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Commodity money is a type of money that has intrinsic value based on the material it is made from or represents. This means the commodity itself has worth, even if it weren’t used as money. Throughout history, various commodities have served this purpose. Here are some types and examples:
1. Precious Metals:
* Gold: Historically a very common form of commodity money due to its durability, divisibility, scarcity, and aesthetic appeal. Gold coins are a classic example.
* Silver: Similar to gold, silver has been widely used for coinage and as a store of value.
* Copper: While less valuable than gold or silver, copper coins have also served as commodity money in some regions.
2. Agricultural Products:
* Grains (Barley, Wheat, Rice): In early agricultural societies, grains were often used as a medium of exchange and for storage of value.
* Cocoa Beans: The Maya civilization used cocoa beans as a form of currency.
* Tea: In some parts of Asia, compressed tea bricks served as a medium of exchange.
* Tobacco: Used as currency in colonial Virginia.
3. Animal Products:
* Cattle: In many agricultural societies, livestock has represented wealth and served as a medium of exchange.
* Furs (e.g., Beaver Pelts): Used in the fur trade, for example, by early European settlers in North America.
4. Shells:
* Cowrie Shells: Used as currency in various parts of Africa, Asia, and the Pacific islands for centuries.
* Wampum: Shell beads used by Native American tribes in North America.
5. Salt:
* A vital commodity in many ancient societies, used for preservation and seasoning, making it a valuable medium of exchange.
6. Other Goods:
* Alcohol (e.g., Rum): Used in certain historical contexts as a medium of exchange.
* Cigarettes: Have served as commodity money in situations where traditional currency is unavailable or unreliable, such as in prisons or post-war Europe.
* Gasoline: Used as a form of commodity money in parts of Europe after World War II.
* Rai Stones: Large circular stone discs used as currency on the island of Yap in Micronesia, valued for their scarcity and the effort involved in their acquisition.
It’s important to distinguish between commodity money and commodity-backed money. Commodity money has intrinsic value in itself, while commodity-backed money (like the gold standard) is fiat currency that can be exchanged for a specific amount of a commodity.

Video courtesy of ABN-AMRO

Video courtesy of ABN-AMRO