Sunday, October 14, 2012

how do you survive an economic collapse caused by the contraction of credit, where credit is the medium of exchange in everyday transactions?

Necklace of wampum. During trade the beads were counted, removed, and re-assembled on new necklaces. Native American shell beads were also sometimes woven into belts or other mnemonic and ceremonial devices that demonstrated the wealth and commitment of a tribe to a treaty.
szabo | From the very start, England's 17th century colonies in America had a problem -- a shortage of coins [D94, T01] The British idea was to grow large amounts of tobacco, cut timber for the ships of their global navy and merchant marine, and so forth, sending in return the supplies they felt were needed to keep the Americans working. In effect, early colonists were supposed to both work for the company and shop at the company store. The investors and the Crown much preferred this to paying in coin what the farmers might ask, letting the farmers themselves buy the supplies -- and, heaven forbid, keep some of the profit as well. 

The colonists' solution was at hand, but it took a few years for them to recognize it. The natives had money, but it was very different from the money Europeans were used to. American Indians had been using money for millenia, and quite useful money it turned out to be for the newly arrived Europeans -- despite the prejudice among some that only metal with the faces of their political leaders stamped on it constituted real money. Worse, the New England natives used neither silver nor gold. Instead, they used the most appropriate money to be found in their environment --durable skeleton parts of their prey. Specifically, they used wampum, shells of the clam venus mercenaria and its relatives, strung onto pendants.

Clams were found only at the ocean, but wampum traded far inland. Sea-shell money of a variety of types could be found in tribes across the American continent. The Iriquois managed to collect the largest wampum treasure of any tribe, without venturing anywhere near the clam's habitat. [D94]. Only a handful of tribes, such as the Narragansetts, specialized in manufacturing wampum, while hundreds of other tribes, many of them hunter-gatherers, used it. Wampum pendants came in a variety of lengths, with the number of beads proportional to the length. Pendants could be cut or joined to form a pendant of length equal to the price paid.

Once they got over their hangup about what constitutes real money, the colonists went wild trading for and with wampum. Clams entered the American vernacular as another way to say "money". The Dutch governor of New Amsterdram (now New York) took out a large loan from an English-American bank -- in wampum. After a while the British authorities were forced to go along. So between 1637 and 1661, wampum became legal tender in New England. Colonists now had a liquid medium of exchange, and trade in the colonies flourished. [D94].

The beginning of the end of wampum came when the British started shipping more coin to the Americas, and Europeans started applying their mass-manufacturing techniques. By 1661, British authorities had thrown in the towel, and decided it would pay in coin of the realm -- which being real gold and silver, and its minting audited and branded by the Crown, had even better monetary qualities than shells. In that year wampum ceased to be legal tender in New England. In 1710 briefly became legal tender in North Carolina. It continued to be used as a medium of exchange, in some cases into the 20th century -- but its value had been inflated one hundred fold by Western harvesting and manufacturing techniques, and it gradually went the route that gold and silver jewelry had gone in the West after the invention of coinage -- from well crafted money to decoration. The American language of shell money became a quaint holdover -- "a hundred clams" became "a hundred dollars". "Shelling out" came to mean paying in coins or bills, and eventually by check or credit card. [D94] Little did we know that we had touched the very origins of our species.

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