"When California was first invaded by gold seekers there were a few Mexican coins in circulation there, not nearly sufficient to answer the needs of the growing community. The immigrants brought more or less metallic money with them. The smaller coins were those of many different countries, chiefly Spanish. For want of sufficient coins, the first trading was done largely with gold dust, sometimes by weighing it in scales, sometimes by guesswork. A 'pinch' of gold dust about as large as a pinch of snuff had a current value and was a common measure in places where there was no means of weighing. At a public meeting in San Francisco, September 9, 1848, it was resolved by unanimous vote that $16 per ounce was a fair price for placer gold. This rate was at once adopted in all business transactions. By and by private coiners of gold came into the field. The Legislature was at first alarmed by the appearance of these unaccustomed pieces, and passed a law to prohibit circulation and to close the shops where they were made. It was soon found, however, that they were a great convenience. Then the law was repealed. Several establishments immediately went to work assaying and coining gold. One of these was at Salt Lake City, whose productions were known as Mormon coins. Only one of these establishments, that of Moffat & Co., of San Francisco, conformed exactly to the government standard of weight and fineness. All the others, however, including the Mormon ones, circulated freely, and were received on deposit by the banking houses until the government set up an assay office and began to stamp octagonal pieces of $50, called 'slugs,' and afterwards those of $20 each. This was done in 1851; the San Francisco mint was not ready till 1854. The Moffat coins continued to circulate after the mint had gone into operation, since everybody had confidence in their goodness. It is estimated that $50,000,000 of private coins were struck. They were received in the Atlantic cities at their assay value only."
The foregoing illustrations drawn from our own history serve to explain the nature of money and the processes by which mankind learns to distinguish between good money and bad.
Mr. Farmer: In all that has been said there is nothing stranger nor more interesting than what is going on today.
Uap is one of the most interesting of the South Sea Islands. It is the Western outpost of the Carolines, which were purchased by Germany from Spain for $3,300,000 at the close of the Spanish-American War. The form of money used by the people and the perfection of the system of currency is as interesting as anything in the history of the human race.
The small change consists of pieces of pearl shell and small round stones. Large sums are represented by fei. These are big circular stones in the form of wheels ranging in diameter from one to twelve feet. In the centre of each is a hole through which a pole is thrust to facilitate carriage from one spot to another.
These coins are not minted on the island, nor has any addition been made to the supply of them for a number of years. They were originally fashioned in the Pelao Islands, and brought thence to Uap in canoes over a stretch of four hundred miles of ocean. A very large fei could not be changed into smaller coin without seriously disturbing the currency of the island. The owner of one of these twelve-foot masses of wealth is a sort of J.P. Morgan. Like the man with the million dollar bill in Mark Twain's story, he does not need to break his money in order to pay for anything he may buy, but readily secures all that he desires on credit.
It speaks volumes for the honesty of the islanders that all this stone money is left out of doors standing against the sides of the huts. The annals of Uap do not contain a single record of the theft of a fei, but perhaps the difficulty of disposing of such unwieldy cash may be a potent factor in the matter. Not only is the ownership of a large fei equivalent to the command of an unlimited amount of currency, but abstract possession seems to entail the same advantage.
Many years ago a canoe carrying one of these large stones was sunk a few miles off the island. Although the fei went to the bottom of the ocean and has lain there ever since, the man to whom it was consigned enjoyed all the advantages that would have accrued from its delivery to him. During his lifetime he was accredited one of the wealthiest men of Uap. Not only that, but he bequeathed his interest in the submerged fei to his son, and it has been passed on in like manner through four or five generations, securing all the advantages of substantial wealth to each.
Mr. Lawyer: Metal of some kind has been used as far back as the records of time go, and strange as it may seem, gold was the first metal to be used as well as the first to be discovered, as a standard of value, or measure of value. Iron was used in Sparta, spikes in Central Africa, nails in Scotland, lead in Burmah, copper, tin and silver in Rome. Silver and gold were used in China a thousand years ago. In her palmy days gold bracelets and rings were weighed out in Egypt, measuring value.
For the past two hundred years there has been a distinct evolution of the world's present standard of value going on, sometimes it has been gold, sometimes it has been silver, sometimes nations have tried to have both. During the last hundred years the struggle to use both has gone on persistently until within the last twenty-five or thirty years.