Primitive Money

Abstract

This chapter elaborates various aspects of the cost of production theory. According to the cost of production theory, the value of money is determined by its cost of production in the broadest sense of the term that includes the cost of transport. This theory clearly implies the acceptance of the commodity theory of value, because the intrinsic value of money is largely determined by its cost of production. The value of cloth, brass wire, beads and other currencies used until comparatively recently in East Africa depended largely on the distance from Zanzibar or from the major mainland ports which supplied travelers with these currencies. It is suggested that it would be idle, however, to try to establish strict relationships between the cost of transport and the value of heavy currencies. It has been observed that the cost of transport constitutes a brake on the unlimited production of those kinds of primitive money which could otherwise be produced in practically unlimited quantities.