What can you do with a $10 bill?
1) You can buy 10 cokes or 5 packs of gum.
2) You can keep it in your wallet and use it tomorrow.
3) You can take it to any store and they will accept it in exchange for a wide range of goods and services.
Those three characteristics are what define money. In the first example, $10 is worth a specific number of items, a concept known as Unit of Account. $10 also has roughly the same value one day to the next, which allows you to save your wealth using dollars, a concept known as Store of Account. Finally, other people in society will accept your $10 as payment, making dollars a Medium of Exchange.
But what if, instead of $10, you had 10 cocoa beans? In today’s world, you could not buy any gum, you can’t keep it in your wallet and buy something with it tomorrow, and your local grocery store won’t accept it. Clearly, it is not money. But, back in the day, it was. To be clear, I’m talking back-back-back in the day – in the time of the Mayans and the Aztecs. In that time, you could use cocoa beans to buy a specific number of things (UNIT of ACCOUNT), you could save them for the next day (STORE OF VALUE), and they were widely accepted (MEDIUM OF EXCHANGE).
That’s right, you read the previous paragraph correctly. Chocolate was money. People used it to buy things. They COULD consume it, but that was not its primary purpose.
Flash forward to today, are there any forms of chocolate that are money? Well, actually, yes: M&Ms.
This is going to take a few steps to explain, so bear with me.
M&Ms were first produced FOR the military. Prior to US production, “Smarties” were chocolate candies produced in Britain for soldiers. They had a hard shell so they would not melt in the summer, which made them useful as a lightweight and nonperishable supply of calories that soldiers could carry with them.
Forrest Mars Sr. (son of the founder of the Mars candy company) saw these "Smarties” when he was in Britain which inspired him to create his own version. He then applied for a patent to have the exclusive rights to make them (remember our lessons on patents?). Once he had the patent he needed to figure out a way to produce these chocolates with a hard shell. Mars paired up a man named William Murrie, who was the son of the Hershey executive. (Mars & Murrie = M&M).
Together, they made M&Ms and exclusively sold them to the US military during WWII. While I cannot find explicitly why they were only sold to the military, this was a time period of rationing in the United States where sugar was limited. M&Ms (and other chocolate) was, however, part of military rations. Once the war was over, soldiers were hooked on M&Ms and they eventually became sold to the public. (Another mini-econ lesson, while a monopoly is one seller, a monopsony is one BUYER. So, M&Ms started off as a monopsony/monopoly. One buyer and one seller.)
The US military continues to include M&Ms in Meals Ready to Eat (MREs)—bags of food that U.S. military personnel carry with them. The food in them last for years (literally) and are calorie packed. They can therefore be used while deployed or during training because they are not perishable and are easy to carry around. One of the key components of an MRE is the “dessert,” often M&Ms.
So how are M&Ms money? Imagine you are in the military and living off of MREs on a training exercise and you get M&Ms in your food package. What can you do with them? Well… you can use them to “buy” some other food item from one of your buddies (UNIT OF ACCOUNT), which your buddy will accept (MEDIUM OF EXCHANGE); you can store them (they won’t melt) and use them to buy something from someone in a couple of days (STORE OF VALUE); or you can eat them. For example, you could use your M&Ms to buy some peanut butter from someone else’s MRE, if that’s what you’d prefer. Or, if your buddy had cheese in her MRE, you might be able to exchange your M&Ms for that. So… what does that make M&Ms? MONEY!
One important distinction in different types of money… the U.S. dollar is FIAT MONEY, as is the euro, peso, pound, ruble, yen, etc. That means that it doesn’t have value beyond being money—you can’t really use the paper otherwise—and it only has value as money because the government says it does (and provides backing for it).
Chocolate is COMMODITY MONEY. It serves as money, but it also has other values. Cigarettes, for example, can be smoked but are used in prisons to exchange goods and so serve as money. Given the prevalence of cigarettes in the military in the early 20th century, the same is probably true there as well. 5 cigarettes for 5 packs of M&Ms? Commodity money that you have probably heard of more often is Gold, Silver, and Platinum. It can (and has) been used as money, but it also has value as components of jewelry.
Next time you hear the word money, you can think of more than just the dollars in your pocket. You can think about chocolate.
1 cup (213 grams) brown sugar
½ (100 grams) cup sugar
½ cup (1 stick) butter, room temperature
½ cup shortening
1 ½ tsp. vanilla extract
2 ½ cups (300 grams) all-purpose flour
1 tsp. baking soda
1 tsp. salt
1 ½ cup (divided) M&M’s or chocolate chips, or some combo of the two
Cream the sugars, butter, and shortening in a mixer until light and fluffy. Add the vanilla and eggs and re-cream.
Add the flour, baking soda, and salt. On low, mix the dough until flour is incorporated. Add HALF of the chocolate and mix in on low for just a few seconds.
Put the dough in the refrigerator for 30 minutes.
Preheat oven to 350 degrees.
Roll the dough into balls and place on the cookie sheet. Add M&Ms or chocolate chips to the top of each cookie.
Bake for around 10 minutes. Allow to cool on the cookie sheet for around 2 minutes before placing onto a cooling rack.
Eat hot. Eat warm. Eat at room temperature. You’ll enjoy them any way.
Sources on the History of M&Ms
A great discussion on money here: https://www.stlouisfed.org/education/economic-lowdown-podcast-series/episode-9-functions-of-money
Sources on the Mayans Aztecs using cocoa means for money: