Four Sacks of Potatoes

On New Year's Day in 1919, an Austrian woman named Anna Eisenmenger opened her writing table drawer in Vienna and looked at her remaining paper money. She wrote in her diary, "I survey my remaining 1,000-kronen notes mistrustfully, lying by the side of the pack of unredeemed food cards in the writing table drawer." She wondered whether they would share the same fate if the state failed to keep its promise, noting that private tradesmen already refused to sell wares for money and demanded something of real value instead. To feed her household through the winter, Eisenmenger surrendered her husband's gold watch for four sacks of potatoes.

Her dilemma cuts to the core of what holds value when paper money becomes worthless. When an economic crisis deepens into acute collapse or war, the paper slips we carry lose their authority. We are tracing how humans actually trade and survive when official systems break down, building toward an answer that splits into three broad categories: consumable vices, practical survival necessities, and durable wealth stores that protect your life savings until stability returns.

To understand why households end up bartering heirlooms for food, you have to look at how rapidly money can evaporate. In a war of average intensity, consumer prices rise by approximately 20 percent. As finance professor and economist Efraim Benmelech pointed out, wars have been financed mostly through money printing and inflation. In severe hyperinflations, governments print money until paper loses all meaning, driving national currencies into mathematical oblivion—like in Weimar Germany, where by November 1923 a new Rentenmark exchanged at one to one trillion old marks.

When trust in state paper vanishes entirely, trade does not stop. Instead, economies spontaneously revert to commodity money—physical objects that have value both in themselves and as a means of exchange. That transition was documented in World War II, when cigarette currency emerged in occupied territories by 1941 and inside Allied prisoner-of-war camps. As economist R. A. Radford observed among captured soldiers, within a week or two, rough scales of exchange values took shape as ordinary rations transformed into money. To see how that transformation happens, we have to look closely at the mechanics of the goods that step into the void.

Fiat money works only as long as people share faith in whoever issues it. Once that faith evaporates, printed paper loses its purchasing power because it represents no concrete backing. An emergency currency cannot rely on belief alone; it demands intrinsic use-value. Anyone taking it must know that if trade breaks down tomorrow, the item can simply be used or consumed on the spot.

How fast that transition happens was documented firsthand by the British economist R. A. Radford. Captured in Libya in 1942, Radford watched soldiers inside Allied prisoner-of-war camps turn their Red Cross rations into a functioning economy. Starting from simple direct barter, rough scales of exchange values took shape within a week or two. Official camp Reichsmarks circulated almost exclusively for gambling debts because the canteen held practically nothing to buy. By the end of a month, prices were no longer quoted in tins of beef or sugar. As Radford recorded, a market came into existence without labor or production, and the cigarette became the camp's standard currency.

Cigarettes succeeded because they fulfilled every textbook requirement of sound money. They were standardized, reasonably durable across months of storage, and portable enough to carry in pockets. Crucially, they were divisible: a single smoke paid for a minor favor, whole cartons handled substantial trades, and single matches served as fractional change.

This spontaneous emergence was not unique to World War II barbed wire. In the seventeenth century, American colonists in Virginia and North Carolina used tobacco leaves as commodity money, eventually circulating warehouse receipts to address the problem of durability. Yet commodity tenders carry their own vulnerabilities. In Radford's camp, when prisoners began circulating irregular hand-rolled substitutes, soldiers scrutinized every smoke, rejecting thin ones or demanding extra weight to balance the deal. It brought all the familiar troubles of a debased currency. Still, as Radford noted, the essential interest lies in how universally and spontaneously this economic life appears, coming into existence not by conscious imitation but as a response to immediate needs and circumstances—a reality that would soon spill out of prison camps and into besieged cities across Europe.

When war ends or siege lines tighten, the breakdown of state money shifts from theory into street corners. In occupied Germany after World War II, massive wartime arms financing had created an enormous monetary overhang that rendered the Reichsmark functionally worthless. Direct goods exchange rapidly displaced official paper. American cigarettes became the universal benchmark—what Germans called their Zigarettenwährung, or cigarette currency. To channel this informal economy, municipal barter centers opened in Berlin in June 1946 and in Frankfurt that October. Civilians formed long lines early in the morning outside the Frankfurt center, carrying family heirlooms and antiques up to the appraisers to receive store scrip, while American soldiers brought in staples and cigarettes.

Inside the Frankfurt Barter Mart, relative prices reflected what people actually craved. A pound of butter cost 16 store credits, while a coveted Leica camera went for the equivalent of 23 cartons of cigarettes. In Hamburg, police even posted a cigarette reward for information in a murder case. Consumable vices had become the universal yardstick, setting the going rate for groceries and heirlooms alike.

During the 1990s siege of Sarajevo, the same mechanics emerged when the city lost power and running water for months. Surviving meant trading everyday utility. At the damaged Holiday Inn, as reported in 1994, immersion water heaters changed hands at all hours for items like food and medicine; journalist Jamie Graff celebrated trading an immersion heater for an omelet and a bath, while a reporter bartered cigarettes to get a hotel maid to haul water upstairs. Claiming a room meant offering hard currency alongside liquor and batteries. During construction of the Sarajevo tunnel beneath the airport runway in 1993, laborers were paid one packet of cigarettes a day. Meanwhile, fuel was pure gold: wartime trader Celo recalled that taking a ton of petrol at night and selling it by morning put someone ahead thousands of German marks.

By July 2018, Venezuela showed that even without bombs, hyperinflation produces identical barter economies. The IMF warned that Venezuelan inflation could reach one million percent by December. With cash worthless, fruit vendor José Pacheco refused small-denomination bolívar notes, pointing out that otherwise he would be hauling whole boxes of paper to the bank. Think-tank analyst Geoff Ramsey noted the strange paradox: in a deep inflation crisis, people paid for parking with granola bars. Across the border in Cúcuta, artisans wove valueless banknotes into handbags to sell for Colombian pesos. Yet this immediate scramble for food, vices, and fuel forces an enduring clash: when everything collapses, do everyday survival consumables really protect your purchasing power better than precious metals and hard foreign cash?

When paper currency collapses, an immediate division emerges over what actually protects you. Proponents of consumable goods argue that practical necessities reign supreme because sheer survival overrides every other concern. In post-World War I Vienna, private tradesmen flatly refused paper money. In her diary, Anna Eisenmenger recorded that an acquaintance exchanged a piano for flour, while a visiting farmer offered three months of food if she surrendered her family's grand piano. Faced with immediate starvation, she had already traded her husband's gold watch for four sacks of potatoes just to see her household through the winter.

Everyday commodities carry immense transactional leverage when acute shortages hit. During the siege of Sarajevo, cigarettes held a clearly established value: two boxes of Marlboro cigarettes reached about 25 German marks and were frequently used as a medium of exchange for other goods. In post-World War II occupied Germany, writer Vladimir Petrov observed that the extraordinary value attained by the cigarette gave Soviet authorities an effective tool to extract hidden assets from the civilian population. According to Gerald Tebben, Soviet authorities systematically traded war-booty tobacco for gold at sixty cigarettes per gram until domestic gold reserves ran dry.

Yet defenders of hard stores argue that precious metals and foreign reserves are far superior for preserving capital across borders. As United Nations observer Paulo Gonçalves reported from Bosnia in 1995, the German mark was the currency most people preferred to trade in, with the German mark being the currency people preferred to deal in. A similar resilience appeared in post-World War I Vienna, where Eisenmenger's bank manager urged her to convert her savings into Swiss francs, an asset that held steady while the Austrian krone collapsed from twenty-five Swiss centimes—about 30 cents—down to a twelfth of a centime within a year.

Furthermore, consumable commodities yield no ongoing investment return, require costly storage, and burn up in daily use. That is why during acute inflations, observers like Sir Basil Blackett noted that industrialists quickly moved paper marks into foreign tender, land, and machinery. To anchor value amid severe currency depreciation, Zimbabwe issued one-ounce, 22-carat Mosi-oa-Tunya gold coins in 2022, which central bank governor John Mangudya confirmed could be traded both locally and internationally. The question that remains is what happens to both sides of this divide once emergency barter ends and official order is restored.

When monetary stability returns, emergency commodity currencies vanish almost overnight. On June 20, 1948, the Western occupation zones in Germany launched the Deutsche Mark, granting every resident start-up cash of 40 marks. From June 21, the old Reichsmark became invalid. Goods that shopkeepers had hidden away appeared in windows, and the black market and its cigarette money virtually disappeared as a credible currency took hold.

That reform exposed the harsh split between paper promises and physical wealth. As defenders of tangible assets point out, bank and savings balances were slashed to just 6.5 percent—exchanged at 100 Reichsmarks for 6.5 Deutsche Marks—leaving paper fortunes as gutted as those unredeemed food cards from Vienna. Meanwhile, historians record that owners of land, houses, and industrial production machinery were spared.

And that delivers the direct answer to what holds value when paper money becomes worthless: it depends entirely on your horizon. If the goal is staying alive from one afternoon to the next, consumable vices like cigarettes and coffee, and basic necessities like fuel, immersion heaters, and medicine command immediate trade. But if the goal is carrying wealth through to the other side of reconstruction, only durable physical assets—productive land, industrial machinery, gold, and stable foreign currency—preserve capital once the crisis clears.

As economist Joseph Schumpeter observed, a nation's monetary system mirrors everything its people desire, do, endure, and are. Money is never just printed state paper. It is a fragile social compact of shared trust, and the moment that faith evaporates, value retreats straight back to physical necessity.