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(Originally published in Practical Anarchy, November 1993.)
We get so used to seeing dead politicians on government money that we have a hard time imagining anything else. The truth is that you have probably handled several forms of privately-issued money. Furthermore, private money has a long history which actually preceded coins from kings. Call them tokens, good-fors, wooden nickels, chits, scrip, they have carried trade and commerce time and again. And they are working now.
The stone ages ended about 8000 BC when copper was discovered. From about 3500 BC other metals (including silver and gold) were also found and worked. Cuneiform records from Mesopotamia at about 2400 BC tell of silver being weighed out in payment. This was indirect trade in a material that, like amber and cowrie shells, had no immmediate use. Silver and gold are pretty, but not suited for agricultural or hunting tools. By 700 BC, merchants were die-punching nuggets of electrum to mark them so they wouldn't have to be reweighed. It wasn't long before monarchies and democracies minted coins. The "stater" coins of ancient Athens were widely known and accepted for their unvarying fineness and weight. The goddess and her owl also carried a universal message of good will. But what if the Athenians had placed bad luck symbols on the coins? Would you accept a coin that showed a knife sticking an eye? America's seated goddess and Britain's standing goddess were accepted in the 19th century Orient because they were univeral symbols. These were refinements on an archaic tradition of indirect trade.
In the mid to late 1300s life in England had improved to the point where luxury items were over-priced in terms of the smallest silver coins. So, bronze tokens ("counters") from Europe filled a need for small change. Foreign coins were joined by private issues. By the 1600s, the privately issued copper tokens completely dominated common trade. It is not surprising, then, that the first coins minted in America were also tokens. For nearly 200 years, small purchases were carried out in a wild array of private and foreign coinages. Federal government money wasn't established in household shopping until the 1840s.
From about 1834 to about 1844, a series of economic changes brought "hard times" and Hard Times Tokens. These privately-minted coins stand out as being pointedly political, for or against Jackson, Van Buren or Daniel Webster. There were even abolitionist tokens. These all circulated in daily trade. The California gold rush saw a replay of the ancient invention of money. Gold dust and raw nuggets gave way to small, privately-issued gold coins. During the Civil War, with cheap paper money flooding the economy and copper disappearing into cannons, the people again resorted to tokens. Cent-sized coins displayed patriotic or anti-war themes or the name and address of a merchant. Congress outlawed tokens in 1864, but it had no more affect than the royal proclamation of 1672. In the 20th century coal mines, schools, pool halls and bars have all issued their own scrip and tokens. The video game token is part of this tradition. In fact, if you look back at history, you will see a curious pattern. We can assume that government money is the norm and that tokens are an interesting exception. However, there hasn't been a time when there weren't a variety of moneys carrying the needs of daily commerce by providing a medium for indirect trade.
In the 1990s, the new merchant's store token is the payphone card. Extremely common in Europe and Asia, they are only now making headway in the US. Basically, you buy payphone service in advance in the form of a debit card. Some cards are totally electronic, with a magnetic stripe like a charge card. Most phonecards are electro-mechanical, being punched by machinery in the payphone. American cards will most likely be of the first variety, all electronic. Phone cards carry colorful pictures of tourist attractions, local festivals, monuments or sports. They also carry advertising for other companies.
Debit cards drive the copiers at Kinko's, a national chain of printshops common to college towns and business parks. Unlike phone cards which are disposable, Kinko's cards can be re-incremented by inserting the card and your cash into a machine at the store.
The Aug/Sept 1993 issue of Mother Earth News featured a cover story on "time dollars". The town of Ithaca, New York, has developed its own local currency. People there trade services in units of an hour. The idea of denominating money in labor had been suggested by anarchists and syndicalists in previous decades. Community money is also an idea from recent history. Following the Panic of 1929, many small towns created their own local scrip. Today, during centennials or other celebrations, towns sell, and merchants redeem, tokens that are good for 50 cents or a dollar.
An interesting twist on "time dollars" comes from the policies of the conservative economic journal, The Freeman. Authors are paid 10 cents a word, plus a subscription. Authors can assign that subscription to anyone, thus commoditizing it.
Banking, in the form of money-changing and money-lending, must begin with the earliest days of multiple coinages. Today, we are expected to accept that banks are "regulated" by the government from which they get the notes they lend. In fact, there are many avenues of unofficial banking. The most obvious of these are the money-changers of our day: coin stores. Coin stores buy and sell gold and silver bullion. It is true that "hard money" is over-sold as an investment by economic conservatives. Since 1987, the price of silver has fallen from $5.50 to $3.50 an ounce and is back near $5 again. There are many reasons for this and obviously, large speculations are not for the average person. However, the fact is that measured in terms of gold (and less directly in silver) the price of most things today is about what they were 100 or 150 years ago. A three-piece woolen suit (should you want one) still costs about an ounce of gold--$20 then, $400 now. In 1960, a paper-back book of 1000 pages cost 95 cents. Today, the same book sells for $6.95. Meanwhile gold went from $35 to $350 an ounce and silver from under $1 to under $5.
My favorite coin store has as its motto "Aurum non olet." Gold doesn't smell. In other words, cash leave no traces. At least, it didn't use to. Now, US paper money and other world currencies have little magnetic strips built into them. (Just hold a $10 or $20 up to the light and you'll see the little bar at the left.) On the other hand, you can put a lot of cash into a Kinko's card. Actually, since the company won't guarantee defective cards, it is better to have several with various smaller amounts encoded on them. (Kinko's is open 24 hours a day and you can easily validate the card.) The same would be true for magnetic phone cards or other debit card.
[The "strips" in U.S. paper money are plastic security threads. They are not magnetic. --Numismatica]
In the near future, you may be given a good-for from an ice cream shop or a time dollar from an auto mechanic. You might be offered an ounce of gold in return for a used computer. Bus or train or parking lot tokens are other common alternates that tend not to circulate in change, though they could. Before you turn down a token, ask yourself how much control you want the banks and their governments to have over your money.
Michael E. Marotta
<mercury@well.com>
[This article was edited to include corrections from Bill Smith <wfs5572@tamsun.tamu.edu>. --Numismatica]
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Numismatica / 1 Oct 1995