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This chapter examines the scale, composition, and geographic distribution of cloth imports in the interior of central East Africa during the second half of the nineteenth century, when imported commodities—particularly cloth—were taken from Zanzibar into the adjacent mainland interior through what is today Tanzania to exchange for ivory. The price of imported cloth rose dramatically as imports moved inland, while the price of ivory was comparatively low in the interior but increased substantially as tusks neared the coast and Zanzibar, where they were sold at high rates to global buyers. As a result, even as central East Africa’s ivory exports boomed, and cloth imports into Zanzibar rose, the supply of imported cloth remained comparatively modest in much of the deep interior, where it was used as a valuable commodity currency through the century. This chapter argues that the effects of nineteenth-century cloth imports on interior textile industries were far more limited than many scholars have assumed.

This chapter transfers the modern approach to seigniorage to a commodity currency. Seigniorage is earned as a fee for minting or by devaluation of coins. As a result and in contrast to a fiat currency an optimal seigniorage can be achieved by multiple combinations of these instruments. Hence without specifying further goals, like a constant unit metal content, there is no result comparable to that of a fiat currency. Another striking difference is different degree in of freedom of monetary policy that a government faces. The commodity basis limits the government in its monetary policy but renders hyperinflations highly unlikely.

This chapter deals with the history of economic thought regarding the revenue from the supply of currency, its justification, or, in more modern welfare-theoretical terms, its optimal level. It is confined mostly to continental European writers of the last three centuries. It is shown that different forms of organization of the currency supply constitute different instruments to generate seigniorage. Three regimes are distinguished: In a commodity currency, mints charge a tax on deliveries of the currency-commodity, e.g., gold. In a fiat currency, seigniorage is collected by issuing currency to finance government spending. In a credit currency, seigniorage is realized as interest payments to the government or its authorities. Regarding optimal seigniorage two approaches are distinguished. One determines seigniorage as optimal if it covers the cost (of production and maintenance) of the currency, the second builts upon the former but adds a broader utility based framework.