeep, but they could not have been significant. Without a large revenue base, the Shire "government" therefore was not much of an economic factor even within the Shire itself. Thus most of the money was probably concentrated in the hands of the various powerful families such as the Tooks, Brandybucks, Bagginses, etc. who looked after their own affairs.
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