Matthew Berg — Was “Cigarette-Money” in World War II POW Camps a Case of Commodity Money Origination?

Perhaps the most convincing single example cited by proponents of the view that money is a commodity is the well-known use of cigarettes as “money” by Allied prisoners of war in Germany during World War II. Just six months after being liberated by the U.S. Army, former POW R.A. Radford published his famous article in the journal Economica, “The Economic Organization of a P.O.W. Camp,” describing how he and his compatriots had used cigarettes as a medium of exchange during their unpleasant stay at their not-so-idyllic Bavarian Stalag.

But as we will see below, there are some significant problems with the notion that cigarettes were really a form of commodity money which developed spontaneously in the way commodity money theorists suggest. In fairness to Radford himself, he recognized that “prison camp is not to be compared with the seething crowd of higglers in a street market, any more than it is to be compared with the economic inertia of a family dinner table.” But, as is often the case in economics, subsequent interpreters tend to underemphasize such subtle points as this. For example, in the view of prominent Austrian economist Robert P. Murphy, “there is nothing in Radford’s account that conflicts with the standard economists’ story about the origin of money.”

New Economic Perspectives
Was “Cigarette-Money” in World War II POW Camps a Case of Commodity Money Origination?
Matthew Berg