Commodity money: shells, salt and grain

Wonder

1. Why would a society accept seashells in payment for food?
2. What happens to a money when outsiders can produce it more cheaply than insiders?
3. Why did grain, rather than gold, anchor some of the earliest known accounts?

Explore

1. Grain was among the first measured stores of value. Mesopotamian temples and palaces stored barley and recorded rations, wages and debts against it; the shekel began as a unit of weight. The Laws of Eshnunna, from the early second millennium BCE, set 300 sila of barley equal to one shekel of silver. The granary served as treasury, and the scribe’s clay tablet as ledger.
2. Cattle served wherever herding dominated. The Latin pecunia, money, derives from pecus, livestock; English “fee” is related to Old English feoh, cattle or property. Herds reproduce and are easy to count, but they are hard to divide, costly to keep, and exposed to disease and drought. A whole fortune could die in a single season.
3. Cowrie shells, mostly Monetaria moneta gathered in the Maldives, circulated as money around the Indian Ocean, in China and in West Africa for more than a thousand years. The Chinese character 貝 (shell) still appears, in traditional script, within the characters for wealth, buying and selling. Cowries are durable, uniform, hard to fake and easy to count: close to ideal while supply came from a few distant beaches.
4. That condition failed in the nineteenth century. European merchants shipped vast quantities of a cheaper East African cowrie into West Africa, and the shell’s purchasing power fell steeply. The same thing ended wampum in New England. Shell beads, slow to drill by hand, became legal tender in Massachusetts in 1637. European metal drills multiplied output, counterfeit and dyed beads spread, and silver coin arrived from the Boston mint in 1652; wampum’s value fell, and the colony withdrew legal-tender status in 1661.
5. Salt shows a different limit. Bars of rock salt called amole circulated as currency in Ethiopia into the twentieth century, worth more the farther they traveled from the salt flats. (The story that “salary” comes from Roman soldiers being paid in salt is popular but poorly supported.) A money whose value depends on distance from its source works regionally, not universally.
6. On Yap, in Micronesia, large limestone discs called rai were quarried on Palau and carried home by canoe. Ownership changed by public agreement while the stones stayed put; one lost at sea was still counted, because everyone knew it existed. The system was a shared ledger. From the 1870s, the Irish-American trader David O’Keefe quarried stones with iron tools and shipped them in bulk. Islanders valued his rai well below the canoe-carried ones, even when larger: they priced in the cost of getting them. The flood of new stones still wore the system down.

Key facts

Exercise nine, six, three, one

Fact check

Dates, figures and claims checked against the published sources listed below.

• Laws of Eshnunna, in M. Roth, Law Collections from Mesopotamia and Asia Minor (1995)
• J. Hogendorn & M. Johnson, The Shell Money of the Slave Trade (1986)
• W. H. Furness III, The Island of Stone Money (1910)
• M. Friedman, "The Island of Stone Money" (1991)
• S. Ammous, The Bitcoin Standard (2018)