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The maintenance of a uniform price-level with growth is possible only if money is increased at the same uniform rate. The mere fact of saving does not provide the growth of money. Under conditions of private property and private banking, creation of bank credit has to be always anticipating saving in some degree, though theoretically the length of time involved in the anticipation may be very small. The point is most easily grasped, however, if we revert to the case of the socialistic State.

The mere fact that interest is earned by the State bank does not automatically provide a growth of money available for financing the increase of production. The causation is the other way round. It is because new money is being continually created that a level of prices is maintained which gives the State interest, and so long as it pays uniform wages to a growing population for increasing production, and the population spend the money on current utilities, the level of prices must yield interest.1

The extent of new creation of money will depend, in a sense, on the interval which elapses between paying out money as wages and getting it back again, but whatever the interval may be, the rate of creation per unit of time is always the same percentage of the amount existing. Suppose money paid out at time x comes back at x + 1, being then paid in for the use of goods existing at x, in respect of the use of them for the interval x to x + 1, and regard the goods as marketed not continuously, but at the beginning of each interval. The amount of money paid out to producers at x may be called Ix. This comes back to the bank at x + 1, but at that time a larger amount, 1(x + 1) has to be found to pay out to producers and can only be found by anticipating the future receipt of the difference between I(x + 1) and Ix.

In a régime of individualism it is mainly bank credit which takes the place of the State creation of money. This must always be anticipating savings, or else the fund from which money interest can be obtained will not be in existence and growth would involve the continual lowering of price-level, which would dislocate private business enterprise, excepting in so far as a Deus ex machind in the shape of new inventions and cheaper processes might happen to arrive.

1 Soddy, The Inversion of Science, seems to assume that in the conditions under consideration there would be no interest obtained by the State. That, it is submitted, could not be the case, but it has to be remembered that the State is assumed to apply the whole of such interest to financing new production, i.e. saving” it all, so there is no interest in the sense of an income spent on buying current utilities.

A smooth state of growth, with uniform price-level, is possible if the two conditions are fulfilled : (1) growth is uniform, (2) saving and the creation of bank credit always continually equal the amount required for financing growth as distinct from maintenance production. If these conditions are not fulfilled, there is almost inevitably involved not only disturbance of individual prices, but disturbance of the general level of prices, and, under ordinary conditions of individualism, oscillation of trade activity. It is not possible, however, to enter on a discussion of these questions in the present paper, but reference is made to these problems merely for the purpose of pointing out that a study of the conditions of uniform growth, even though that condition does not actually exist, is useful as a preliminary to the consideration of the effects of irregularity.




The island of Rossel lies about 200 miles south-eastward of New Guinea. Approximately 100 square miles in area, it is inhabited by a primitive population numbering about 1000 in all. The Rossel Islanders have characteristics and customs which differentiate them from the Melanesian-speaking peoples of the neighbouring archipelago, but none are so striking as the unique currency system, by the aid of which they carry on their mutual trafficking in pigs and concubines, in canoes and wives.

The outstanding features of the Rossel Island money are that, of each grade of the tokens in use, there is a virtually unchanging stock that has come down to the present generation from time immemorial, and that into the grading of the tokens -their value-relationships to one another—there enters the novel principle of a time-element or interest-element, in place of the more familiar principle of simple proportionality.

The articles which it is here proposed to call money are made from shell, and are of two kinds, named Dap and Kö respectively. A single piece of Dap money, which we may conveniently designate a coin, is a polished bit of shell a few millimetres thick, with flat or slightly curved surfaces, having an area varying from 2 to 20 sq. cms., and of almost any shape, though usually roughly triangular with rounded corners. In colour the coins vary from white through shades of orange and red, especially on the outer more polished surface. The coloration is generally uneven. The shapes and colours suggest that these coins were made from a mollusc allied to the Spondylus, from which the well-known sapi-sapi beads are made. Every coin is perforated within a few millimetres of one of its edges and generally at a corner. A single coin of Kö money consists of ten discs roughly shaped out of some shell, possibly that of the giant clam, each disc of the ten having approximately the same diameter and thickness. The individual discs are not money, for a set of ten discs is only exchanged as a whole.

There are twenty-two main values of Dap money, having separate names, but these names are not descriptive of the values. Certain of these values are subdivided into two or three classes, so that there are about forty distinctions of value altogether

No. 135.—VOL. XXXIV.

in the case of Dap money. For the purposes of the present account these sub-values (which seem to be of little importance) will be ignored, and only the twenty-two main values will be considered. As the names given to them are somewhat clumsy it seems simplest to use here the numbers 1 to 22 to designate them, taking 1 for the lowest, and 22 for the highest value.

Although any piece of Dap is generally at once recognised by the native as being a 1 or an x, it is difficult to obtain any definite characterisation of these classes. Very roughly, one can say that the lower values are white or dark red and rather clumsier in shape, while the higher values are lighter red to yellow and more delicate in shapecertainly the higher the value the more pleasing to the eye. This lack of a serial arrangement of attributes to mark value would be almost impossible if additions were continually made to the stock of money; but the money of Rossel is peculiar in that it is not replenished by fresh additions, except in the case of Nos. 1 to 6 or 7; but such money, although bearing the appropriate value-names and obeying the same laws of exchange as the money regarded as original, is recognised as belonging to a different order. In the case of Kö money (the second of the two varieties), it is believed that there have been no additions to the original stock, which was made in a remote past by Wonajö, the supreme god of Rossel (as also was the main stock of Dap money). The shell for the Dap was obtained from a bay at the east end of Rossel; the shell for Kö from a bay on the north side of the island. Both these places are classed with the “ yaba,” or sacred places, which occur throughout the island, the rites in connection with which serve to preserve the uniform and beneficial order of the universe. If the money on the island be non-renewable and there be not too great an amount of it, it would, of course, be possible for every coin to be individually known; in this case, there might be no general distinguishing marks of the 22 classes, for, in the case at least of Dap, every coin has its perceptible individual characteristics. In the case of Nos. 13 to 22 there is little doubt that all the coins belonging to these classes are individually known by all natives of any consequence in the financial world. Moreover, each coin belonging to Classes 15 to 22 has an individual name in addition to its class-name. It is, therefore, clear that in the case at least of these there need be no defining character of the class other than enumeration of its members. It was possible to ascertain the quantity of Dap on the island of values 15 to 22, which gave a total of 81 coins all distinguished by individual names.

Of Kö money the distinctions of value are fewer, there being a total of sixteen values. The names of these are the Dap names with suffix “ kagnö.” For instance, the lowest value Kö is called “ Tebuda kagnö,” Tebuda being the name of No. 7 of the Dap series. The remaining fifteen values of Kö, which may be designated by the numbers 8 to 22, are denoted by means of the names of the remaining higher values of Dap. Thus the name of No. 22, the highest value Dap, with suffix “kagnö,” denotes the highest value Kö. Unlike the Dap money, the values of Kö money vary with the variation of one simple character, namely, size of the discs. These discs vary in diameter from about 14 cms. in the case of the lowest values, to about 3 cms. in the case of the highest.

To pass on to the consideration of how these values are interrelated; in the first place, the same principle of value-relationship applies within each of the two monetary systems, the Dap and Kö, but no member of the one series has any recognised exchangevalue in terms of any member of the other, though there is an equivalence for certain purposes between Dap and Kö bearing the same name. Generally speaking, wherever payments of Kö are made, payments of Dap also form part of the transaction -a service or commodity is priced in terms of so much Dap and so much Kö. There are, however, a number of commodities which are priced in terms of Dap only, mostly commodities of low price. It is possible, also, that there are some commodities priced in terms of Kö only—which is most likely to be the case with commodities which pass mainly between women, for it is said that Dap is essentially men's money, while Kö is essentially women's money, though the latter idea seems to be merely a traditional fiction. In the present account only the Dap side of payments will be considered, even though similar important payments of Kö may also be involved.

In nearly all instances of real money throughout the world, where there are coins of different values, a higher value coin is generally regarded as equivalent to so many of the lowest value coins or at least as being composed of so many recognised units of value. This is not the case on Rossel; the value of a coin a in terms of a coin y is expressed by the length of time y would have to be let out on loan in order that a be repayable. If the thought of the islanders were sufficiently systematic, then all the twenty-two values of Dap could be expressed in terms of No. 1 and time; No. 2 would be No. 1 at interest for a few days— No. 22 would be No. 1 at compound interest for several years.

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