On the Nicobar Islands, located on an ancient trade route between India and the East Indies, coconuts fulfilled the various roles of money, serving as medium of exchange, store of value, standard of value, and standard of deferred payment. As a store of value coconuts took a backseat to less perishable silver-plated spoons and forks, but in every other respect coconuts served as the principle form of money on the Nicobars. Extensive evidence of coconut money existed in the nineteenth century and the first half of the twentieth century.
Although coconuts cannot be stored for indefinite periods, Indian traders held sizable stores of coconuts to transact business with the islanders and to export. The islanders also kept stores of coconuts in anticipation of future transactions. The Indian traders kept coconuts stored in courtyards protected by fences made from palm leaves; the British government found it necessary to adjudicate disputes between Indian traders and islanders whose pigs had crashed through the palm leaf fences and eaten the coconuts of the Indian traders.
Coconuts involved in a single transaction could mount into the thousands. Every year the Island of Car Nicobar bought 25 ships from the Chowra Island for 100,000 coconuts. Coconuts were counted in pairs up to a score, and then counted in scores of scores.
An exchange rate existed between coconuts and the silver rupee of India, and interestingly enough the silver rupee constantly depreciated relative to coconuts. Up to 1885 a silver rupee was the monetary equivalent of 500 coconuts. In 1901 official information put the value of one silver rupee at 100 coconuts. Following World War I the islands decided to impose an export duty, and fixed an official exchange rate of one silver rupee per 200 coconuts. In the post–World War I era, the silver rupee continued to fall relative to coconuts, equivalent to less than 100 coconuts by the beginning of World War II.
Coconuts served as a standard of value even when exchange took place in other articles. An official document cites an instance in 1896 when the people of Car Nicobar purchased a canoe from Chowra valued at 35,000 coconuts, but made payment in other articles, including cloth, spoons, baskets, Indian currency, silver wire, silver rings, knives, forks, pigs, fowls, beads, fishhooks, rupees, and axes. Each article had a coconut equivalent contributing to the total cost of the canoe.
Islanders contracted for debts payable in coconuts. A British government agent found that islanders were in debt to Indian traders for millions of coconuts, leading to the creation of a commission that studied the debts of natives to Indian traders with a view to scaling back indebtedness. After the rupee was made legal tender, acceptable in the payment of all debts, islanders continued to contract debts in coconuts.