[Azaelia of Willowbottom]

Someone mentioned the exchange of currency between realms... And I have these guesses to offer:

*While it would have been pretty impossible to fix a rate of exchange for currency between realms, I would have to assume that currency in Gondor and Rohan would probably be about equivalent. The two civilizations are close enough together that trade/exchange of money would occur fairly regularly.

*If the Hobbits came in contact with money from other parts of the world, through chance events like Bilbo showing up with dragon gold, or through the rare excursion to Bree, I am sure they could work out how much foreign money was worth through weighing/examining the coins.


And on currency within the Shire itself:

*The halflings are skilled with their hands, so I see no reason why a smith or jeweler of some kind wouldn't take it upon himself to make coins/currency for the Shire.

*Wealthier families, as has been said before, probably had enough resources to trade in coins, whether they were gold, silver, or bronze. Merry certainly was able to handle money effectively, case in point, the brief mention of currency in Bree.

*Not much has been said, however, about lower-class families like the Gamgees. My own vision (which has no proof that I can discern) is that these groups of less wealthy citizens would mainly barter for what they need.
The Gamgees are gardeners, and can thus probably feed themselves pretty well, but they may need tools to plow, rake, etc. Perhaps in that event, they would trade produce for the materials they needed. I'm sure you didn't just walk into the Green Dragon, plunk down a zucchini and ask for a beer. Drinks were probably pretty cheap way back then (not much inflation). Lower-class families may have made some small coinage by selling their veggies in a market (that may have been a mix between bartering and trading coin), that they could use to go out for a pint with their buddies.

*I don't really see Frodo paying Sam in cash. He certainly would make sure that Sam's needs (and those of his family) were looked after--food in hard times, clothing if needed, fuel for heat, etc., but I am not sure that it was ever mentioned that either Bilbo or Frodo ever paid the Gamgees with actual money.

*Hobbits seem like polite, cheery, accommodating people overall, so I doubt that lack of coin money was ever a problem. They love feeding each other and sharing what they have, so I can picture a more mixed economy than I see in a larger, more rule-based society like Gondor, which is probably strictly cash.