Last week we thought a little about counterfeit money.  The counterfeit American Express Travelers check paid to an innkeeper at Mahagi was able to buy goods and services.  The American cyclist traveling the length of Africa no doubt had other currencies in his backpack, possibly including some authentic US hundred bills.  Getting something for nothing was the cheapest at Mahagi.  We began to wonder if the Zaire, issued by the government, was also counterfeit.

Money is thought to be an indicator of value but when the value of the money changes every day how can anyone tell what something will cost when he needs it? With the depreciating Zaire it was certain that the price in Zaires would increase. 

The dorm workmen had apparently put some thought into how they would deal with the rapidly devaluing money and the requirement that they provide school notebooks as needed. 

When we traveled to Bunia to buy dorm supplies, they asked us to buy, and keep in stock for them, some cases of the thin 32-page school Cahiers they had to send to school with their children.  If I could buy two large cases in Bunia and sell to them as needed for the next several months, it would cost the workers less than one fourth the Rethy price at the current exchange rate.  Their regular monthly pay increases would make them cheaper and cheaper as the money devalued.

I tried, but failed to help the workers that time.  I found the cahiers were sold in cases of 500 booklets, and I noted down the price per case.  The sacks remaining in the cab of the Isuzu truck held sufficient money from the Field treasurer to purchase two cases of the notebooks so I placed the order and had the shopkeeper establish the invoice.  He sent his men to get the cases of notebooks for me.  I took the invoice to the truck and returned with Zaires in bricks, bundles, and stacks to count out the total, as on the invoice.  When I placed the invoice with the carefully counted money on the counter he pushed it back to me.  Maybe he was hoping for dollars.  He absolutely refused to sell the Cahiers to me.  His paper was apparently worth more to him than the paper I had offered in exchange.

I was ready to buy a large percentage of his stock.  He would be forced to spend all that money for new merchandise before the Zaires lost value.  It is possible that he hadn’t yet purchased the cases of school notebooks, just knew where he could get them and that he anticipated making an immediate, significant, profit.  Of course if the price there had increased he might realize no profit at all.

Increasing the number of Zaires you had was very easy, but using that increase before it devalued was nearly impossible.  Placing money in the bank was known to be foolish by any merchant.  Oh yes they would take it, give you a receipt, increase your account balance, and keep it from being stolen, but saving accounts that devalue are meaningless.  Only you could withdraw the money, but the bank limited the amount that could be withdrawn on any given day and foreign currency could not be purchased.  Your money would devalue rapidly and there was nothing you could do about it.  Saving the profit wasn’t possible.  The merchant found the product he offered for sale to be a more useful currency than the devaluing Zaire.

I think the real reason the invoiced and paid sale was cancelled was that the merchant decided he would rather keep his paper and sell a few school cahiers each day, at an ever increasing price, and spend the income immediately at the market place.  There he would pay the higher prices to get roughly the same amount of food he would have gotten at the cheaper prices a few weeks earlier.

I didn’t argue further with the clerk.  His notebooks, sold a few at a time, at higher and higher prices, would bring in enough to purchase what he needed to buy at the market place.  If all he had was my bricks of Zaires their value would drop daily.

We employed about 20 workmen to accomplish all that needed to be done at the Rethy Academy and of course they needed to be paid.  Since the money was now devaluing so rapidly, with newly printed ever larger denomination bills being put into circulation, we increased their pay every month.  The funds to operate the boarding school were received from the children’s parents as US dollars in our Dorm account at Bunia so we bought the Zaires through the Field Treasurer only as needed. 

We modified the workers’ wages by calculating a conversion factor based on the prices of a list common purchases. Just before paying wages we sent out three trusted men to record the current prices from three local market places.  The average prices for each item were inserted into our formula to obtain the conversion factor for the month.  Some prices at the Soko might have doubled, others increased by only 20%, but we did the best we could to increase their pay as their cost of living increased.

The formula was fairly complicated, modeled after the one used by the contractors installing the Koda Hydroelectric plant.  The formula was used to calculate the installments to be paid in Zaires as the work progressed.  Theirs was based on quantities of construction materials times the ratio of the old price to the current price.  Ours was based on what a family of six would purchase at the Soko, each item multiplied by the price this month divided by the price last month. 

The workmen realized that a debt had to be repaid and that the older the debt, the easier it was to repay.  We allowed the workmen to have advances on their salaries up to half their anticipated wage for things like hospital bills or school fees.  Their last month’s salary times the conversion factor less the deduction to pay their accumulated debt could leave more than two thirds of last month’s salary even though they had already spent half.  To offer a fair wage in money that devalued daily meant the employer needed to continuously increase wages and those wages needed to be able buy what was needed to live.

It was amazing how long the nearly worthless Zaires continued to be used.  Salaries were paid.  Items were sold in the small shops.  Food was sold in the market place.  With the local people having no other money, the opportunity to make a vast profit was available to any who had access to foreign currencies.

The exchange rate between the US-dollar and the Zaire was more closely monitored than ever before.  The idea that salaries and prices should be calculated in dollars seemed reasonable but of course all payments needed to be made in Zaires.

No prices were posted in the shops.  If anyone wanted to buy something he asked the price, the shop-keeper took out his cheap calculator, multiplied by an exchange rate he got somewhere, showed the buyer the price, and then waited to see if the buyer agreed.  The basic rule of thumb was, if you have enough Zaires to buy the item, spend them immediately.  I’m not sure how the small shop-keepers knew the reference price for each item, but with the limited variety of items offered they probably just memorized the prices in US-dollars.

All our prices at the Editions CECA bookstore were marked in US-dollars.  One who claimed to be a government inspector arrived in my office one day to explain to me the serious offence I had committed, marking prices in a foreign currency.  I insisted that those were reference prices.  Our discussion lasted several hours, him insisting that I had a large fine to pay, and my refusal to admit fault as the director of Editions CECA.  He finally gave up when I shewed him a government print order for an official airport document for the Bunia airport.  The price they had me print on the form was $50.00.  I did give him a ream of paper.

Coffee exporters could buy hand sorted, sun dried coffee beans from the growers for next to nothing, using Zaires, of course.  After exporting and selling a twelve-ton truckload of coffee they could bring back a truckload of merchandise bought with less than a quarter of the US dollars or the Uganda Shillings earned.  The balance of the hard currency would purchase more Zaires than was used to purchase the coffee in the first place, so hard currency began to be seen in Kwandruma. 

There were stacks of $100 bills hoarded by truckers like Mbikpa and Mugasa or Pambu who exported coffee and other goods to Uganda through Mahagi.  Salt, Sunlight soap, school cahiers, Bic pens, Union matches, and other small items carried in the small shops came from Uganda so Uganda shillings were in demand as well, purchased somehow by those wanting to get rid of Zaires.

The 50-thousand and the 100-thousand Zaire notes were fairly common. The 500-thousand and the one million notes, recently printed in Germany, were crisp, colorful, beautiful things, utilizing all the most recent security features.  The older, most abundant notes, were worn, tattered, damp, and filthy.  They were often tied into bricks, simply remaining that way. Ever larger cash boxes were required. Banks did not take any old currency out of circulation.

Zaire again decided to take action to re-value their money.  Last time they had removed the highest denomination bills, the five and ten Zaire notes, from circulation by printing new notes of the opposite colors.  This time they decided to replace all the money with what was officially called the Nouveau Zaire.  One Nouveau Zaire was declared to have an exchange rate of one to two US Dollars, rather than, as now approximately three million to one.

The local people called the new currency the “Zaire Lourde”, apparently “heavy” because one of the new Zaires was to have a value of five million times the value of the original Zaire. In theory one could purchase the new currency with the old currency at the nearest bank.

The nearest bank was in Bunia 100 miles from where we lived and worked at Rethy. In our experience, under the best of conditions, in dry season, the trip over the dirt roads could be accomplished in about five hours. In rainy season, when the red clay dust was converted into a slimy surface on the hills and the dried mud holes transformed from deep dips in the road to truck stopping sloughs, eight hours of effort could end with one far from the bank. Creating a one track trail off the road around the disabled, overloaded, truck in the mud hole might succeed. One might get to the bank by road, but not if you lived in Zande-land.  If anyone had saved a significant amount of money, he had to get it a bank by whatever means available.

MAF, did offer weekly flights in small five passenger Cessna planes, but they weighed both the passenger and his baggage.  A brick of money was 25 bundles of 25 Zaire notes of the same denomination. A pile of 24 bills all oriented in the same way, face up, was kept together with the 25th bill placed at a right angle to the stack and folded around the others to make a bundle. Twenty-five such bundles were made into one stack and cross tied with homemade sisal twine. The bricks then became a useful unit of currency but each brick weighed about a pound.

A one-pound brick of money contained 625 bills and, if made up of 5-thousand Zaire notes the total value was about $1.00 depending on the time of the month. The weight of the boxes of money times the MAF freight rate per Kilo per mile (charged in US Dollars) was billed to the customer’s account. It would cost more than the value of the money to fly it to the bank for exchange. This was true for a CECA church in Zande-land which sent their savings by MAF to Bunia for exchange.  The MAF transport invoice far exceeded the theoretical value of the money which was never accepted by the bank, but was stored indefinitely in an attic in Bunia.  Dealing with devalued money was a challenge.

For a couple months there was no money in that part of Zaire.  How do you deal with no money at all?