Native Indians did not use currency but they did collect oblong shells which they polished and sawed into beads. These beads were then strung on leather strings to form necklaces, belts and lengths of shells called wampum, which were frequently given as gifts. Dutch traders had encountered wampum and adopted it as a money substitute. In 1627 one of these merchants, Isaac De Razier of the New Netherlands colony (New York), introduced wampum into Plymouth Plantation. He brought £50 in wampum beads to Plymouth in order to purchase corn. Quickly wampum became the preferred coin substitute, as it was more portable and less susceptible to spoilage than commodity money. On November 15, 1637 the Massachusetts General Court promulgated that wampum beads would pass at 6 to a penny and were to be legal as payment in sums under 12 pence. In the same year Connecticut began accepting wampum as payment for taxes at the rate of four beads to the penny. No doubt in an attempt to standardize the value of wampum, three years later, on October 7, 1640 the General Court decided white wampum beads would pass at 4 to the penny and blue beads would pass at 2 to the penny for sums of 12 pence and below. Apparently the Connecticut legislature also fluctuated briefly revaluing white beads at six to the penny and reverting to their previous value of four to the penny. Apparently the two colonies were not able to coordinate their rates, for on June 1, 1641, eight months after lowering their rate, the Massachusetts General Court legislated wampum beads were to once again pass at 6 to the penny! Several other regulations followed as the need for and use of wampum spread. It should be noted, when these early promulgations did not specifically mention the color of the beads, Don Taxay has suggested the laws refer to white beads, with darker blue beads had twice the value.
On October 27, 1648, the same day the Charlestown ferrymen were granted their petition (see the commodity money introduction), the General Court voted to officially accept wampum, not just as single beads (called seawant) but, in strands of set denominations (called peag). This was a trial period to last until the convening of the next court. In all there were eight different denominations. Each denomination was to be made of a string of unbroken and unblemished beads (defined as "without breaches...without deforming spots"). White beads would circulate in standard strands of 1d, 3d, 12d and 5s, while black beads (sometimes called blue or violet) would circulate in strands of 2d, 6d, 2 1/2s (that is, half a crown) and 10s. The rate of exchange for the beads was not given, but using the October 18, 1650 rate of 8 white beads or 4 black beads to the penny, the strands would be as follows:
White 1d = 8 beads
White 3d = 24 beads
White 12d = 96 beads
White 5s (60d) = 480 beads
Black 2d = 8 beads
Black 6d = 24 beads
Black 2 1/2s (30d) = 120 beads
Black 10s (120d) = 480 beads
Clearly during this trial period wampum was to be a regular means of payment for all commerce and not just for small exchanges below a shilling (i.e. 12d). It appears this experiment was successful for on October 18, 1650 when the rates of 8 white beads or 4 black beads to the penny were set, it was also stated that wampum would be legal tender for expenses up to 40s but was not acceptable for taxes.
As coins became more plentiful the acceptance of wampum waned. On May 22, 1661, nine years after the Boston mint opened, the 1650 wampum law was repealed due to "much inconvenience" to those individuals who were required to accept up to 40s in wampum as satisfaction for payment and debts.
Wampum was used by colonists in New England, New York, New Jersey, Pennsylvania and Virginia. In West New Jersey wampum was the major means of payment until 1682 when Mark Newby introduced his Saint Patrick coppers.
Although more convenient than commodity money several problems developed with the use of wampum. As wampum had no intrinsic value, anyone could collect some shells and literally produce their own currency. With no central minting operation the quality of these products was often substandard. Shopkeepers needed to keep a vigilant eye for inferior wampum and legislation was needed so they would not be required to accept poor quality beads. Further, the amount of wampum produced was unregulated, which eventually caused an oversupply.
These difficulties were most notable in New York where the use of wampum lasted longer than in other areas, as fewer alternatives were available. In the New Netherlands colony wampum was legislated at four beads to the stiver, which was the Dutch equivalent of the English penny. However, so many poor quality unstrung beads were put into circulation that in April of 1641 a law was passed prohibiting the use of unpolished beads during the month of May. During that month these poorer beads would be accepted in payment of taxes but only if they were strung and then at the discounted rate of six beads to the stiver. Apparently this action did not remedy the problem for in May of 1650 an ordinance was passed prohibiting the use of loose wampum; this law also further discounted poorly made wampum that circulated on string, so that they traded at the rate of eight beads to the stiver. As more and more wampum flooded the market the value of all beads declined. In 1662 New Netherland revalued white beads to twenty four to the stiver! Although wampum was clearly less desirable as a means of payment, it continued to be used on a limited basis to the end of the century. Kleeberg mentions the items handed over as payment to assist with the repairs of New York's Fort James on July 14, 1672 included wampum and seawant as well as beaver skins, commodities and even services, such as a day of work as a laborer. It is interesting to note that seawant, that is loose beads, which had been prohibited from daily commerce in 1650, were still used for tax payments. As late as 1693 commuters on the New York and Brooklyn ferry could pay with either two pence in silver or eight stivers in wampum. According to Mossman the last recorded exchange of wampum as money was in New York in 1701.
See Crosby for documents and Mossman for excellent recent coverage. On Seawant and Peag see the definitions in the Oxford English Dictionary. Also see J. Earl Massey, "Early Money Substitutes," in Studies on Money in Early America , ed. by Eric Newman and Richard Doty, New York: American Numismatic Society, 1976, pp. 15-24; Don Taxay, Money of the American Indians and Other Primitive Currencies of the Americas,New York; Nummus Press, 1970, especially pp. 107-148, with the colonial information on pp. 133-136; and on New York, John. M. Kleeberg, "The New York in America Token" in Money of Pre-Federal America, edited by John M. Kleeberg, Coinage of the Americas Conference, held at the American Numismatic Society May 4, 1991, Proceedings no. 7, New York: American Numismatic Society, 1992, pp. 15-57 on p. 35.
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