CHAPTER VIII: AUXILIARY EXCHANGE.

§ 757. How great is the labour and loss of time entailed by lack of a circulating medium, is well shown by Cameron in his Across Africa. He desired to hire a canoe at Kawélé. The agent “wished to be paid in ivory.” Of this, says Cameron,—

Evidently, pressure of inconveniences like these must prompt the use of some one commodity generally desired and generally possessed, which serves at once as a medium of exchange and measure of value. This commodity varies with place and circumstance; but, whatever its kind, it is such as ministers to one of the chief needs—sustentation, defence, and decoration.

Food, living or dead, existing in measurable quantities or easily reduced to measurable quantities, is early employed as a currency. Among the pastoral peoples of South Africa, herds form men’s chief possessions; and the prices of women and slaves are given in terms of cattle. That ancient pastoral peoples had animal-money is a familar truth; as even Edition: current; Page: [393] our language curiously indicates by the word “impecunious,” which, now meaning one who has no money in his pocket, means literally one who is without cattle. And that among the Romans cattle formed the first currency is implied by the remark of Mommsen that “copper (aes) very early made its appearance alongside of cattle as a second medium of exchange.” Among the Old English, too, oxen formed the currency; and they long continued to do so among the Celts of Wales.

Instead of these large living masses serving only for large transactions, there are elsewhere used kinds of food that serve for smaller transactions. Dried fish in some cases become a currency, and there are people who use grain as money. At Zanzibar “in former times mtama, a species of millet, was employed as small change.” If under the head of food we include nerve-stimulants, we may here add tea—brick-tea, as it is called in Mongolia, which, according to Erman, is “a mixture of the spoiled leaves and stalks of the tea-plant, with the leaves of some wild plants and bullock’s blood, dried in the oven, and divided into pieces of from 3 to 3½ pounds weight, of the shape of bricks.” Referring to this same currency, Prejevalsky says “anyone, therefore, desirous of making purchases in the market, must lug about with him a sackful or cartload of heavy tea-bricks.” A like use is made of tobacco in the Sulu Islands. Says Burbidge:—“The inferior Chinese tobacco is preferred by the Sulus to their own produce, and is a regular kind of currency in which almost all small payments may be made.” In some places condiments serve the same purpose, as in parts of Africa.

And Monteiro mentions the same use as occurring in Abyssinia.

Thus the primary requirement for a currency in its initial stage, is that its components shall be of a kind subserving desires common to all—things which all want; and its secondary, though not essential, requirement is that it shall be divisible into approximately equal units.

§ 758. As means to sustentation there come, after things used for food, things used for warmth. Among the Thlinkeet sea-otter skins form their principal wealth, and circulate in place of money; and where skins of other kinds are worn they similarly serve as media of exchange.

By more advanced peoples textile fabrics, and the materials for them, are employed as currency. After describing the extent to which, in the markets of the Garos, commodities of all kinds are bought and sold, Dalton says:—

To which he adds that the Garos have “bundles of cotton weighing two pounds, the small change with which they provide their wants.” So that out of the most generally sold commodity a unit of value has arisen. How this unit has been formed is suggested by a statement concerning another of the Indian hill-tribes. Among the Kookies cotton is mostly bartered to the Bengali bepáris for fowls: “each fowl being considered equivalent to its weight of cotton.” In Africa the cotton employed as money has become a woven fabric. Says Wilson in his Uganda—“Unbleached calico . . . constitutes the principal article of barter in the interior of Africa.” Elsewhere he adds that this cloth which forms the principal article of barter—

So that an arm’s length of cloth serves as a measure of value. The complete transformation of calico into money is shown by the statement of Duff MacDonald concerning Blantyre.

Elsewhere textile fabrics woven into definite shapes, and having ornamental characters, come into use. Turner says that in Samoa “fine mats are considered their most valuable property, and form a sort of currency which they give and receive in exchange.” And in Asia “among the Khalkas the [silk] scarves serve as currency, but are rarely used for presents,” as in Southern Mongolia and Tibet: an instructive instance, since it seems to imply presents passing into barter and barter into a currency.

§ 759. From the ways in which things that satisfy physical needs come into use as money, we now pass to the ways in which things subserving self-preservation, as weapons and implements, come into use for the same purpose. The raw material out of which such things are made, first being an object of barter, occasionally serves as a medium of exchange. In parts of Africa a fixed quantity of iron or copper has become a measure of value. Burton tells us that—

In other places there is a like use of iron, or rather steel, fashioned into weapons. This happens in North East Assam, where, says Rowney, “the arms of the men [the Khámptis] are the dáo for all offensive purposes.” “The currency of the country is the dáo, and also unwrought iron.” That weapons are not more generally thus used may be due to the fact that nearly every man possesses one, and neither wants another himself nor, if he took it in exchange, could pass it on.

In one case, if not more, implements have been similarly employed. Down to the 4th century bc in China, unwrought metal, bartered by weight, was still a medium of exchange; but before that time there had arisen a currency of implements. Between the 7th and the 4th century bc there was spade-money: the spades being actually serviceable as tools. As far back as the 7th century bc bronze knives, of something like uniform weights and rudely inscribed, served at once for cutting and for making payments. “Hoes and goods,” “hoes and cloth” were equivalent terms for wealth. Gradually these implements used for currency lost their original forms: the cutting part becoming less in proportion to the rest.

But the Chinese media of exchange were extremely miscellaneous. As far back as the 11th century bc gold passed current in cubes, having definite weights. Then there was “ring-money,” consisting of definite weights of bronze shaped into rings for convenience of stringing together. This coinage appears to have been the ancestor of the modern “cash” of the Chinese.

§ 760. Of things which subserve the three dominant desires above named, those which fulfil the third are those best fitted for the purposes of a currency—things which minister to the love of admiration. By painting the body, by tattooing, and by the wearing of trinkets in nose or ears or on the wrists and ankles, savages show us that, after the bodily needs have been satisfied or partially satisfied, the most dominant wish has been that of subordinating others by outdoing them in decoration. Ornaments and materials for ornaments have therefore been things which everybody wanted; and while thus fulfilling the primary requirement for a circulating medium, they have fulfilled the secondary requirement of great portability. We read that iron and beads are so much desired by the Thlinkeets that they will even exchange their children for them; and accounts of adjacent Edition: current; Page: [397] peoples, the Kutchins and Eskimos, show the double purpose to which the beads are put.

In his description of the Californians, Bancroft, while enumerating as partly constituting money some rare things and others costing much labour, names shell-money as its chief component.

So is it in Polynesia. Says Powell—“The native money in New Britain consists of small cowrie shells strung on strips of cane.” And among the Solomon Islanders, according to Coote—

It was thus in the earliest days of China, and is thus now throughout Africa. Waitz remarks that cowries, used by the Negroes as money, are, by other African races—Kaffirs, Hottentots, Hassanieh-Arabs—used as ornaments. The transformation into currency is clearly shown by this extract from Cameron.

A chief element in the conception of value, acquired by ornaments as they pass into a currency, is the consciousness of labour expended either in making them or in finding them. We are specially shown this by a case in which an object not ornamental is made valuable by the trouble bestowed on it. Describing what is called the money-house in the New Hebrides, Coote says—

This instance makes it easier to understand that the precious metals derive their values in but small measure from their beauty, but derive it mainly from the difficulty of getting them. It needs but to remember that in appearance aluminium bronze differs scarcely at all from gold, but is worthless in comparison; or again it needs but to remember that only experts distinguish between the glittering but valueless glass called “paste,” and the glittering but immensely valuable diamond; to see that the measure of value is the amount of labour spent in finding and separating.

§ 761. Before the precious metals, first prized as materials for ornaments, could be used for a metallic currency, fit modes of measurement had to be established. We have seen that even while ornaments serve as money, their worth is estimated by measurement: the strings of shells employed are valued by their lengths as equal to one or other bodily dimension. This method being inapplicable to metals, there arose in its place a valuation by weight; which, of course, became possible only after scales had been invented. But units of weight having first been furnished by organic bodies and multiples of them (as shown in the East by the use of the carat, an Indian bean, and among ourselves by use of Edition: current; Page: [399] the grain of wheat as the basis of our system) definitely weighed portions of gold and silver became units of value. For a long time such portions of metal were habitually tested by the scales, and in some countries always continued to be so.

Hebrew traditions show us incipient transitions from ornaments to currency and the estimation of value by weight—a practice doubtless derived from the Accadians. We see this when Abraham presented to Rebekah “a golden earring of half a shekel weight, and two bracelets . . . of ten shekels weight of gold;” and again, when buying the cave of Machpelah, he “weighed to Ephron the silver which he had named . . . 400 shekels of silver, current with the merchant.” In later days, the shekel (equivalent to the weight of twenty grains or beans) acquired an authorized character: there were shekels “after the king’s weight”—an Assyrian expression. This implies a step towards coining, subsequently reached; since we must assume that one of these authorized shekels bore some mark by which its character was known.

Passing now to later times, and making allowance for the extent to which, in mediæval Europe, Roman usages influenced men, we may recognize essentially the same facts. In ancient Frankish days there arose again these same relationships between the ornament, the weight, and the current metallic unit of measure. In the Merovingian period—

It would appear that the beag had “a fixed legal value,” and was “as much a recognized type of value in its way as the ore or pound.” At the same time, uncoined bullion was also Edition: current; Page: [400] used for purposes of payment. As with the Hebrews the shekel was at once a unit of weight and a unit of worth, so in France the livre was a name for a weight and for a piece of money. A like relation arose among ourselves. However much it eventually deviated, the “silver-pound” was no doubt at one time an actual pound.

As units of value were determined by weighings between individuals, at a time when weights were themselves relatively indefinite, there resulted indefiniteness in the units of value. Moreover, these independent origins led to the issue of stamped units of value by different individuals or groups of individuals, causing a variety of coins nominally of the same worths, but actually of more or less different worths. How these relatively indefinite weights were rendered more definite, is implied by that distinction made by the Hebrews, between the ordinary shekel and the shekel “after the king’s weight.” Evidently the substitution of a coinage issued from one source, furthered the process of exchange by making the values of the units uniform; and though, in subsequent times, the debasing of coinage by kings produced a great evil, yet there remained the benefit of uniformity.

But that which it chiefly concerns us to note, is, that by making exchange more facile, a trustworthy currency enormously extended and eased the process of distribution. The means of making most purchases could now be carried about on the person. Definite estimations of values of the things bought and sold, could be made—prices arose. The amounts payable for labour of various kinds could be currently known. And, above all, the obstacles to distribution which had resulted from inability to find those who personally needed the goods to be disposed of, entirely disappeared. Moreover, with the establishment of prices and current knowledge of them, transactions between buyer and seller lost, in large measure, the arbitrary character they previously had. Lastly, as a concomitant effect, arose the possibility of competition. Prices could be compared, and the most advantageous purchases Edition: current; Page: [401] made; whence, along with advantage to the buyer, came checks and stimuli to the producer or the distributor.

§ 762. With like unobtrusiveness crept in a further development of the media of exchange. Though coins were far less cumbrous than things previously used, still they were so cumbrous as to impede extensive transactions; as they still do in China, where copper or bronze coins strung through holes in their centres, are extremely inconvenient for large payments. Moreover, even after private mints had been abolished, there was, besides the debasing of coinage by kings, the clipping and sweating of coins; making the units of value partially indeterminate, and so entailing weighings and disputes. More serious still was a further defect. Immediate payment was implied: a requirement which in many cases negatived transactions that might else have been effected. Often one who wanted to buy, and had property enabling him to buy, had not the requisite cash immediately available. To meet these and converse cases, there began a system of uncompleted purchases, to be completed either at named or unnamed dates—there was initiated a simple form of credit-paper. There passed some document which, while it acknowledged the money or the goods received, promised to hand over the specified equivalent either some time or at a specified time. Transactions of this kind, arising spontaneously in the making of bargains, gradually generated a system of payment by memoranda of claims; so initiating a paper-currency. For all paper-currency consists of memoranda of claims in one or other form—“promises to pay.”

Beyond this need, and beyond the need for portability which in ancient China led to the use of notes representing the iron money then current, two other needs were met. In Italy, at a time when coins were so miscellaneous that much time had to be spent in weighing and testing, there began the practice of depositing a quantity of them with a custodian, after once for all estimating their value and receiving in Edition: current; Page: [402] return a memorandum of it—a memorandum of a claim against the custodian, which served for making payments. In England, where the Tower was used as a place of safe deposit by merchants until, having been robbed of £200,000 by Charles the First they had to find safer places, there grew up the practice of putting valuables in the vaults of goldsmiths, and receiving “goldsmith’s notes.” These were presently used for making payments; until, from the need for having amounts divisible into convenient portions, the goldsmith’s notes became promises to pay the sums named in them, without reference to the particular properties of A, B, or C which had been deposited: they became bank-notes.

Of further developments it is requisite to name the system of cheques, long in use among ourselves but only recently adopted abroad. Save when made “not negotiable,” these, especially in country places, pass from hand to hand as local notes do. Lastly, to movable memoranda of claims have to be added the fixed memoranda, made in merchants and tradesmen’s books. For these serve in place of immediate exchanges of coin for goods, and form one variety of those partially completed transactions, or postponed payments, above named, from which a credit-currency originates. Obviously these diminish the labour of exchange, especially in small places where tradesmen are customers to one another, and half-yearly, after balancing accounts, give and receive the differences: these, too, being generally in the form of cheques or memoranda of claims.

By this credit-currency all large transactions and a great mass of small ones are in our days effected. A trader’s banking account is simply a record of claims against him and his claims against others, which are continually discharged by one another and the debits and credits balanced. And now that this system has been developed so far that by the Clearing House the claims of bankers on one another are three times a day compared and memoranda of the differences exchanged—now that this system, once limited to London Edition: current; Page: [403] bankers, is extended to provincial bankers; it results that every few hours the claims which masses of men have on one another throughout the kingdom, are compared and settled by transfers of small amounts, which themselves take the form of paper-orders that are presently registered as credits.

Among examples of evolution which societies furnish, perhaps none is more striking than this gradual advance from the giving and receiving of presents by savages, to the daily balancing of a nation’s myriads of business transactions by a few clerks in Lombard Street.