A Pound of Wampum

Note:: This was written for an audience that isn't accustomed to a lot of things that we're accustomed to here, so some things may seem a bit overly obvious to some readers.


We have all been told that the Native Americans used a form of money called wampum: beaded belts of variable length with pictures woven into it with differently colored beads. The cylindrical beads themselves were made of marine shell from the American coast, shaped and bored through by the Native Americans [1]. Yet apart from the physical description, it seems we have all fallen prey to a substantial untruth. Wampum wasn't quite money--although it might have been a form of proto-money--and the Native Americans weren't the only ones producing it.

If we are to seriously question whether wampum was a form of money, however, we must first ask ourselves: what is money? We do not question the fact that a dollar is worth a dollar, although it is a statement as sound as saying that a beer is worth a beer. Money pervades our lives in so many ways that to question it would be to question our lives altogether--a rather distasteful prospect. If we don't take it for granted, then our houses and our cats and dogs and cars and backyard landscape projects lose all sense of relative value in the context of the world in which we find ourselves. Without money, we can no longer say that a moderately sized house is worth ten cars, or that a candy bar is worth 85 pieces of penny gum. Instead of considering exchange value, we're suddenly left with judging an item by its usefulness (use-value): its true value to us at the given moment that we consider its value.

If one can imagine how differently he would live in considering utility rather than exchange value, he might understand a small portion of the Native American mindset when the Europeans landed ashore. As the natives eagerly traded with Europeans, they concerned themselves with the use of those items they traded on merit of those items themselves. This was as true as when the native was the buyer as it was true when he was the seller; that is, the wampum he offered or received was considered a useful item, not as a mere means to acquisition.

On the other hand, wampum did share key characteristics with money that made it a prime candidate for developing into a form of it--though once again we rarely consider these characteristics ourselves; and to understand what was happening with wampum, we need to look back at how money developed elsewhere. Surprisingly, economic historians with coarsely different political and social views tend to agree on the origins of money (Both Von Mises and Marx, opposing economists of the most extreme nature, provide near identical illustrations on the emergence of money). Equally surprising, the story is simple enough for most ordinary people to grasp without much effort.

Once again, imagine a world without money. One happens to need a pair of pants, but has more than enough scissors. A maker of pants, however, has an abundance of pants but a shortage of scissors. Depending upon how useful the pants and scissors are to both parties alike at the given time, they soon work out a negotiation. For the sake of simplicity, let us say that one pair of scissors is worth two pairs of pants. As such, each is valued in relation to the item for which it is being traded.

Imagine the whole population doing this at the same time for every item in existence. Soon, certain items of great utility will begin to emerge as the basis for trade, even when that item itself isn't being traded. For example, assume that wood is very useful to a society--perhaps more useful than anything else at the time. At some point, someone has traded six pairs of pants for one piece of wood. At another point, someone has traded three pairs of scissors for the same amount of wood. When trading pants for scissors, then, people can use wood to assess the use value of scissors and pants, even though wood isn't being traded. Soon, part of that wood serves the exclusive purpose of facilitating such exchanges--and money is born.

In this case, the pants would be worth 15% (1/6) of a whole piece of wood, while the scissors would be worth 33% (1/3) of a whole piece of wood. In essence, if wood were dollars, the pants would become worth fifteen cents while the scissors would be worth thirty three cents. Items for trade no longer relate directly to one another's value like before, but instead the value of wood [4].

Of course, the bank doesn't accept logs for deposit into a savings account. In western society, money developed through the trade of metals--the most useful commodity for many ages, and still an integral part of our economy. The British Pound was called a Pound because it originally took the form of a pound of a particular metal--most likely, gold or silver [4]. A mere century ago, all money in the United States was judged in relation to gold or silver. We still hoard gold at Fort Knox, and one of the most reliable indicators of market stability today is the value of gold and silver.

But why? Why did metal become the money-commodity of western society instead of, say, shells? Surely, metal was useful--perhaps more useful than anything else for countless centuries--and thus likely became subjected to trade more than other commodities. However, this isn't the only reason. For all intents and purposes, metal is infinitely divisible--a necessity for figuring out how much gold a piece of penny gum is worth. Metal can also be infinitely congealed together in the same manner, so that two pounds of gold is always twice as much as one pound. In addition, metal is easily measured with very little technological capacity; and lastly, metal was (and still is) scarce: only so much metal could have been available at any given time [4].

Returning to the Americas, then, we begin to see some interesting comparisons between western money in its proto-form and wampum. While it could not be infinitely divisible, wampum did consist of small pieces of shell that were worth much less alone [1]. Wampum was also infinitely extensible: a wampum belt that was twice as long as another was roughly twice as valuable. The beads of which wampum was comprised were scarce as well: much labor went into the creation of wampum, and only so many shells could be extracted from the natural world under the social conditions of aboriginal America [2].

In addition, just as in western society, a difference in value developed along the lines of the scarcity. In the case of the West, gold proved much more elusive than silver, and the value in comparison to silver reflected that scarcity. In the same manner, black and red beads were more difficult to excavate and produce than white beads, and a greater number of black or red beads in wampum increased its value in like proportion [3]. Still, wampum was not yet functional as money, although it might have been well on its way, and as such the Native American economic system was still largely based upon barter.

The difference between wampum and the western conception of money lies in the particular use-values of each. Whereas money serves no other purpose than to be a middle-man for exchange, wampum had a particular use-value in native American culture apart from trade, and was socially valued as inherently useful. Wampum served as a memory aid [1]: without a system of formal writing, religious and cultural rites were passed down in tandem with the spoken word through the woven pictorials on wampum. In turn, this led to wampum's spiritual value, much like a copy of the Christian Bible might have been valued before the invention of Gutenberg's press. The larger the Wampum belt, the more it preserved the memories of a culture--and without those memories (however distorted), a culture ceases to exist. This also explains why a single bead held little value among the native Americans: a single bead could not hold a single memory, while a thousand beads could store the memories of a lifetime.

The Native Americans, then, were not trading wampum as both buyer and seller with the settlers because it was a form of money, but instead because they so highly valued its utility. To the Native Americans, the trade was that of use-value for use-value. While wampum seemed well on its way to becoming a standard form of money, it had yet to shed its particular qualities as a commodity. This concern for use-value stands in contrast to the Europeans, who traded primarily for exchange value and the accumulation of profit--and their actions in the midst of trade reflected this exchange-value mentality.

In early 1622, A Dutch trader by the name of Jacob Eelkes captured a chief of the Pequot and threatened to decapitate the man unless he received a large ransom [1]. The chief subsequently gave Eelkes a wampum belt of over 840 feet long (evidently, the use-value of his life was greater than that of the wampum), and Eelkes quickly discovered that wampum could get a much greater number of fur pelts in trade. Soon thereafter, the Dutch began to manufacture wampum at a far greater pace than the native Americans could produce. In addition, unlike the natives, the Dutch were able to dye the white shells to that of a more valued color--usually a deep purple or black--which would be the equivalent of wiping the face of a dollar bill clean and replacing it with the face of a ten dollar bill. In the process, the foreign manufacture of wampum entirely removed the memory-aiding use-value of wampum when introduced into the local economy. To the Europeans, wampum was nothing more than money, and they treated it as such; but to the Native Americans, wampum had a specific use aside from trade.

Combined, these factors led to the quick devaluation of wampum to the natives, in exchange value due to inflation [2] (much like the results of counterfeit in today's society) as well as in use-value--the stories told within the woven designs were no longer of any particular importance to the native culture. The newly emerging money system in Native American culture was systematically destroyed, and--as seems to be a historical trend--the west profited immensely by their economic collapse.

While wampum shared key characteristics with a monetary commodity, it still lacked the essence of money: the exclusive function of facilitating exchange. Given its similarities to the metals that emerged as the money-commodity in the West, it seems fair to say that wampum was, in fact, on its way to developing into money--but failed due to economic exploitation by the European traders, a common theme in modern history.


Works Cited


1. Wampum - Wikipedia, the free encyclopedia.
Modified 10 April 2006. Accessed April 2006.
<http://en.wikipedia.org/wiki/Wampum>

2. Craig, Ben. "Competing Currencies: Back to the Future?"
Economic Commentary. 15 Oct. 1996

3. Herman, Marry W. "Wampum as money in Northeastern North America"
Ethnohistory. Winter 1956. Vol. 3, Issue 1.

4. Marx, Karl. Das Kapital.
London: Penguin Books, 1990.
pp. 178-187.