In researching material for the Wall Street & Financial History of America Tour I came across a subject I had forgotten existed and knew little about to begin with. Wampum, the supposed Native American money.
I heard about Wampum growing up in Rhode Island. Some mysterious Native American currency made from the purple part of Quahog shells. To a young schoolboy this seemed absurd. Quahogs were everywhere, so much so their crushed shells are used by some instead of gravel for unpaved driveways in New England beach towns. Using them for ash trays seemed sensible, but how could anyone be taken seriously trying to use seashells to store value or exchange for goods and services?
As it would turn out Wampum, like most things Native American was poorly understood let alone explained within the public school systems I was enrolled in. The true story behind Wampum is fascinating. For starters, the Native Americans didn’t use it as money. More on that later.
To start let’s discuss what Wampum was, it wasn’t as simple as just picking up a clam shell and breaking off the purple rim lining the inside. Wampum wasn’t Wampum unless it was fashioned into beads and strung together. It also wasn’t just composed of the purple portions of Quahog shells, but also from the white part as well as white whelk shells. These shells were only found in coastal areas, and only the tribes located in southeastern New England and on Long Island were involved in collecting the shells and crafting them into beads.
Prior to European settlement the Native Americans had no metal tools and stones would have been used to round and drill holes into the shells. Stop and think about that for a moment. How would you approach that? Quahog shells are hard but when they break, they fracture not unlike a dinner plate with sharp edges. Whelk shells naturally spiral around their center, but how would you drill through them without a metal instrument? Turning these natural materials into circular and tubular beads must have taken considerable amounts of time and experience.
The use of these beads as a form of money begins to make sense. After all Wampum possessed all the properties of money, it was durable, portable, divisible, uniform (enough), limited in supply, and acceptable. However, the Native Americans of the Eastern Woodlands didn’t use Wampum as money in the familiar sense. The binary nature of Wampum allowed for it to be fashioned into sashes, belts, and other garments that depicted people, places, and things. With no written language, these garments were symbols of legends and historic events such as treaties. To the Native Americans, Wampum and Wampum beads were not a form of currency, but more a tradable commodity that could be used to convey information. Native American leaders also wore it to signify their social status. Wampum traveled far inland from the coast to as far north as Ontario, as far west as the Great Lakes, and as far south as the present-day Carolinas.
Upon arriving in the New World, Europeans began trading with Native people. Settlers at first only offered European goods, but eventually both the Dutch and the English realized the importance of Wampum. With indigenous people having no previous concept of European financial systems or their currencies, Wampum became a trading device for exchange between Europeans and Native Americans. The primary good of interest became beaver pelts. European goods could be exchanged for Wampum in coastal areas, and then the Wampum could be taken further inland and exchanged for beaver pelts and other furs coveted in Europe. This disrupted Native communities in two ways. First, coastal communities now had an incentive to prioritize the manufacturing of Wampum over other tribal affairs; and second, the men of both coastal and inland native communities began to prioritize hunting for pelts over other obligations.
The use of Wampum beads by the European settlers in the Northeast may have created many financial firsts in the New World. European tools hastened the process of making Wampum, which may have led to the first incidence of inflation on this side of the Atlantic as the Dutch took over the trade and mass produced Wampum beads. During the 1600’s, Wampum beads became legal currency in the colonies which set rates for what they could be exchanged for in European currencies, and thus might have been the New World’s first foreign currency exchanges. In these systems, the purple Wampum beads were more highly valued than the white beads and less scrupulous traders began dying white beads purple in what was possibly the first example of counterfeiting in North America.
You can learn more about Wampum, Native Americans, and their relationship to the Dutch and the English on our Wall Street & Financial History of America Tour.