Source Book in Economics: Selected and Edited for the Use of College Classes

An excerpt from the beginning of: ORIGIN OF EXCHANGE - SPENCER'S THEORY [in his Principles of Sociology, Herbert Spencer suggests that barter, and exchange for money, may have grown out of the exchange of presents; and he gives some evidence in support of this view. In discussing ceremonial institutions he shows that the custom of giving presents developed into the various forms of tribute, taxation, sacrifice, and ecclesiastical offerings. He then says (Vol. II, pp. 99-100; reproduced by permission of the publishers, D. Appleton and Co., New York; three volumes, 1895 and 1896): ] Something must be added concerning presents passing between those who do not stand in acknowledged relations of superior and inferior. Consideration of these carries us back to the primitive form of present-making, as it occurs between members of alien societies; and on looking at some of the facts, there is suggested a question of much interest: Whether from the propitiatory gift made under these circumstances there does not originate another important kind of social action? Barter is not, as we are apt to suppose, universally understood. Cook, speaking of his failure to make any exchange of articles with the Australians, says, "They had, indeed, no idea of traffic." And other statements suggest that when exchange begins, the thought of equivalence between the things given and received scarcely arises. Of the Ostyaks, who supplied them "with plenty of fish and wildfowl," Bell remarks, "Give them only a little tobacco and a dram of brandy, and they ask no more, not knowing the use of money." Remembering that at first no means of measuring values exists, and that the conception of equality of value has to grow by use, it seems not impossible that mutual propitiation by gifts was the act from which barter arose: the expectation that the present received would be of like worth with that given being gradually established, and the exchanged articles simultaneously losing the character of presents. One may, indeed, see the connection between the two in the familiar cases of gifts made by European travelers to native chiefs; as where Mungo Park writes: "Presented Mansa Kussan [the chief man of Julifunda] with some amber, coral, and scarlet, with which he appeared to be perfectly satisfied, and sent a bullock in return." Such transactions show us both the original meaning of the initial present as propitiatory, and the idea that the responsive present should have an approximately-like value: implying informal barter. Nay more. Certain usages of the North American Indians suggest that even a circulating medium may originate from propitiatory presents. Catlin writes: "Wampum has been invariably manufactured, and highly valued as a circulating medium (instead of coins, of which the Indians have no knowledge); so many strings, or so many hands' breadth, being the fixed value of a horse, a gun, a robe, etc. In treaties the wampum belt has been passed as the pledge of friendship, and from time immemorial sent to hostile tribes, as the messenger of peace; or paid by so many fathoms' length, as tribute to conquering enemies..."..