The long and the short of Yukon money

'All money is a matter of belief," said Adam Smith. I was reminded of this after seeing the MacBride Museum's fascinating new exhibit on Yukon money called Change.

‘All money is a matter of belief,” said Adam Smith. I was reminded of this after seeing the MacBride Museum’s fascinating new exhibit on Yukon money called Change.

The centrepiece of the exhibit is a 340-year-old Chinese coin, discovered last year west of Fort Selkirk during archeological research related to the Casino mine project. James Mooney, one of the archeological team’s leaders, described the coin’s remarkable story in a recent talk at the museum.

The coin was minted around 1670 during the reign of the Qing Dynasty’s Kangxi Emperor. We don’t know how it got to the Yukon or how many hands it passed through along the way. There are lots of theories, but picture some chain, like Chinese traders buying sea otter pelts from the Russians, who had traded for them with Aboriginal peoples along the Pacific Coast. And then, at some point, somebody carried the coin over the coastal passes and dropped it at a favourite way point along a trading route that had likely been in use for hundreds or thousands of years.

This is where the definition of money comes in. The small copper and zinc coin looks like money to us, though with that square hole in the middle that is typical of the Chinese coin-making technology of the day. But did the person who lost it – a Russian merchant or a Chilkat trader – bring it along to trade? Or as armour, like the Chilkat vest in a Washington museum that has hundreds of coins sewn on in overlapping rows to protect the wearer? Or as an ornament, as we see on another ancient Chilkat mask with Chinese coins for eyes.

It seems to me that a use other than money was most likely. At the time, trading was probably more commonly done in classic trading commodities like beaver skins, beads or hooligan oil.

It sometimes surprises people to find out that pre-modern trading networks were so common, often covering remarkably long distances and carrying on for centuries. There are lots of examples. Baltic amber is found throughout the old Roman Empire, and Roman coins of all ages are found scattered great distances from the limits of the empire. In North America, archeologists often find arrowheads hundreds of miles from their likely quarries.

The MacBride exhibit has a fascinating map showing all the documented trade routes from Asia to the Alaska Panhandle, the Yukon interior and along the Arctic coast.

We read a lot about Robert Campbell and the founding of the Hudson’s Bay post at Fort Selkirk, but we should remember that Campbell did not introduce the concept of trade to the Yukon. Indeed, he was trying to break into some well-established trade networks that linked Yukon First Nations to the Chilkats on the coast and through them to Russian and Asian traders.

Our current money seems like an immutable fact of life, but we should remember that it is relatively recent. During the gold rush, you could pay for almost anything from eggs to dance-hall companionship with gold dust. Lots of stores had gold scales. At the time, there were lots of gold and silver coins too. Paper money was issued by dozens of banks in various formats and was exchangeable into gold on demand; “as good as gold,” as they used to say.

Merchants like Taylor and Drury (my ancestors, as it happens) issued trading tokens for use at their stores across the Yukon. Often these tokens became like money since they were so widely accepted. The MacBride show has a nice sample of these coins on display, as well as an early “credit card” put out by T&D.

In the 1930s, gold convertibility was ended and the government took control of note issue from the banks and clamped down on tokens. At that point our money became “fiat” money or money whose value is based entirely on faith. You won’t find any words like “Promise to pay the bearer in gold.” It says “legal tender” but all that means is that other people have to accept it if you offer it to pay a debt, unlike a cheque or beaver pelt.

In fact, most of our money is even less “real” than dollar bills. There is $57 billion of paper money in circulation but the other 95 per cent of the money supply exists only in bank computers. The amazing thing about this kind of money is that banks can create it out of nothing. If you borrow $100 from Bank A and deposit it in Bank B, then Bank B thinks it has more money and will lend $90 of it to someone else, who will then repeat the process. This is a mind-bending concept that usually consumes several weeks of discussion in monetary economics class.

Money is undergoing new changes now, with gift cards, frequent-flyer points and virtual currencies like Bitcoin floating around the economy.

Confidence in modern currency is also on the wane in various crisis-stricken countries. Greeks wonder if they will wake up in the morning and find out that the euros in their bank accounts have turned back into drachmas overnight. Others wonder if all the cheap money being pumped out by central banks will cause inflation in a few years, eroding our savings.

All of which probably explains why the Yukon’s old friend, gold, is trading at more than $1,700 per ounce.

Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels.