Naturally-occurring currencies

By on January 31st, 2017 in Editorial

Edible currency (the other kind of money that is an intrinsically valuable commodity in its natural form) has a very clear reason for its value. Salt, tea, cocoa beans; all provided sustenance, in some cases in a way that was considered particularly tasty.

The items listed below are different, their innate value more oblique and complex. Although two of the entries have uses relevant to survival, all of the examples have value tied to their luxurious qualities as much as to their practical ones.

COWRIES (SHELL MONEY)
“She sells sea shells by the sea shore…”

Does she, though? Or does she use seashells as a form of direct commodity exchange, recognising their value as body ornamentation and thereby employing them as a payment method?

Cowries (as pictured above) were the most common type of shell money, used as currency in China as far back as 3000 years ago; they were so central to the idea of money that the Classical Chinese character for ‘money/currency’ developed from a pictograph of a cowry shell.

Shell money was an important component of trading routes all over the world. They were most valuable in Africa, where they were particularly difficult to get hold of and remained legal tender until the mid-19th century. In Australia, different shells had different values to different tribes; those that one tribe treasured would often be utterly worthless to another.

Shells would be fastened into strings to create new denominations – the Native Americans (who favoured tusk shells) would establish the value of each string by measuring it against the distance between a pair of nipples.

Shell money served no practical purpose; you couldn’t eat it and it wouldn’t keep you warm. But it was pretty to look at and made even more exotic by its scarcity.

GOLD

Gold is perhaps the most famous and universal currency of all time. Look how nice and shiny it is! You just want to mine it, pan for it, gather it up, stuff it all in your pockets, melt it down and turn it into jewellery or highly ornate coins featuring a version of your face.

So it has been throughout history, to the point that many nations pegged their currencies to gold until well into the 20th century. Today, national central banks stockpile gold reserves as a sort of safety net of guaranteed value. The ubiquitous acceptance of gold as precious has even led to the invention of gold vending machines for those who need to purchase their bullion on the move.

But what makes it valuable, beyond the reductive explanation that humans are little more than upmarket magpies? In a nutshell, it comes down to chemistry. Gold is very stable by virtue of being an unreactive noble metal (more valuable than silver, which tarnishes), relatively rare yet not impossible to obtain, and easy to melt down and fashion into desirable objects.

CANNABIS
Ok, everyone relax; we’re not proposing your kids toot up a doobie to have a pop at the national debt.

Hemp was one of the first plants to be spun into useable fibre over 10,000 years ago, and since then it has found a wide variety of industrial applications. It has been used for food, building bridges, fuel, ink and almost anything else you can think of. In the 16th century Henry VIII decreed that hemp must be grown to provide material for his expanding navy; the resistance of cannabis to salt and rot made it ideal for sails and rigging.

Much later, hemp was in such high demand that America passed laws throughout the 17th century to ensure its mandatory cultivation. Soon after, hemp became legal tender until the early 1800s; farmers were permitted to pay their taxes with the crop in the hope that this would encourage them to grow it.

There is an argument to be made that a somewhat less legally-entrenched form of cannabis payments sprung up around the recreational use of marijuana during the jazz scene of the early 20th century, with beatniks, hepcats and dropouts using the weed as a means of impromptu bartering.

Nevertheless, hemp had already fallen into decline by the 1930s, with the corporately-engineered Marijuana Tax Act ensuring that industries threatened by the cheap and versatile plant would be able flourish.

PELTS
To end on a far more straightforward note, pelts or furs were used as currency for many centuries, taken from a wide variety of animals including beavers, squirrels and deer.

The practical aspect of such trades is obvious; animal fur allowed the production of clothing that would aid in the wearer’s survival and comfort in colder climates. It is interesting to note its shift over time from a basic good that was elemental to subsistence, to a luxury good that runs the risk of netting you a faceful of paint.

Unsurprisingly, given the circumstances best suited to their use, furs and pelts became a more complex and developed currency in Russia and Siberia than anywhere else. Nevertheless, the fact that the word “buck” persists as a slang term for the dollar is indicative of the importance fur once was as a currency in North America.


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James is freemarket’s Chief Commercial Officer. He has a history of finding new ways to solve age-old financial challenges and was responsible for launching some of the first online money transfer and prepaid card initiatives in Europe.


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