Imagine a remote, isolated frontier colony of less than 600 people. ... However, they have nothing to export, and therefore not the money to finan-
ce imports, so traders do not regularly visit the colony.
...Still, there will be some ships visiting the colony now and then. Bold explorers
going even further into the unknown, scientists interested in that remote out-
post of civilization, people who have the money to travel wherever they want.
They are likely to need some supplies (food, water, etc.) and perhaps some
basic spare parts or some services (for example the local doctor's) from the
colonists.
The problem is: How do they pay for such goods or services ?
Obviously, the visitors could trade some good that they carry, but I'm assuming that you don't take that easy out. So...they could trade services. Medical help from the ship's doctor, repair work by the ship's engineer, killing dangerous nuisances, drilling using the ship's lasers, even a few cordon bleu meals from the Steward-3. Pilot lessons, drilling the local militia company for a few weeks, etc.
Also, money probably *would* work, assuming that the currency is reliable and counterfeit-proof. But since the holder of the funds has to go somewhere else to spend it, the price will likely be very high. To get the price in cash, I'd do this:
1. Double or triple the price for scarcity and frontier condition.
2. Estimate the average length of time that the payee will take to get the funds off-planet, then return with the trade goods. Increase the total price by ~20% per year, compounded.
--1 year or less: 120% X 2 (or 3)
-->1-2 years: 150% X 2 (or 3)
-->3-4 years: 175% X 2 (or 3)
(Rounded for convenience)
The person who takes the cash will have to have enough assets that *he* can trade for the required goods/services. He must also be able to get off-planet to spend the money at some point.
If the recipient of the cash has to wait for an infrequent starship to visit, the cash price will go up DRAMATICALLY. The reason is that such ships will have (a) very limited selections and (b) very high prices.
An important point to bear in mind -- cash is only valuable to the extent that you can get goods or services with it. If the goods and services are easily obtainable, then the cash price will be equal to or less than the barter price. If the goods and services are hard to get, then the cash price will be much higher than the barter price.
Note that someone who suddenly has a pile of cash can wreck the economy of a small colony. He has more cash, but there is no increase in the goods in the economy. The result is inflation--prices shoot up. (Which is driven by exactly the same economic phenominon that led the seller to orginally demand a higher price).
Note that a technologically advanced barter economy will probably still use cash as a pricing mechanism. However, the amounts will be carried on traders' books rather than held as cash. For instance:
Sturn owns a shop and has a Pistol for sale. Giles wants to trade his Shotgun for the Pistol. They negotiate and finally agree that the Shotgun is worth Cr200 and the Pistol is worth Cr80.
Sturn gets the Shotgun.
Giles gets the Pistol. In addition, Sturn gives Giles a "Credit" for Cr120, which Giles can redeem at any time. Note that Giles may want more Credit -- or require more trade goods -- if he distrusts Sturn. But if Sturn has been in business for awhile, Giles will probably take the store Credit. Sturn's ledger notes that Giles has a Cr120 credit.
Later on, Giles wants Harld's milk cow. He offers Harld half of his credit (Cr60) at Sturn's store. Harld agrees and they go to Sturn and have him make the appropriate adjustment to his ledger.
In effect, they have created a sorta-cash economy. So long as Sturn is a reliable merchant (and can stock enough goods to make a credit at his store worth having). In fact, if Sturn gives them "notes" showing the credits, the notes can be used as local currency.
Later on, Sturn runs into some real cash and offers to redeem the credits for (say) 90% cash price. He offers Harld and Giles Cr54 each to eliminate their credits. Harld and Giles would probably not be interested unless (a) they want to trade with other merchants (and Sturn won't "transfer" the credit to other merchants); (b) they start to doubt that Sturn will be around much longer; (c) they think a starship may arrive soon and want hard currency to buy goods with.
IMHO, some kind of "general store" will be one of the first things the colonists will setup (after they have enough agricultural surplus to enable trading). Such a store would be an important economic asset in a cash-poor economy, since it would allow a sort of clearing house for trades.
