ECONOMY WITHIN AN ECONOMY - THE MANILLA CURRENCY, EXCHANGE-RATE INSTABILITY AND SOCIAL CONDITIONS IN SOUTH-EASTERN NIGERIA, 1900-48

This paper studies the effects of the coexistence of the manilla curre ncy and British currency in south-eastern Nigeria, and the way in whic h this monetary situation created political tensions which eventually led to the redemption of the manilla. When British control of Southern Nigeria was formalized in 1900 and British currency introduced in the south-east in the following year, the inability of the colonial autho rities to put into circulation adequate supplies of British coins, cou pled with historically entrenched use of traditional currencies, compe lled the colonial state to recognize the latter as legal tender. Howev er, the continuing circulation of these currencies alongside British c oins created financial and economic difficulties, causing the colonial state to adopt a number of legislative measures to eradicate them. Wh ile other traditional currencies capitulated to these measures, the ma nilla continued to be popular as a result of objective economic factor s, and was strengthened by some of the very instruments designed to el iminate it. Meanwhile, the constantly fluctuating exchange rate of the manilla was generating discontent. These fluctuations were caused pri marily by the gyrations of the world market. Improved prices of palm p roducts - the main sources of British currency in the economy of south eastern Nigeria - brought about the appreciation of the manilla. This caused hardship among wage-earners by reducing the exchange value and the purchasing power of their meagre and fixed income which had to be converted to manillas in order to buy food and other locally produced goods and services. Periods of depression, on the other hand, caused m anilla depreciation as a result of a diminished inflow of British curr ency. This reduced the income of peasant producers, while increasing t he purchasing power of workers. The ferments generated by fluctuating manilla values have remained, until now, unidentified causal links in the political movements in south-eastern Nigeria, including especially the women's movements of the 1920s. The discontent intensified in the 1940s, when the influx of cash into the Nigerian economy caused by wa r-time military spending and the post-war commodity boom caused a cont inuous appreciation of the manilla. This development made life more di fficult for workers, whose incomes were already being decimated by inf lation. The resulting intensified political tension, as well as the ex isting obstacles to trade and smooth collection of taxes (also caused by unabating manilla fluctuations), made the demonetization of the man illa through redemption inevitable. With the elimination of the manill a, which had constituted a sub-system within the economic system of co lonial Nigeria, the colonial state's economic control of Nigeria can b e said to have been completed.