Money and Economy in Zimbabwean History: A Concise Currency Timeline

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War, Global Crisis and Colonial Consolidation, Currency Developments, 1910s -1920s.

Tinashe Nyamunda

The previous articles in this column examined the origins of the colonial monetary system from 1890s to the eve of the First World War. So far, these articles have shown how indigenous modes of exchange were gradually displaced, through legal tender and other political and economic mechanisms, by a nascent colonial monetary system based on British sterling. On top of exploring how a western banking system exclusively servicing the settler population emerged, these articles also discussed the ways in which the whites wanted to create their own autonomous currency arrangements. But when the British refused to assent to this idea in 1907, it became clear that a colonial monetary system could only be developed on the back of imperial sterling arrangements.

As the second decade of the 20th century began, coinage shortages worsened. But despite these challenges, the settler agricultural community was persistently entrenching itself with the help of the state and at the expense of Africans. In 1912, for example, the Land Bank was established to try and provide white farmers with cheap loans to develop their farms. What must be emphasised is that African agriculture was very competitive. Europeans found it difficult to establish commercial agriculture that could compete with Africans who had the knowledge of the ecology and experience to produce under the conditions they lived under for thousands of years. But to improve the competitive edge of Europeans, the Land Bank would play an important role in financing their activities, which Africans did not have access to.

This was part of the systematic development of settler agriculture in the colony. Combined with the demand for coin-denominated taxes, gradual land expropriation and dual market pricing of commodities that favoured European agriculture.  Africans were being undermined. In the context of coinage shortages, settler farmers took advantage and implemented a number of measures that allowed them to underpay African workers in a system of primitive accumulation. This allowed them to gradually accumulate wealth and become more competitive. Their exploitative system, as we shall see in what follows, would be aided by worsening cash shortages as the First World War broke out in 1914-1918, disrupted shipping and created severe supply bottlenecks, including that of currency from Britain.

But a point must be made here. At the turn of the twenty first century when land expropriation began in Zimbabwe, there was a lot of talk about Africans being inexperienced in commercial farming and how whites were the backbone of agriculture in the country. The experiences in the first forty years of the colony’s existence in which African agriculture dominated the market flies in the face of these claims. The colonial state had to put in place a number of measures to actively destroy African agricultural productivity in order to set European farming as the basis of economic development and reduce Africans to mere wage labourers. Currency was at the heart of these developments.

The outbreak of the First World War put additional pressures on colonial monetization as Britain left the gold standard in 1914. The gold standard was an international exchange system in which all exchange was measured in terms of gold bullion as an equalizer of all exchange, and Britain was at the helm of this system between 1870 and 1914, and when it was suspended. It eventually rejoined in 1925, only to permanently abandon it in 1931. The strategy behind suspension was the increased value of sterling on the back of soaring export prices, even as industrial production diminishing in Britain. Although these monetary measures made in London were made with the metropole in mind, the British Empire, including African colonies were expected to unquestioningly follow suit.

Despite efforts to curb coin shortages, local alternatives to cash would prove insufficient. But to take stock of specie in circulation and try to figure out ways of managing shipments and that which the colonial public held, the Royal mint in Britain requested information from W.H Milton, the Secretary to the Treasury in Southern Rhodesia, a report of the amount of cash in circulation versus their requirements to be intermittently submitted to London each year. But even after these reports were submitted, with the war at sea, there was little London could do as logistics of supply were hampered and the shortages persisted.

As a means to continue managing colonial currencies, from 1914 onwards, London requested from its colonies annual data on British gold coin, foreign gold coin, local metallic currencies, and notes in circulation. This data would help the Bank of England to keep tabs on activities taking place in the colonies, a role a local Reserve Bank could have done through managing and monitoring its money supply. The measures were designed for imperial, and not colonial benefit, as they would help cushion Britain against the inflationary pressures that might arise if a large amount of colonial money would flow back to Britain. Yet little was done to try and resolve specie supply problems in Southern Rhodesia. This dislocated business, leading E.A Haster, the secretary of the Salisbury Chamber of Commerce to complain that, “the present shortage of silver [was] dislocating business and causing considerable inconvenience.”

In response to worsening coin shortages, Haster suggested the revival of the stamped coupons scheme such as the Marshal Hole Notes, or the one that had been adopted because of the disruptions of the Anglo-Boer war between 1899 and 1902. In the context of the First World War, the Post Office could be used to then redeem the coupons and monitor against overprinting since there was no monetary authority in the country. The Post Office would then have to work with oversight from the Department of the Treasury. However, the Treasurer, Milton, rejected this idea hoping that the collection of taxes from Africans would make the problem better. But this did not resolve the challenges.

In the absence of a monetary authority to manage the situation locally, farm and mine owners created their own strategies to manage and pay their workers. However, this system was always abused. For example, big mining companies such as the Globe and Phoenix or Falcon mine resolved to pay their workers, with authority from the BSAC state, using their own coupon system. The Mine complained to the Colonial Administrator that shortages of coinage made it difficult for them to pay wages. But they requested permission to use “stamped cards similar to those issued in 1896 if so could we have 600 of 2/6 300 of 1/- per first post meantime must suspend payment native wages which must have disquieting effect upon [laborers] respectfully request Native Commissioner to explain to compound that silver shortage is but temporary would be advantageous”.

Ultimately, the Globe and Phoenix management issued what became known as the Globe and Phoenix coupons which could not be used elsewhere except at the Mine stores which tended to profiteer from this. Such coupons came in denominations of 5s., 2s 1s., 6d., and 3d. It had been resolved that once coinage became available, the coupons would be redeemed, but it was not uncommon for workers to leave employment before the coupons were redeemed, and in many cases were devalued because of defacement at redemption.

Another way of exploiting African workers was the use of the box system. In this case, Africans would be given a box at a mine shop at which they could either borrow, or purchase goods against their wages in a farm or mine store. In most cases, the goods would be overpriced and in others, they would never fully retrieve their purchase when they needed to return home to their families because of cheating by the white store managers. Such mines used these opportunities to exploit workers and minimize their expenses. Although not officially sanctioned, the state largely turned a blind eye to these practices.

Many black workers felt cheated under this system, but there was precious little they could do about it. However, the major challenge was that if the practices continued, labour, which was consistently in short supply in the early years, could become even less, thus compromising the colonial economy. Secondly, those Africans who did hold silver coins would have continued to hoard them and not release them as a way storing value and avoiding unfair exchange with coupons. This is eerily similar to today’s context where many Zimbabweans have opted to save in hard currency, for example, in US dollars instead of fast devaluing Zim dollars as in the case of the period between 2003 to 2009, or in the case of RTGS dollars and bond notes (bollars) in the period from 2016 to date.

To try and maintain a steady supply of labour in the interests of the development of the colonial economy, the state decided to monitor and control this system. To understand and control it, a Commission to investigate these coinage challenges led by Cave was tasked to do investigations. This was especially important across the region as hoarding of silver coins was increasing in response to abuses under the box and coupon systems, and many of the coins were being exported by traveling Africans. To solve the coin shortages and therefore limit hoarding and the outflow of silver, the Cave Commission recommended that the commercial banks be allowed to issue bank notes which could be  more authentic and better regulated than private farms and mines’ coupons. Although these Bank notes were issued by private commercial banks such as Standard Bank and after 1918, Barclays, they would help provide better legitimacy to money and be used in place of coins. The passing of the 1918 Bank note ordinance allowed for the official issuance of these notes by the banks.

Unfortunately, although better than coupons, Africans did not quickly to take up this new system which they equated to the coupon system and only gradually began to trust notes. However, notes also tended to be of higher denominations and therefore difficult to change, and if one lost them, the loss would be huge. Moreover, they were not as durable as coins, and therefore remained unpopular for some time. The introduction of notes met with very limited success. However, this allowed government to restrict the export of silver and gold coins to limit outflows. In 1920, the BSAC government prohibited the export of gold and silver in coin above £5, including in the form of jewelry above the value of £25.

In response to the outlawing of coin exports, some Africans resorted to melting down the coins and selling them off as silver. But this was also outlawed. According to a May 1920 government gazette, those caught breaking these laws were liable “… upon conviction to a penalty not exceeding five hundred pounds, and in default of payment, imprisonment with or without hard labor for a period not exceeding one year, … or both …” In those days, that amount of money was too much even for well to do white settlers. But ultimately, the colonial state managed to find local ways of coping with shortages but keeping within imperial requirements of currency and economic management.

What the developments between 1910 and 1920 reveal is the extent to which the settler population and colonial state managed to impose an economy that resembled that of the imperial center. Despite the challenges in the colonial economic encounter, BSAC chartered rule managed to lay the foundations upon which a colonial economy developed in line with the interests, at colonial level, of the white settler community, but at a broader imperial level, to create an agrarian and mineral extractive economy fueled by ultra-cheap African labour. A key feature of the period was the continued and systematic economic disenfranchisement of the Africans which paved the way for a settler economy, even after the lapsing of chartered rule, issues of which the next article in this issue will examine.

  • Tinashe Nyamunda is in the African Modernities Past and Present (AMPP) research group at North West University where he is Associate Professor in Economic History.
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5 COMMENTS

  1. Well written, thank you Prof for the economic history of Zimbabwe, looking forward to more of your articles.

  2. So Zimbabwe has always had issues with the money and this dates back to our colonial era???? Looking forward to more articles to see how all this relates with the current situation we are in. Good job Prof…. your articles don’t disappoint they leave the reader wanting more

  3. Interesting how cash shortages have always provided an avenue to exploit workers. We even see this in the present with Panonetsa’s bond notes. Very nice read Prof Mukoma Nyamunda.

  4. A very enlightening read and as it is said, “History repeats itself”! The box system is the one that really stimulated my curiosity, up to this day it still exists in mines and farms, under different disguises! Can’t wait for the next article.

  5. Thank you for another enjoyable piece. It is interesting to know that currency has been a problem in Zimbabwe since the colonial period. What was even more amazing was how the people design informal ways to deal with it. Perhaps one day you can give us a timeline specifically on the survival strategies people used during currency problems before and after independence.

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