Money, Credit and Interest
February 27, 2008 by Carl Chapman
Filed under Credit 101
Credit and debt started with the landing of the Pilgrims. The Pilgrims backed by fancy London financiers who extended them credit to be paid in quarterly installments. Meeting these obligations was going to be tough, though. The pilgrims were coming to a new place; a place whose bounty was not known with certainty and a place that had no money. You can easily imagine that any amounts the Pilgrims had brought with them would soon run out- then what? Well it is fair to assume that they’d thought of this too and that they knew their payments would have to continue anyway. So it is fair to assume that they were banking on the wealth they would find in the New World to sustain them and to help them pay their debt.Since the small sums of money were soon exhausted it is clear to see that barter was, for the most part, the way that trade was conducted.
Things began to get better for the Pilgrims and it became clear that some sort of money would be needed to help in growth and commerce.Just as in ancient times, there was not currency so that the Pilgrims were left to their own devices. As in other times and in other places they wanted to use something easy to carry, to divide, that had value, and that would last through repeated use.
They did not have the advantage of vast, easily accessible mineral stores as was did many of the civilizations that grew up about the middle east and the Mediterranean so they could not employ precious metals for coinage.Instead, they resorted to the use of a currency they called “wampum. “Wampum was usually made from a hard-shell clam and had been popular as early as 1620 when the Dutch used it to trade with the New York Indian Tribes. Other Indians in the area preferred to beads as their circulating medium of exchange.
Settlers came to use any means of exchange the Indians used, first in their trade with the Indians and then for trade among themselves.The widespread use and acceptance of these native currencies were evident in Massachusetts, where in1641 Harvard College accepted wampum as payment for tuition or for tax payments and in New York, where wampum as an official currency as late as in 1701.
Then, there was a long period of growing prosperity in America that was mirrored by ravenous increases in taxes levied by Crown. The colonial discontent that followed resulted in the Revolutionary war.The American Revolution presents an interesting case study for the larger issues that govern credit. These very same principles guide credit affairs in the consumer realm.
