Rice Currency

Rice Currency

The history of rice currency takes into scope geographical areas as diverse as the Far East and the American colonies, and touches upon familiar subjects in the history of money, including debasement, Gresham’s law, paper money, and religious associations.

The most developed system of rice currency emerged in feudal Japan. At the opening of the seventeenth century Japan added up its wealth, measured in koku of rice, and found the country’s wealth equivalent in value to 28,000,000 kokus. After the sixteenth century copper, gold, and silver circulated alongside rice but values were expressed in rice, debts were contracted in rice, and taxes were collected partly in rice and partly in metallic money. Workers received rice in payment for work, and the retainers and attendants of feudal lords received stipends in rice.

Large landowners issued rice notes, maintained large storehouses to redeem those notes, and often sought to redeem the notes at harvest season to make room for the new crop. When they discovered that some of the note bearers never claimed the rice, they began, in the manner of the goldsmith bankers, to issue more notes than they could actually redeem in rice. After a rash of abuses, the Tokugawa banned this practice in 1760.

Rice currency shared an inconvenience common to commodity money—it was bulky to transport for large commercial transactions. With the growth of trade Japan began to supplant rice currency with metallic money, but not without hearing from the political philosophers, who saw metallic money as the opening wedge for all kinds of evil. Perhaps these philosophers echoed the Confucian emphasis on social stability and saw metallic money as a revolutionizing influence. Other ancient societies, including Sparta of ancient Greece, saw metallic money as an immoral influence. Rice currency survived in some of the remote villages of Japan up to the eve of World War II.

In the nineteenth century local governments in Burma measured their revenue in baskets of rice. The Burmese ate the good rice and circulated as money the inferior broken rice unsuitable for food or seed, giving history another example of currency debasement and Gresham’s law.

Rice was the most important primitive currency in the Philippines. In 1775 the Sultans of Magindan collected taxes from the Philippines in unthreshed rice. The prime monetary unit was a handful of unthreshed rice, called palay. A scale of denominations of palay rose from 1 handful to 1,000 handfuls. A day’s wage of a mountain wood gatherer was five handfuls.

Some of the Philippine tribes endowed rice with religious significance. No women could enter a rice storehouse, and men had to perform certain religious rituals before entering.

In 1739 the colony of South Carolina enacted a law that made rice an acceptable means for paying taxes. The following year the colonial government collected 1.2 million pounds of rice. The government issued “rice orders” to public creditors, which were redeemable after taxes were collected in rice at a rate of 30 shillings per 100 pounds of rice. These rice orders circulated as money, and long-term contracts were struck in terms of rice.

As a commodity rice was relatively light, making it easier to transport than some commodities, and it could be stored up to eight or nine years. Rice could serve the monetary functions of a medium of exchange and store of value better than most monetary commodities, which accounts for its relatively rich history as a form of money.