Tales of Soft Money — Cotton on Cape Verde
Update 2020-02-18: This article is updated with further sources to better reflect its chapter in the book, Money Dethroned.
Ibn Battúta traveled the provinces of the Empire of Mali during the year 1352 A.D. As with many of his trips, the journey was dangerous even after having crossed the Sahara due to water still being scarce. He and his caravan passed at least one traveler dead from thirst, and Battúta speaks about desert demons causing people to lose their orientation. Upon reaching Iwálátan (Oualata), Battúta stayed there for fifty days and observed, among other things, the widespread use of fine Egyptian fabrics (Battúta, 1325-1354, p. 320).
Money of the Caravans
He also met Mansá Sulaymán, the Sultan of Mali and brother of the late and admired Mansa Musa. Perhaps due to having heard of Mansa Musa's riches, Battúta, more demanding now in older age, was highly disappointed with the gifts he received by the current sultan. After visiting the capital Timbuktu, and the city of Gogo, he set out towards Tagaddá with a large caravan. Tagaddá is described as an important trading town with regards to the Egyptian fabric already mentioned. It was in this town that Battúta received a command from the Sultan of Morocco to return home at once, and so he started preparations for his journey north across the desert, and stocked up on an interesting good:
I kissed the order and conformed to its instructions. I bought two riding-camels for thirty-seven and a third mithqáls and prepared for the journey to Tawát. I took with me provisions for seventy days, for there is no corn to be had between Tagaddá and Tawát, only fleshmeat, milk and butter, which are paid for with pieces of cloth. (Battúta, 1325-1354, p. 337)
This would not be the first time he and his companions would have to pay with cloths. When Battúta and a large number of other pilgrims much earlier crossed the Arabian Desert in a north-eastern direction, they had an encounter with Bedouins - an event not that interesting per se, if it wasn't for the fact that those Bedouins as well had demanded to be paid in that good:
The Badawin [Bedouins] of that district [Samira] come here with sheep, melted butter, and milk, which they sell to the pilgrims for pieces of coarse cotton cloth. That is the only thing they will take in exchange. (Battúta, 1325-1354, p. 79)
It should be added that the pilgrims from Mecca of course had access to gold dinars and silver dirhams, and yet it was cotton cloth money that the nomads demanded. Had history provided us with only these indication of the use of cotton cloth money, one could arguably be forgiven to brush the subject aside. But this is not the case. Battúta heard of a similar phenomenon upon traveling Yemen, where Arab brigands often demanded cloths in exchange for not occupying the water supply infrastructure of various cities (Battúta, 1325-1354, pp. 109-110). In the interior of parts of East Africa, cloths were used by trade caravans to bribe their way through local chiefdoms (Pallaver, 2009, p. 21). Silk was used as money in Ancient China, resulting in etymological curiosities like the word pu, meaning "cloth", eventually assuming the meaning of "money" (Einzig, 1949, p. 256), and in Roman times, silk cloth was sometimes estimated to be worth its weight in gold in the west (Quiggin, 1949, p. 221). With all that said, little did Battúta know that much of the cloth trade he observed in Mali would be greatly disrupted for monetary reasons a century or so later - with the arrival of Portuguese settlers.
The New Cloth Traders
As part of its "Money in Africa"-project, the British Museum has a research publication by Carlos. F. Liberato, who provides further evidence of long-lasting systems of cloth money in West Africa. The 15th to 18th century European - mainly Portuguese - meddling in the Guiné region initially makes most people think of the slave trade, and the trade in human beings was of course pivotal there. But seldom is it discussed what the Europeans used to actually pay for their cargo. They, like Battúta and the members of his caravan, used cloth as money, not for a limited period of time, but over centuries. Interestingly, the cloth money native to Africa was sometimes in mock, unusable condition since it was used only in economic exchange, not as clothes or garment (Quiggin, 1949, p. 56).
To understand the new influx of cloths, we have to go west, not only to the coast, but further. Cape Verde is an archipelago in the Atlantic Ocean, west of what today is Senegal. Portuguese explorers found the uninhabited islands in the 15th century and decided to colonize them. As it were, it turned out cotton could grow in some of the more rain-heavy areas, which, given the landscape of Guiné in the centuries thereafter, incidentally made the islands a convenient base for money production. Alvise Cadamosto, who visited the region in 1455 and 1456, was one of the first Europeans to document the fact that cotton was already grown and cultivated on the African mainland by locals (Liberato, 2009, p. 12). The Portuguese, quick to notice how relatively valuable cotton cloth strips were for the coastal inhabitants of upper Guiné, proceeded with setting up cotton plantations themselves around their newly claimed settlements.
As early as the 16th century, cloth strips had evolved as a well-established form of money in Senegambia, by the coast as well as further inland. As has been discussed, the area had important cultural and historical ties with the cotton cloths introduced over the past centuries by Muslim traders from north of Sahara. Even on Cape Verde the barafula (cloth strips sewn together) became the standard currency in which taxes, as well as soldier wages were paid. Despite cloths being produced locally by African tribes as well, the Portuguese were more efficient, which led to a profitable but perverse slave supply chain to Cape Verde, de facto financed by money which the slaves themselves cultivated on the island plantations. Liberato quotes Scottish historian Christopher Fyfe, who described this ecosystem in his writings:
Some of the slaves were weavers by profession, and wove the cotton into country cloths as they had done on the mainland. New elaborate patterns of North African type were introduced, and from the middle of the 16th century Cape Verde panos [cloth strips] were regularly exported to Guiné to be exchanged for slaves. As elsewhere in West Africa, European traders were forced to adopt African methods of accounting, and panos became recognized as units of account, just as bars and cowries were in other regions. (Liberato, 2009, p. 9)
To strike a balance between standardization and different denominations, the Cape Verde panos initially came in three broad categories: grossos (rough), ricos (intricate), and tecido fino (delicate) fabric. It is easy to see the conceptual similarity to how coinage historically often was minted (copper, silver and gold). Despite these standardization efforts, Portuguese civil and military officials operating at various African trading posts often opposed the use of cloths as money. They had to make do, because only in 1864 did Portuguese overseas territories get an official provincial currency with the help of the Banco Nacional Ultramarino (Liberato, 2009, p. 12).
Liberato continues by mentioning that the panos circulating in the Rivers of Guiné fetched a value surpassing the level that could be derived from their practicality and immediate consumption, which is fully in line with the monetary theory discussed in this book. A widespread use of panos as a shroud for funeral corpses probably exacerbated this property. The more important the deceased, the more panos were used in the burial gathering, which meant the cloth strips were functioning as a public show of wealth and status. Further corroboration on the monetary properties of cloth strips came, according to Liberato, from a certain Francisco de Andrade in 1582:
[...] nothing is traded [a long the Nuno River] other than loaves of dye, like sweet bread, that are then loaded on ships that go to the São Domingos River [Cacheu], to be used by the [natives] to color their cloth black so it [the dyed cloth] can be used as money all along the other Rivers of Guiné. (Liberato, 2009, p. 12)
Occasionally, certain slave trades could not be made without the use of these Cape Verdean cloth strips, and with this exclusivity came power. The monopoly-like situation caused Portuguese authorities to outlaw the sale of panos to other ships, with the very real warning of capital punishment if unheeded. This is remarkably similar to the Venetian authorities banning the export of glass bead production know-how. Yet, the islanders often sold the cloth strips to Dutch, British or French captains anyway, who then could use them to acquire slaves for their colonies.
Finally, Paul Einzig has found accounts on cotton cloth money in Guinea as well, before it was disrupted:
Above all, guinea cloth, as its name implies, was extensively employed as currency in Guinea. It is through the ports of Guinea that this currency penetrated into the interior to become one of the most important currencies for a long period over a vast territory of Africa. It remained a standard of value long after it ceased to be a medium of exchange. (Einzig, 1949, p. 155)
In the 18th century, the Grão Pará and Maranhão Company was founded to facilitate trade between Portugal, West Africa, and the Portuguese colonies in South America. It established a state-sponsored monopoly on the production of panos, meaning all producers on Cape Verde had to supply the company's warehouses on the islands, from where cloths were shipped to the trading posts. Even then, hundreds of years after the first Portuguese started using cloth strips as currency when bartering with the West Africans, did the panos function as money. The company collected taxes and fees in panos, meaning it was legal tender at the time. Its monopoly also made it a large facilitator of slave trades. Not only did the semi-private Grão Pará and Maranhão Company have the right to collect taxes, it was given the right to organize and station soldiers as well - something that of course is remarkable in today's standard.
The company continued the islands' export to the West African tribes for decades. Not until later in the 18th century, when the French introduced even cheaper Indian-woven cloth strips from Pondichéry, did the Portuguese panos face true competition. Soon enough, American cotton reached the region as well. These are yet other examples of production- and transportation efficiencies causing monetary inflation, and it is easy to imagine Portuguese and African cloth producers bitterly cursing the French and American dilution of what was not just a commodity, but money. Certain tribal chiefs even took to the desperate method of banning, on pain of death, their subjects from wearing European cloths (Quiggin, 1949, p. 58). These dilution waves were of course inevitable, as was the one the Portuguese initially let loose on to the region. The fact that any increase in the price of cotton cloths would lead to a larger number as well as expanding cotton plantations and textile workshops, put a severe dent in the cotton cloth money's capability of defending such a price increase. And with expanding trade networks, such added production could even profitably occur on the other side of the planet, where technological advancements stemming from the Industrial Revolution had cut production costs considerably. This is what characterizes easy money, whereas with hard money, producers would struggle mightily with increased production quantities despite the increase in demand and price.
It is worth adding that while Portuguese families or companies using this fundamentally inflationary money very well could see inter-generational wealth decrease, the situation was obviously worse for the Africans. The realization is sobering; Africans experienced some of the worst possible outcomes imaginable from the fact that their own, easy money could be mass produced by the northern foreigners.