The Form of Money

Coke Fiends

mammon — Thu, 21 Aug 2008 09:00:00 -0800

For God, Country, and Coca-Cola by Mark Pendergrast, 1999, Excerpts

By 1919, there were 1,200 plants; virtually every town in America had a Coca-Cola bottler. The bottling business had one unfortunate, unforeseen consequence, however. No longer simply a soda fountain drink for upper-class urban white processionals, Coca-Cola was increasingly consumed by blacks. Sensational stories of “Negro coke fiends” attacking whites caused many to fear the widespread availability of Coca-Cola. As the century turned, so did public opinion, and in 1900 Candler found himself under intensified pressure to reform his “dope.”

In September of 1906, a major race riot occurred in Atlanta, though it primarily involved whites attacking blacks rather that vice versa, caused by inflammatory newspaper accounts of black “brutes” attacking white women. Long before the riot, cocaine, the 1885 wonder drug, had become the 1900 scourge of humanity, and in the South it allegedly caused crazed Negroes to attack their bosses and rape white women. There may have been vestiges of truth behind the sensational headlines, since many farmers were giving cocaine to their black sharecroppers in lieu of food, and cocaine in the city, where 50 cents bought a week’s supply, was a cheaper high than alcohol.

Exponential Inflation -- The Zimbabwe and French Experience

mammon — Tue, 19 Aug 2008 18:57:53 -0800

What makes this so interesting is that we can watch a country's fiat money go hyper-inflated in real time as chronicled in the news articles posted below. It's actually amazing how long an ecomony can plod along at inflation in excess of %1000. I started tracking articles on Zimbabwe's currency crisis starting in August 2006 when their old banknotes ceased to be legal tender. Zimbabwe recenlty just issued a 100 billion note that barely covers the cost of a loaf of bread and now inflation is the million percent. Obviously, this money is completely useless and an underground economy has emerged by now using other forms of money, perhaps other currencies, or commodities, or combinations thereof. That would be an interesting article. No doubt war will ensue.

This is not the first time a country has experienced hyper-inflation. Below, White describes the French Revolution experience, and then there's the more recent experience of hyper-inflation in 1930s Germany. Currency destruction is Warfare 101. Whether through incompetence or deliberate interference, the outcome is the same - severe societal disruption.

Zimbabwe inflation rockets higher

http://news.bbc.co.uk/2/hi/business/7569894.stm

19 August 2008

The rate of inflation in Zimbabwe jumped to just over 11,250,000% in June, official figures show. Zimbabwe is in the midst of a dire economic crisis with unemployment at almost 80%, most manufacturing at a halt and basic foods in short supply.

The Shock Doctrine by Naomi Klein, 2007

Once countries opened themselves up to the global markets’ temperamental moods, any departure from Chicago School orthodoxy is instantly punished by traders in New York and London who bet against the offending country’s currency, causing a deeper crisis and the need for more loans, with more conditions attached.

Fiat Money Inflation in Franceby A.D. White, 1914

A.D White LL.D. [Yale, St. Andrews and John Hopkins], Ph.D. [Jena], D.C.L. [Oxford], Late President and Professor of History at CornellUniversity

From the early reluctant and careful issues of paper we saw, as an immediate result, improvement and activity in business. Then arose the clamor for more paper money. At first, new issues were made with great difficulty; but, the dyke once broken, the current of irredeemable currency poured through was soon swollen beyond control. It was urged on by speculators for a rise in values by demagogues who persuaded the mob that a notion, by its simple fiat, could stamp real value to any amount upon valueless objects. As a natural consequence a great debtor class grew rapidly, and this class gave its influence to depreciate more and more the currency in which its debts were to be paid.

Manufactures at first received a great impulse, but this overproduction and over stimulus proved as fatal to them as to commerce. From time to time there was revival of hope caused by an apparent revival of business; but this revival of business was at last seen to be caused more and more by the desire of far-seeing and cunning men of affairs to exchange paper money for objects of permanent value. As to the people at large, the classes living on fixed incomes and small salaries felt the pressure first, as soon as the purchasing power of their fixed incomes was reduced. Soon the great class living on wages felt it even more sadly.

Prices of the necessities of life increased: merchants were obliged to increase them, not only to cover depreciation of their merchandise, but also to cover their risk of loss from fluctuation; and while the prices of products thus rose, wages, which had at first gone up, under the general stimulus, lagged behind. The demand for labor was diminished; laboring men were thrown out of employment, and, under the operation of the simplest law of supply and demand, the price of labor went down until, at a time when prices of food, clothing and various articles of consumption were enormous, wages were nearly as low at the time preceding the first issue of irredeemable currency.

The mercantile classes at first thought themselves exempt from the general misfortune. They were delighted at the apparent advance in the value of the goods upon their shelves. But they soon found that, as they increased prices to cover the inflation of currency and the risk from fluctuation and uncertainty, purchases became less in amount and payments, less sure; a feeling of insecurity spread throughout the country; enterprise was deadened and stagnation followed.

Out of the inflation of prices grew a speculating class; and, in the complete uncertainty as to the future, all business became a game of chance, and all businessmen, gamblers. In city centers came a quick growth of stockjobbers and speculators; and these set a debasing fashion in business which spread to the remotest parts of the country. Instead of satisfaction with legitimate profits, came a passion for inordinate gains. Then, too, as values became more and more uncertain, there was no longer any motive for care or economy, but every motive for immediate expenditure and present enjoyment. So came upon the nation the obliteration of thrift. In this mania for yielding to present enjoyment rather than providing for future comfort were the seeds of new growths of wretchedness: luxury, senseless and extravagant, set in: this, too, spread as a fashion. To feed it, there came cheatery in the nation at large and corruption among officials and persons holding trusts. While men set such fashions in private and official business, women set fashions of extravagance in dress and living that added to the incentives to corruption. Faith in moral considerations, or even in good impulses, yielded to general distrust. National honor was thought a fiction cherished only by hypocrites. Patriotism was eaten out by cynicism.

When Bonaparte took the consulship the condition of fiscal affairs was appalling. The government was bankrupt; an immense debt was unpaid. The further collection of taxes seemed impossible; the assessments were in hopeless confusion. War was going on in the East, on the Rhine, and in Italy, and civil war, in LaVendee. All the armies had long been unpaid, and the largest loan that could for the moment be effected was for a sum hardly meeting the expenses of the government for a single day.

When the first great European coalition was formed against the Empire, Napoleon was hard pressed financially, and it was proposed to resort to paper money; but he wrote to his minister, “While I live I will never resort to irredeemable paper.” He never did, and France, under this determination, commanded all the gold she needed.

There is a lesson in all this that behooves every thinking man to ponder.

Articles

Zimbabwe introduces Z$100bn note

http://news.bbc.co.uk/2/hi/africa/7515823.stm

19 July 2008

Zimbabwe is to introduce a bank-note worth Z$100bn in response to rampant inflation - but the note will barely cover the cost of a loaf of bread.

Zimbabwe inflation at 2,200,000%

http://news.bbc.co.uk/2/hi/business/7509715.stm

16 July 2008

Zimbabwe's annual rate of inflation has surged to 2,200,000%, official figures have shown. The figure is the first official assessment of prices in the troubled African nation since February, when the rate of inflation stood at 165,000%. Rising costs are forcing retailers to increase prices a number of times a day for goods purchased with billion dollar bank notes and the number of people falling into poverty is on the rise. Mr Mugabe denies that he is ruining the economy, laying the blame on international sanctions he says have been imposed against Zimbabwe. The US and the EU have imposed targeted sanctions, such as a travel ban and an assets freeze, on Mr. Mugabe and his close allies.

Mugabe threat to expel US envoy

http://news.bbc.co.uk/2/hi/africa/7419389.stm

25 May 2008

Zimbabwean President Robert Mugabe has threatened to expel the US ambassador, accusing him of meddling in the country's political process.Earlier this month ambassador James McGee warned post-election violence in Zimbabwe was "spinning out of control".

"As long as he carries on doing that, I will kick him out of the country," Mugabe said of Mr McGee, a Vietnam War veteran. "I don't care if he fought in Vietnam. This is Zimbabwe, not an extension of America," he said.

Zimbabwe bank issues $500m note

http://news.bbc.co.uk/2/hi/africa/7402943.stm

15 May 2008

The central bank has issued a 500m Zimbabwe dollar banknote, worth US$2, to try to ease cash shortages amid the world's highest rate of inflation. The previous highest denomination note was for Z$250m, issued 10 days ago. Zimbabwe's annual inflation rate is 165,000% and one economist said prices now double every week. At independence in 1980, one Zimbabwe dollar was worth more than US$1.

"Prices are now doubling every week instead of every month and it is hard to see how we can survive to the end of June or how an election will be feasible at all if things continue to deteriorate at this pace," said Harare economist John Robertson.

Zimbabwe inflation hits 165,000%

http://news.bbc.co.uk/2/hi/business/7351086.stm

16 April 2008

Zimbabwe's soaring inflation hit an annual rate of almost 165,000% in February, official figures show. Continuing shortages of food and fuel helped to push up inflation from January's rate of 100,000%.The central bank has introduced new banknotes to cope with the spiraling prices.

Last month it issued a 10 million Zimbabwe dollar note. The leadership of Zimbabwe is in doubt following elections last month.

Zimbabwe bank to issue $10m bill

http://news.bbc.co.uk/2/hi/africa/7195569.stm

18 January 2008

Zimbabwe's central bank is to introduce new higher-denomination banknotes in an effort to ease the critical shortage of cash in the country. Zimbabwe has been in economic decline for the past eight years, with annual inflation widely thought to be in excess of 50,000%. The highest value note that will go into circulation on Friday is worth 10m Zimbabwean dollars.

PM to boycott talks over Mugabe

http://news.bbc.co.uk/2/hi/uk_news/politics/7115205.stm

27 November 2007

Prime Minister Gordon Brown has said he will not attend an EU-Africa summit after Zimbabwe's leader Robert Mugabe confirmed he would be there. “Given the circumstances of the last 10 years and our attempts to give assistance in Zimbabwe, which have been thwarted and resisted, it is not possible for us to attend this summit and sit down with President Mugabe." The collapse of the Zimbabwean economy and society therefore was something for which President Mugabe and his policies have got to take full responsibility, he added.

New moves to ease Zimbabwe crisis

http://news.bbc.co.uk/2/hi/business/7023714.stm

2 October 2007

Zimbabwe's central bank governor has unveiled a series of measures aimed at easing the country's economic crisis. A new currency will be introduced - striking more zeros off bank notes - in an attempt to curb the black market in currency, Gideon Gono said.

Mr Gono has also urged parliamentarians to consult widely before going ahead with the controversial bill that allows black Zimbabweans to take a majority shareholding in foreign owned companies. President Robert Mugabe's government has proposed the new law in a bid to give Zimbabweans more control over the economy, despite fears it could further drive investors from the country.

Zimbabwe Inflation Hits New High

http://news.bbc.co.uk/2/hi/business/6959164.stm

22 August 2007

Zimbabwe's annual rate of inflation jumped to 7,638% in July according to the first official figures to be published for three months. Last month, the International Monetary Fund warned annual inflation could reach 100,000% by the end of the year. The Consumer Council of Zimbabwe has said the real year-on-year inflation is far higher than the official rate - claiming it was nearer 13,000% in June.

Zimbabwe's economic crisis has led to an estimated three million people fleeing the country for South Africa. Unemployment stands at about 80% and there are mass shortages of fuel and foodstuffs.

Plans Needed for Zimbabwe Exodus

http://news.bbc.co.uk/2/hi/africa/6956383.stm

21 August 2007

The head of the UN refugee agency has told the BBC that contingency plans are needed in case the exodus of refugees from Zimbabwe increases. More and more people are fleeing the worsening economic and political situation in Zimbabwe. Zimbabweans are struggling to find even the most basic goods on shop shelves, as an economic crisis pushes inflation above 4,500% and unemployment is estimated at more than 80%. Refugees come into neighboring countries "because they need to survive to a certain extent, to find food security, to try to find some kind of economic activity that they cannot find in their own country."

Zimbabwe Sugar Stampede Kills Two

http://news.bbc.co.uk/2/hi/africa/6950619.stm

16 August 2007

Two people have been crushed to death in Zimbabwe when desperate shoppers scrambled to buy sugar. Pressure from the crowd, in Zimbabwe's second city Bulawayo, caused a pillar to fall on top of a security guard and a 15-year-old boy, killing them both. Zimbabweans are struggling to find even the most basic goods, as an economic crisis pushes inflation above 4,500%.

Zimbabwe launches $200,000 note

http://news.bbc.co.uk/2/hi/business/6924062.stm

31 July 2007

Zimbabwe is to start circulating a new 200,000 Zimbabwe dollar note, in a bid to tackle the country's inflation, the highest in the world.The new note, issued by the Reserve Bank of Zimbabwe from Wednesday, can buy 1kg (2.2lb) of sugar. The official annual rate of inflation in Zimbabwe is nearing 5,000%. The new note is worth US$13 at the official exchange rate or $1 on the black market.

Mugabe Vows to Save Sick Economy

http://news.bbc.co.uk/2/hi/africa/6913148.stm

24 July 2007

President Robert Mugabe has said at the opening of parliament that strict price controls will continue as Zimbabwe tries to turn around an ailing economy. The country, once the bread-basket of the region, is suffering crippling food shortages and rampant inflation. Economic refugees are arriving in neighboring states like South Africa at a rate of around 3,000 a day.

Zimbabwe Crisis 'Threatens Lives'

http://news.bbc.co.uk/2/hi/africa/6288038.stm

10 July 2007

Roman Catholic Archbishop of Bulawayo Pius Ncube says the political and economic situation in Zimbabwe has reached "life-threatening proportions". He says there is almost no fuel in the country, and every day, people are reduced to hunting for a loaf of bread. The archbishop said it had reached a point where regional political intervention was now needed.

Mr Mugabe blames the worsening economic crisis on a Western plot to remove him from power.

Mass Zimbabwe Arrests Over Prices

http://news.bbc.co.uk/2/hi/africa/6283990.stm

9 July 2007

A total of 1,328 Zimbabwean businessmen and women have been arrested and fined for breaking official price controls in the past two weeks, police say. The government ordered that the prices of many goods be cut in half, in order to tackle the world's highest rate of inflation - more than 3,700%. But businesses say the new prices are below cost, so some firms have closed.

Zimbabwe to Cut Prices by Half

http://news.bbc.co.uk/2/hi/business/6240636.stm

26 June 2007

Zimbabwe has ordered factories and firms to cut the price of basic goods and services by up to half, in a bid to tackle rampant inflation. The price of basic commodities such as oil and bread must be reduced with "immediate effect" said the government. Economists warn that the measures are likely to lead to shortages, as companies either stop producing because they cannot afford to, or sell their goods on the black market.

"Government is aware that these price increases are a political ploy engineered by our detractors to effect an illegal regime change against the ruling party and the government following the failure of illegal economic sanctions."

The US and European Union have imposed a travel ban and an assets freeze on President Robert Mugabe and scores of other top officials.

Zimbabwe 'collapse in six months'

http://news.bbc.co.uk/2/hi/africa/6751671.stm

14 June 2007

Zimbabwe will collapse within six months, possibly leading to a state of emergency, says a leaked briefing report for aid workers in the country. Rampant inflation will mean shops and services can no longer function and people would resort to barter, it said. Zimbabwe's inflation is already 3,714% - the highest rate in the world.

It said power and water suppliers were already near collapse. Electricity was last month rationed to just four hours a day to save power for farmers. Just one adult in five is believed to have a regular job. Mr Mugabe denies responsibility for Zimbabwe's economic problems, blaming a western plot to bring down his government because of his policy of seizing white-owned land.

Huge Rise in Zimbabwe Inflation

http://news.bbc.co.uk/2/hi/business/6665749.stm

17 May 2007

Zimbabwe's rate of inflation surged to 3,731.9%, driven by higher energy and food costs, and amplified by a drop in its currency, official figures show. Zimbabwe will be forced to import maize, a basic food staple, to make up for a lack of home-grown produce. The government has also recently warned of shortages of bread and flour, which may cause even more hardship.

Critics have blamed President Robert Mugabe's policies, particularly the seizure of white-owned farms, for damaging the once self-sufficient country - in the past described as the bread basket of Africa. President Mugabe, meanwhile, has accused foreign governments of trying to sabotage Zimbabwe's economy and topple him.

Electricity Rationed in Zimbabwe

http://news.bbc.co.uk/2/hi/business/6638993.stm

May 9, 2007

Households in Zimbabwe are to be limited to four hours power supply a day in the latest setback to hit the country's struggling economy. Rampant inflation has led to widespread shortages of fuel and food. The monthly rate of inflation rose to 2,200% in March, the highest in the world.

Zimbabwe Inflation Reaches 2,200%

http://news.bbc.co.uk/2/hi/business/6597993.stm

May 7, 2007

Inflation in Zimbabwe reached a record 2,200% in March amid a deepening economic and political crisis. This is the highest rate in the world. The figures had been due for release earlier this month but were delayed. Zimbabweans spend any money they have as soon as they can, before prices rise even higher.

Exporters claim their businesses have been devastated by this skewed exchange rate. Mr Gono earlier that month said Zimbabwe was suffering from "economic HIV". President Robert Mugabe's critics accuse him of destroying what was one of Africa's most developed economies. He blames the economic problems on western countries trying to topple him.

Bread, Net Disasters Hit Zimbabwe

http://news.bbc.co.uk/2/hi/africa/5359504.stm

Sep 19, 2006

Shops in the Zimbabwe capital Harare are running short of bread after three top food-makers were arrested for over-charging for their products. Prices of bread and other staple foods are controlled by the government and bakers say the official price does not even meet production costs. The bakers said last week that their costs had risen by up to 289% in the month of June alone.

In another sign of Zimbabwe's economic meltdown, its main internet connection has been shut because of unpaid debts. Zimbabwe's Internet Service Providers Association (Zispa) said that e-mail traffic and web use was down by 90% after the main satellite internet connection run by the state-owned TelOne was closed over a debt of $700,000.

TelOne says it is waiting for the foreign currency to pay the bill from Zimbabwe's central bank. "This is catastrophic as all legal Internet Service Providers utilize TelOne for their outgoing bandwidth to the World Wide Web as well as for e-mail traffic. In short, this... is causing an almost collapse of the Internet in Zimbabwe," said Mweb, the country's biggest provider.

Zimbabwe's annual inflation is running at 1,200% - the highest rate in the world. Earlier this year, Zimbabwe knocked three zeros off the denomination of its banknotes in an effort to contain inflation. The opposition says President Robert Mugabe has destroyed one of Africa's most developed economies through his policies. He blames the problems on a western plot to remove him from power.

Rush to Spend Old Zimbabwe Money

http://news.bbc.co.uk/2/hi/africa/5271154.stm

Aug 21, 2006

People in Zimbabwe have been rushing to shops to spend their old banknotes before they cease to be legal tender at midnight on Monday. Three weeks ago Zimbabwe adjusted its currency, removing three zeros from the values after years of high inflation. The central bank has indicated that it may allow extensions to the deadline in exceptional circumstances. But the authorities insisted that the roll-out of the new currency, meant to tackle hyper-inflation, would go ahead.

There are also reports that buses and some shops were already refusing to accept the old notes on Monday, and that long queues were forming at banks as people tried to change their old money.

The new currency is intended to end the necessity of carrying bags of cash for even small purchases, and eliminate the multiple zeros that Zimbabweans have become used to seeing on price tags. A loaf of bread, for example, will now cost 220 Zimbabwe dollars, as opposed to 220,000 old Zimbabwe dollars.

Critics say the measure does not tackle the underlying causes of Zimbabwe's inflation. They accuse President Robert Mugabe of ignoring economic principles and trying to bribe voters by seizing productive white-owned farms to give to poor black families. He maintains that Zimbabwe's economic woes are the result of a western plot intended to bring down his government.

Medicinal Cocaine Controversy

mammon — Tue, 19 Aug 2008 08:00:00 -0800

Coca-Cola Series

For God, Country, and Coca-Cola by Mark Pendergrast, 1999, Excerpts

Asa Candler consolidated his claim to Coca-Cola two weeks after Pemberton’s death, on August 30, 1888. He bought the remaining interest through a tangled chain of titles. Throughout 1889, without much advertising, Candler saw sales of Coca-Cola mushroom. The combination of cocaine and caffeine induced repeated calls for Coca-Cola and the first indication of habitual users, soon labeled “Coca-Cola fiends.”

Candler’s Coca-Cola had phenomenal growth. From almost 20,000 gallons in 1891, sales shot up to 35,360 gallons in 1892, then [during a nationwide depression] to 48,427 in 1893, 64,333 in 1894, and 76,244 in 1895. By 1900, Coca-Cola was already not simply a soft drink, but a phenomenon. With success, however, came increased notoriety and controversy. The drink’s cocaine content had been a source of trouble from the beginning, but it was also a major selling point.

The early ads were almost universally medicinal. Curiously, this was a turn away from Pemberton’s first ad for Coca-Cola, which called it “Delicious and Refreshing.” While the firm letterhead did proclaim that Coca-Cola was “Delicious, Refreshing, Exhilarating, Invigorating,” Candler’s early ads failed to use those adjectives. Instead, Coca-Cola was “Harmless, Wonderful, Efficient, Quick, Relieves Headache, Gives Prompt Rest.” It was the “Ideal Brain Tonic and Sovereign Remedy for Headache and Nervousness. It makes the sad glad and weak strong.” Candler believed in the drink’s beneficial effects, even if he denied they were due to cocaine.

[This was a common t-shirt logo during the late 1970s and early 1980s]

Pemberton Creates Coca-Cola

mammon — Mon, 18 Aug 2008 09:00:00 -0800

Coca-Cola Series

For God, Country, and Coca-Cola by Mark Pendergrast, 1999, Excerpts

Pemberton may have first resorted to morphine to ease the pain of his own Civil War wounds, continuing its use throughout his periodic illnesses. Pemberton was an addict. “Morphinism,” as it was called then, was increasingly prevalent, particularly among physicians and pharmacists. Pemberton had a personal interest in coca as a cure for morphine addiction. In the late 1970s, Pemberton first read about this miraculous new substance.

Pemberton told a reporter in 1885 that “I am convinced from actual experiments that coca is the very best substitute for opium, with a person addicted to the opium habit that has ever discovered. It supplies the place of that drug, and the patient who will use it as a means of cure, may deliver himself from the pernicious habit without inconvenience or pain.”

Pemberton granted that cocaine, if misused, could be dangerous, but he same could be said for any effective medicine. “I wish it were in my power to substitute the Coca and compel all who are addicted to the use of opium, morphine, alcohol, tobacco, or other narcotic stimulants to live on the coca plant or any of its true preparations,” he said. “It is perfectly wonderful what coca does.”

Pemberton’s label for his new syrup: “Coca-Cola Syrup and Extract for Soda Water and other Carbonated Beverages. This Intellectual Beverage and Temperance Drink contains the valuable Tonic and Nerve Stimulant properties of the Coca plant and Cola nuts, and makes not only a delicious, exhilarating, refreshing and invigorating Beverage [dispenses from the soda water fountain or in other carbonated beverages], but a valuable Brain Tonic and a cure for all nervous affections – Sick, Head-Ache, Neuralgia, Hysteria, Melancholy, etc. The peculiar flavor of Coca-Cola delights every palate.”

The Army Disease

mammon — Sun, 17 Aug 2008 09:00:00 -0800

Coca-Cola Series

For God, Country, and Coca-Cola by Mark Pendergrast, 1999, Excerpts

Chewed by native Peruvians and Bolivians for over 2,000 years, coca leaves acted as a stimulant, an aid to digestion, an aphrodisiac, and a life-extender, giving the mountain-dwelling Andeans remarkable endurance during long treks with little food. The Incas had called it their “Divine Plant,” and it was central to every aspect of the political, religious, and commercial life.

Cocaine had first been isolated in 1855 by the German Gaedeke, but it was Americans who pursued active experimentation. By the early 1880s, doctors and pharmacists were reporting on the use of coca and its principal alkaloid, cocaine, as a possible cure for opium and morphine addictions. The importation of opium to the U.S. had increased dramatically, from almost 146,000 pounds in 1867 to over 500,000 pounds in 1880. Addiction was so common among veterans of the Civil War that it was called the “Army disease.”

By the mid-1880s, one drug journal accurately described a “veritable cocamania” as a result of the “crusade against the enormously increased use of alcohol and morphine.” It was impossible to open a drug journal without finding numerous articles about new uses for the leaf and its principal alkaloid. In response, manufacturers produced coca tablets, ointments, sprays, hypodermic injections, wines, liqueurs, soft drinks, powders, and even coca-leaf cigarettes and chewing tobacco, was extensively advertised in 1885. Advertisements purporting to offer cures for the habit appeared frequently in Atlanta papers.