Thread by @SahilKapoor

A thread 🧵.
A fascinating story of Monopoly Money, corporate wizardry and inflation in Zimbabwe. An excerpt from the book- The World for Sale by Javier Blas & Jack Farchy.

The Zimbabwean central bank couldn’t print new banknotes fast enough to keep up with the devaluations of the Zimbabwean dollar, creating a shortage of banknotes. Bank lines stretched several blocks and account holders occasionally resorted to violence.

For Cargill, which had entered the cotton sector in Zimbabwe in 1996, this represented a serious headache. The commodity trader had built a large operation in Zimbabwe, with several ginneries to separate the cotton fibre from its seeds, buying stations across the country...

and contracts with 20,000 farmers to buy their produce.42 With Chinese demand for cotton surging, Cargill needed all the supplies it could get. But the banknote shortage meant it could no longer pay the small-scale farmers, who relied on cash, for their cotton.

Faced with the impossible task of buying cotton without banknotes, Cargill hit on a novel solution: it would simply print its own. And so it asked a local company to print 7.5 billion Zimbabwean dollars, worth about $2.2 million, in 5,000- and 10,000-Zimabwean dollar bills.

To guarantee the notes, it deposited funds at a local bank. This Monopoly money, which looked a bit like a cheque, carried the logo of Cargill Cotton and the signatures of two of its top local executives.

It didn’t matter that the bills didn’t bear the signature of the governor of the Zimbabwean central bank, or the wildlife scenes that typically decorated Zimbabwean banknotes. They were soon being accepted alongside the country’s official currency at shops across Harare.

In all but name, Cargill was acting as the country’s bureau of engraving and its central bank. It took out adverts in a local newspaper, instructing that the banknotes ‘should be treated as cash’. It issued more banknotes in 2004, with denominations as high as 100,000 Zm dollars.

At the trading house’s headquarters in the outskirts of Minneapolis, finance employees jokingly called the banknotes ‘Staley bucks’, after Cargill’s chief executive at the time, Warren Staley. ‘That was seen as more reliable than the Zimbabwean currency'.

The Monopoly money was no joke, however, for Cargill. The company told the Zimbabwean government, which had been largely unaware of Cargill’s parallel printing press, that it was helping the country by alleviating the shortage of banknotes.

But, for the trading house, issuing its own money was also a lucrative business. Cargill executives told US diplomats they were ‘making a killing’ printing their own money. The reason was simple.

Zimbabwe was suffering from hyperinflation, with consumer prices increasing at a rate of about 365% per year. With banknotes in short supply, the recipients of Cargill’s Monopoly money tended to spend it rather than take it to the bank.

When the notes finally trickled into the bank, their value had been eaten away by inflation, sharply reducing Cargill’s actual payout in dollar terms.

‘That makes monopoly money even better business than cotton in this oddball economy,’ the deputy chief of the American embassy in Harare wrote in a diplomatic cable." (from "The World for Sale"

Start reading it for free: amzn.in/696N9xp