The origin of money, like all problems of a similar nature, is a question which is invariably raised by scholars and laymen alike. As such a question can very rarely be answered with any degree of certainty, cautious investigators are therefore content merely to advance theories describing the possible ways in which money could have originated. Careful historical analysis may give some support to this or that theory, but it will always remain difficult, if not impossible, to offer for them a completely factual basis. We must readily admit that we do not know how and where money was first used and under what conditions it came to be used. In searching for the origin of money we are already likely to make an essential error, insofar as the concept of money appears to have developed under different conditions and at different times.
In the past it was sometimes assumed that the development of a monetary system came about as a result of utilitarian motives. Ordinary barter relationship was said to have evolved into a barter system in which certain trading objects were somewhat standardized, as when, for example, one group of people traded its canoes against a fixed quantity of food produced by another. One trade object is believed to have been gradually singled out-as for instance salt, iron tools, or glass beads-which was readily exchanged for other commodities, thus creating a common denominator for barter. This common denominator in a standardized form was regarded as the predecessor of money in its regular form.
Museum Object Number: 29-31-1
Image Number: 12708
Other theoreticians disregarded such utilitarian explanations and believed that religious motivations were more important in the evolution of monetary systems. Thus, E. Smith argued that the divine character which primitive peoples attributed to such objects as metal, for example, made them valuable and that consequently they were “naturally sought after by people anxious to secure such powerful religious and social aids.” In the course of time, Smith speculates, the “arbitrary value and religious reputation” of these objects made them “the material of currency-not merely a standard of values, but the instrument whereby commercial development has been rendered possible.” The same author holds, as an illustration, that primitive people saw in the cowrie shell a resemblance to the “portal by which a child enters the world.” These shells were in great demand as fertility charms and gradually attained position as a currency.
It has been stated that some forms of simple money have value as ornaments, and as gold and silver are sought after as ornaments in modern societies, so cowrie and other shells, beads, feathers, and metal objects were desired for ornamental purposes in primitive groups. This desire to secure these objects as ornaments is said to have given them such general demand that they were readily accepted for those surplus commodities which the normally self-sufficient peoples offered for exchange, and thus, these ornamental objects are believed to have gradually evolved into a monetary system.
Whatever the origin and development of money has been, we can readily agree that money-as it has been presented here-could secure economic significance only in those societies in which the economic structure depended upon an exchange of commodities. Where economic specialization, such as the professionalization of some crafts, has occurred, the basic conditions for a standardized exchange system appear to exist. The economy of West Africa, with organized markets offering for sale all the commodities required for daily life, could not have functioned effectively without some form of money. Or, in those sections of Melanesia where betel nuts, fish, yams, taro, figs, canoes, and even slaves were regularly retailed, the use of some kind of a monetary system became practically a necessity. It appears that there exists a definite relationship between the type of economic structure and the need for money.
When some authors, such as Norman Angell, A. R. Burns, and others who have traced the development of money with particular emphasis on coins, refer to money among our palaeolithic ancestors, they are only referring to objects about whose function in the economy of these people we have not the slightest information. It remains exceedingly doubtful that in any simple economy, be it based on food gathering, hunting, agriculture, or animal breeding, monetary concepts could have arisen, and it is necessary to emphasize that barter systems which are often a part of these economies can not be regarded as initial steps in the direction of a money economy. Thus, the little disks of ostrich shells, which theoretically may make an acceptable basis for a currency, cannot be regarded as money or the predecessors of money, although the Bergdama of South West Africa prepare long strings of them in exchange for pots, iron tools, and salt offered by the adjacent Ovambo (Fig. 4).
When, due to internal or external influences, the economic structure changes, the need for a monetary system often can arise almost instantly. This occurred in many areas of the world when they were drawn into the European orbit. Not only were European coins accepted rather quickly, but local objects which previously had no significance from the standpoint of monetary value gained a new position in the exchange of goods. A good example is the wampum of North American Indians, consisting of beads made from the inner whorls of certain shells found in sea water. The beads, of which there were two kinds (purple and white), were polished and strung together in belts (Fig. 2). Although in pre-European days wampum was regarded as a valuable possession, primarily based on its importance in socio-religious life and only occasionally used in trade, the European fur traders, on discovering their value to the Indians, adopted them as media of exchange, thus gradually elevating them to the category of money. Three hundred and sixty white beads were regarded as the unit of wampum money and were spoken of as a fathom, which was equated in value to the sixpence. For a short period in the middle of the seventeenth century, four white beads passed as the equivalent of a penny in Connecticut and six, sometimes eight, for a penny in Massachusetts. As long as the fur trade lasted this money retained its currency value, but the decline of the beaver trade brought wampum money into disrepute.
That the need for a monetary system depends upon the economic structure was also evident from the developments which may be studied in parts of Canada. In pre-European days, exchange of commodities was not a prominent feature of the Indian economy, but when, with the arrival of the Europeans, beaver-skins came into great demand and Indians learned to exchange them for other commodities, they gradually acquired the value of money in that other commodities were expressed in terms of beaver-skin units. It is interesting to note that when beaver-skins become less abundant and the demand for them decreased, they were supplanted by blankets – the well-known Hudson Bay Company blankets whose quality was indicated by points woven into the blanket’s edge, the best being four-point, the poorest one-point. Different values could thus be expressed in blanket point units.
The introduction of European monetary units, such as coins, into economies which do not depend on an exchange of commodities, will not immediately change the pattern of such an economy. Coins remain without value, except as pieces of ornaments or little treasures. The Maria Theresa dollar, which circulates in large sections of North East and Central Africa, is regarded as money only in some countries like Ethiopia, where the economy calls for a medium of exchange; whereas among some of the semi-nomadic tribes of the Sahara, these coins with the buxom likeness of the Austrian empress find favor only as ornaments of a magico-religious nature.
Economic development alone does not necessarily account for the creation of monetary systems. A centralized governmental organization may lend support to a standardized medium of exchange, not only for the better organization of its internal or external markets, but also for the facilitation of such payments as tributes, taxes and fines upon which such a government depends. The issuing of coins becomes quite clearly the function of the political authority, be it profane or religious, and the control of such a currency becomes the prerogative of the state. Although in primitive communities and in the precoinage economies, the control by the state may not be clearly formulated and not sanctioned by formal laws, as in the states of the ancient Near or Far East, a strong impact of the political authority upon the monetary system must nevertheless be assumed.
Until the middle of the last century the peoples of the kingdoms of Bornu and Baghirmi near Lake Chad had no standardized system of currency, although rapidly expanding trade appears to have been carried on in the traditional barter fashion. Then in 1840 the king of Burnu made cowrie legal tender in his domains and a few years later the ruler of the nearby Baghirmi followed his example. It is interesting to note that the Bornu king introduced the cowrie currency only after his attempts to secure his own coins in Europe had failed.
The conditions underlying the creation of a monetary system appear to exist primarily in those societies in which economic specialization is combined with a centralized type of government. Of course, not all societies in which this combination existed have developed the expediency of a currency. One outstanding example is Egypt where, in spite of the rather complex economic and political conditions, the exchange of goods continued to be arranged by barter, and where only occasionally did metals serve as an arbitrary medium of exchange. And among Mexican peoples, where according to the general cultural patterns one might expect the development of a standardized monetary system, no substantial advance beyond the barter system was accomplished, with the exception of the infrequent use of cocoa beans as a medium of exchange. But such exceptions notwithstanding, it is in the highly centralized and commercialized states that the most efficient types of money, namely coins, came into existence. In any case it is extremely unlikely that in societies where requirements regarding a minimum of economic specialization and governmental centralization are not met, a monetary system worthy of that name should have existed.