What is "currency"?

[Guest Guest]

In this 21st century when plastic credit cards rule I think it is a trifle rich to suggest that the “old” money (banknotes and coin) first introduced by the colonial powers to indigenous nations abroad in the late 1800s and 1900s alone reflect “currency”. (I have a collection of credit cards dating back to the 1960s).

 

Before “white man” colonized Africa and beyond there were cowrey shells and other forms of recognized units of value accepted by the indigenous people who lived there. In the far east it might have been spices, in Africa the cowrey, bead or even an Arabic influence involving gold. It is known that the Khoi loved copper because it was malleable and could be relatively easily moulded as trinkets, bangles or ornaments that could be worn. Van Riebeeck used copper as one of his primary sources of barter with the Khoi in what is now Cape Town. Copper strips were an acceptable form of exchange for almost anything from land to livestock – a bona-fide early currency.

 

Currency to me is, and always has been, an acceptable form of trade recognized by and freely circulated by the community who resided there. Whether it be in the form of shells, copper, ivory or a coin – does that really matter? I don’t think so. Who knows in years to come we might trade silver and gold again when this flawed fiat money system collapses in a heap! I know that this is a massive leap from traditional numismatics but this is the sort of forum to flag a wider thinking.

 

The big problem in the 1800s when the colonizers started taking over the traditional lands of the indigenous people – whether they be Khoi, San, Australian Aboriginal, Mayan or Cherokee was finding common ground when it came to money.

 

Western society has certainly enriched the indigenous tribes in many ways but it is the lack of understanding of the culture of these tribes when compared to “white man’s” law that has led to some terrible injustices - especially in the early days.

 

In early South Africa there was a clear divide between the white settlers and “the rest”. One of the greatest instruments of this divide was understanding and owning “white man’s” money. Whether it be the gulder, the Rijksdaalder or the sovereign there was no level playing field.

 

So when I look at an innovative currency that is introduced in the 1800s in a manner that is compatible with the wider indigenous community I see an important evolution in money – an evolution where every man, regardless of background, can be equal.

 

The humble bead in African culture has an extraordinary cultural history because it could be hung around your neck (who needed pockets back then?). A set of beads worn around the neck was and is even today one of the most significant cultural assets owned by any traditional Zulu. And this form of carriage resulted in the first form of currency custom built to meet the need of this wider population – by simply holing it.

 

By holing the Strachan coins they became part of the assets displayed by the owner with the beads. In fact the indigenous name “Kence” (pronounced Kenhjle) is an onomatopoeia (sound representation) of two coins knocking together as the owner walked around proudly with them around his or her neck. (There is no doubt in my mind that Madiba’s first exposure to “money” as a young boy would have been a humble token coin strung, with beads, around the neck of a man in his remote East Griqualand village. Now that token coin could have been a Strachan, Cole or Larkan piece but to the indigenous people it was money – they could take it to a local trading store and buy stuff).

 

I know of no other African coin that was deliberately holed before the mid-1870s to accommodate the entire population – ie the holing was not for the benefit of the privileged white settlers. In fact when I look at the “holed” coins that followed the first sets of Strachan I see a remarkably simple evolution as important to South Africa's indigenous population as the introduction of Union coinage in 1923 was to the local white community. Countries like Tanganyika and Southern Rhodesia followed this lead with holed coins to facilitate carrying by the indigenous peoples.

 

So when we talk about “currency” I believe we need to rethink our understanding of that word. We have talked here about various coins being the first to do this and that but were they relevant to the region? Did they actually circulate? Did the entire population use them in trade or were they elitist?

 

Surely these are questions we should be considering in the post-1994 twenty first century?

 

I am flagging these thoughts openly to raise debate and discussion.

 

In closing everyone on this forum knows that I have a special interest in the tokens of East Griqualand. They are coins with a defineable unit of value - just like a silver six pence. While it is extremely difficult to find copper sheets, cowrey shells or ivory that can be shown to have a "numismatic pedigree" why should coins issued by trading stores in remote parts of South Africa pre-1923 and used widely by the indigenous peoples be treated with any less respect or interest than the Union coinage that followed, or the ZAR coinage of the late 1800s issued under Paul Kruger's watch?

 

In my view the "token coins" (early South African currency) from the East Griqualand region, in particular, are significantly more interesting than the "government coins" that followed - because every token variety has a unique history and many are still waiting for someone to explore and reflect on this in a published work (Dawood Amod, Creighton and Dennis etc). Most important of all, to the local population - regardless of colour - they were money.

 

Kind regards

 

Scott Balson

Edited October 16, 2010 by ndoa18

[jwither 10]

You are correct.

 

There is no actual distinction between money and non-money. It is purely artificial and arbitrary. If there ever was a competitive market for money or currency as there should be, it could be take various forms which today could also include various forms of DEBT such as IOUs and stock certificates since most of the purchasing power in the economy is in these now anyway.

 

But the one thing I can guarantee you is that any issuer who is a reckless and irresponsible as all central banks are today would lose all of their customers, yes CUSTOMERS, the users of their product. Also, people are used to currency being "free". In a private market for money, they might have to pay for it either as they now do indirectly by loaning the proceeds for at no interest to governments or with an explicit charge or fee. As with any other product, there is no automatic reason why currency should be provided at no cost.

[Guest Guest]

Money

 

So we agree that “representations of money” includes pre-1932 “currency token coins” issued by business as well as post-1971 currency coins and bank notes issued by government. Both are essentially the same because they have no real assets like gold and silver backing them (ie they both represent a token currency).

 

In the case of the trade tokens it was the assets of and goods in the store which gave confidence to the person accepting the coin.

 

In the case of the government it is the ability to raise taxes to pay the interest on the debt and the GDP which were cornerstones supporting its value. This option is highly inflationary - as we know.

 

Here is my challenge for this forum (I would welcome debate):

 

Early South African "currency" trade tokens have the same numismatic relevance as ZAR coins and are, at the moment, highy underrated.

The early South African “currency trade token coins” (largely represented by a set value (eg 3d) and in metallic form), apart from the issuer, have absolutely no monetary difference to current (post-1971) coins. Neither has, in the great majority of cases, any real intrinsic metallic value and both are only backed by the perceived assets of the issuer or the issuer's "ability to pay the debt”.

 

Please note I do not see post-1932 coins issued by business falling into the token coin category as “token coins” were outlawed at this time. I do not see advertising or other quirky "tokens" as falling into this category. I do not see Mozambique or South West African tokens (that appear in Hern's book on tokens) as falling into this category.

 

Metallic "Currency" token coins that were issued, pre-1932, for use in trade is a very simple point of definition – ie anyone could go into the local store issuing those tokens and buy stuff – scissors, bread, maize, milk etc…

 

So taking these facts into account let us consider the following historical facts.

 

I would argue that the early trade token coins better represent money in those early days as they were often customized (by holing) to embrace the needs of the wider South African population at that time. They were often issued in remote regions where regular currency was in extremely short supply and, as a result, were that region’s money.

 

In effect the Mandela coins, represent the post-1994 liberation of South Africa from inequity, while the early "currency" trade tokens (of which there are many) represent the first form of money embracing and catering for all races.

 

I am of the view that, for too long, there has been a judgmental and holier-than-thou view on early trade tokens by many coin collectors and investors (not just in South Africa). The growing interest in the Madiba birthday coin etc reflects a changing of perception on what is collectable in numismatic terms – a new generation of collectors is driving this market. Surely these currency trade coins once treated by the indigenous peoples of South Africa as “money” hold as an important part, if not more important role, in numismatic history as our modern day post-1994 coins? Surely they were more relevant to the wider population in large parts of South Africa than the ZAR coinage – in particular!

 

When we, as the older collectors, talk about the Union and ZAR coinage does this embrace the wider population who for generations felt excluded from the political and financial history of South Africa?

 

I feel that broadening the very tight and often blinkered approach to mainstream South African coins to include trade tokens that have played a significant role in the country’s early history will add great value and empathise with a whole new legion of collectors.

 

I know that the traditional boundaries of mainstream coins has been that a government body issues the money but is that old philosophy relevant anymore seeing that modern currency is simply a token of value and MONEY no longer has value in itself (ie silver or gold backing it)?

 

In summary, whoever bought that unique Blood River token coin about a year ago – in my view – has the modern day equivalent of the 99 overstamp pond. You did well at under ZAR30,000!

 

Kind regards

 

Scott Balson

Edited October 18, 2010 by ndoa18

[jwither 10]

I have seen several of your posts along this topic but I'm not familiar with the specifics or history nor does this matter to me.

 

If your conclusion is that tokens are underrated and undervalued versus coins, I would say almost certainly "yes". However, I know almost nothing about South African tokens because I do not collect them.

 

I would however, disagree that any of these other forms of money should be worth anywhere near equivalently desirable coins, not now and not ever. I'm not aware of any country where this is true. It certainly is not true of any of the coins I collect and its not true in the United States either. I would expect that this is also true in Australia where you live and this market is one of the most expensive if not the most expensive versus others after the United States. I know that old Australian currency notes are also very expensive and I would imagine this is true of the tokens from the same time which I would consider of equal or approximately eqaul historicity to those from the South African period you cover.

 

The scarcity and history of these tokens makes little difference to most collectors and even if it did, its simply not enough to make them either as desirable or more desirable to their coin counterparts.

 

I recently wrote an 18 page document which covers the attributes of what makes or does not make coins GENERALLY desirable to MOST collectors. If you are interested in reading any or all of it, I would be glad to post it and it can be used as the basis of any 'debate". I could do so in multiple posts either here or in another new post. I have not done so because frankly, most collectors both here and elsewhere seem to be indifferent on these dynamics even though it would be expected that they might be interested in whether they are or are not getting good value for their money.

[Guest Guest]

Three issues to consider

 

Hi John

 

There are three issues here when it comes to the future value of South African tokens.

 

1) The evolution of coin collecting in recent years in South Africa

Pre-1994 coin collecting in South Africa was (almost) exclusively the domain of privileged "white" collectors. That is no longer the case. On BoB we see that collectors from all races are now enjoying the fun, excitement and rewards in investing in coins. It is this shift from "white-centric" to all races that is behind the evolution of thinking I am talking about in this thread. South Africa is a very different place to the US - the non-white population is about 90% plus of the population whereas, in the US, the indigenous people make up a tiny percentage of the population and the country is run by powerful lobby groups already encamped in the White House.

 

The reason I have been outspoken in earlier posts on BoB about common low grade Madiba birthday tokens being listed as "rare" is because the new collectors were, until recently, being sucked in by this deception. These important new collectors are the men and women who will drive this specialist market in years to come and keep our hobby alive.

 

2) Related history

As a historian I have in the last ten years increasingly realised the importance of the early "currency" trade tokens (like the Strachan and Co) on the lives of the indigenous people living in remote areas like East Griqualand. (My first job when I was transferred from Barclays Bank in Greytown to Ixopo in 1976 was to check the savings card record of every one of over 6,000 accounts! It was a mammoth task which took over six months to complete.) It soon became clear to me that the locals had embraced and recognised the value of money - a foundation based on the early trade token coins that circulated in that region in the 1800s and early 1900s.

 

3) Supply and demand

 

One only has to look at the ridiculous prices being paid in the past on some low graded Mandela coins by new collectors to recognise that there is an enormous burgeoning new market of collectors that some people are exploiting. These are not new collectors with the names like Theron or Mitchell - they would more likely be Ndlovu or Matwetwe. These new collectors will increasingly be the future and focus of coin collecting in South Africa and their interest will have little regard to traditional values as we see them. Many of these new collectors have their roots in places like East Griqualand so the early trade tokens will, by default, have more interest to them than a Veldpond or single shafted ZAR crown. This is not rocket science but common sense and evolution.

 

Kind regards

 

Scott Balson

Edited October 18, 2010 by ndoa18

[jwither 10]

You will be able to read the details in my document, but here is what I can tell you now.

 

The demographic argument you use is one I have used several times on the NGC Message Boards and though you may not think so, it applies equally but just in a different way and to a different extent in the United States. I am aware that these new collectors will not prefer the same material that those who collect now do. That is one reason why I expect United States coins to perform worse financially than most collectors on the NGC Message Boards probably do. But people are still people and the attributes that make MOST of them like some coins over others I do not believe are going to be so radiacally different as you imply to change valuations as I understand that you believe. Close the valuation gap yes, but equal mostly no EXCEPT on an exception basis such as has been seen with the modern Mandela coins.

 

For example, let's take the Strachaan tokens you collect. I'm not sure if they are the best example to use or how scarce they actually are, though I would expect that it is undeniable that there are few in very high grades, maybe ZERO in mint state or choice mint state. But this fact alone does not make enough of a difference to most collectors to make them worth as much as ZAR which are more common. Here is why:

 

• These items are base metal and not gold or silver;
  
• They are small unlike the bigger coins such as the crown;
  
• They were not issued by a recognized mint which does matter to most people;
  
• They are artistically inferior in the minds of most collectors
  

That last reason is a huge one is so obvious that I do not even think it needs to be mentioned. This is a matter of opinion of course but its probably the single most important factor in determining why some coins are worth so much more than others which seem to be "better" in many, most or all other respects. Its true of US coins and can be seen in probably every other numismatic market and field anywhere. The simple reason for this is that collectors do not generally buy, much less pay big money, for material that they do not like. And items they do not like, they do not collect.

 

I have to go now but can reply in more detail later.

[Guest Guest]

History

 

Hi John

 

I guess where we differ is in our collecting philosophy.

 

I am intrigued by the "orphan" tokens... the coins which you suggest are inferior to earlier Union coins. Like modern coins these early tokens are not made of silver or gold. (I use the word "orphan" because of the implication that no one wants them!)

 

When I hold an old corroded F C Larkan 6d to me, personally, it is numismatically on a par with the Veldpond. That Larkan spent 25 years down a dunny after its earlier unique dual role as a trade token and then, later, as a form of barter with local traders. I feel this way because this "orphan" token has such a rich and unique history that can be traced through time to distinct parts of South Africa.

 

The investor values and composition might be in two different worlds BUT historically they both share a very rich and interesting history - the reason I and many others find them so desirable. Historically these tokens were the money used in remote parts by the grand parents of a new legion of collectors in South Afrrica.

 

ie nothing to do with the metal content or design - it is the unique history I am holding in my hand.

 

Kind regards

 

Scott Balson

Edited October 18, 2010 by ndoa18

[jwither 10]

Yes, we do have a difference in our collecting philosophy because everyone of us has our own personal individual preferences.

 

But what I am trying to explain both here and in the document I wrote and referenced here is not my preference or yours, but the preferences of the majority of collectors which determines why coins which fit a particular profile are worth more than others. To most collectors, these coins are "better" and therefore are worth more whether you or I agree with it or do not. If economic considerations do not matter to you or matter less than they do to me or others, then whether the coins or other forms of money you like are worth more or less than those which others prefer should not matter to you and most likely, they do not.

 

I evaluate value in two respects, economic and numismatic. The history that you are passionate about is one factor of both but more to the numismatic value because the two often do not coincide. However, you need to recognize that to most collectors, especially the "history challenged" and "geographically challenged" such as the typical American collector, it is either not important to them at all or less than other attributes.

 

For example, economically speaking, those coins (or tokens) which are the most popular today are probably going to stay that way and generally will be worth more money than those that are less popular now. Not always, but usually. And no, I do not always agree with this because many of the most expensive coins in my opinion do not have anything in particular to commend them, especially given their current prices.

 

If you take a coin like the Veldpond, which by the way I consider overpriced at current levels versus many alternatives, I do not see how you or anyone else could expect that it should be worth the same or less as these tokens just because of your perception of the reletive history. The veldpond is a "celebrity" coin and probably in the minds of many South Africans a "heritage coin" or "national treasure" because of its association with a specific and possibly idealized event in the country's past. These tokens you describe likely have nothing like that associated with them even though they presumably circulated at the same time.

 

If economic considerations do not matter to you, you should actually PREFER the current pricing which the marketplace assigns to what you want to buy and collect. I mean, why would you want to pay more for something that you might be buying as a consumption item (as opposed to an "investment")?

 

That is the way I view my collection of Spanish colonial pillars which I have no intention of ever selling (at least for those outside of Mexico) even though I actually think they will do quite well since they are one of the few truly international coins. I would prefer that these coins cost LESS so that I can buy MORE of them. That others do not view them as I do I view as a good thing and hardly a bad one.

Edited October 18, 2010 by jwither