While the English embarked on a search for a religious utopia, the Dutch immigrated for one purpose: to make money. In fact, they could be said to have "invented" New World money. The explorer Adriaen Block, following Henry Hudson by five years, realized that the polished shells the Pequot Native American tribes [including the Metoac, who were an amalgam of tribes themselves] made were greatly prized by the Mohawk to the north. The Mohawk were wealthy with fur-bearing animals. The Dutch innovatively set themselves up as trading middle-men: the Pequot acquired European goods, the Mohawk got their wampum, and the Dutch received the furs.
Wampum seems to have been institutionalized by Block. There were many business failures and Europeans (excepting the silver-rich Spanish) didn't want valuable coins lost in the new world—nor did the colonists have much currency. Wampum were small, tubular beads made from white or violet shells, a quarter-inch long and half as wide. The beads were the perfect solution to that monetary problem.
It was the Metoac tribes' grave misfortune to occupy the northern shore of Long Island which was the source of the best wampum in the Northeast. Each summer, the Metoac harvested clam shells from the waters of Long Island Sound which, during the winter, were painstakingly fashioned into small beads. Strung together in long strands, they were called wampumpeake--shortened somewhat by the English colonists into the more familiar form of wampum, though the Dutch called it siwan (sewan).
The Metoac traded this painstakingly crafted product to other tribes and prospered as a result. Passed from tribe to tribe, Long Island wampum made its way as far west as the Black Hills of South Dakota. The strings of shell beads were sometimes employed as a rudimentary currency in native trade, but it was also valued for personal decoration. Arranged into belts whose designs could convey ideas, wampum was also employed in native diplomacy to bind important agreements such as war and peace.
Wampum came in two varieties: white and dark (which varied from purple to black). In general, the dark beads had a value roughly twice that of white. The shells from which wampum was made were found on both sides of Long Island Sound, so the Metoac never had a monopoly. Other tribes of the Northeast were also involved in its manufacture, but the wampum created by the Metoac on the northern shore of Long Island was considered the best.
In the Massachusetts Bay Colony, a "fathom" of white wampum with 240 to 360 beads was worth five to ten shillings; purple was valued at twice that. Wampum became legal tender in all 13 colonies. White wampum was made from various shells, the violet was from the purple portion of the quahog clam. The exchange rate was six white or three black wampum beads for a penny. Their value came from the scarcity of the shell and the patient labor needed to grind it with a flint into a cylindrical shape and drilled for stringing.
After 1600, the European fur trade distorted the original purposes and value of wampum. Strung together and measured in fathoms, it became a medium of exchange in trade between white and native, which greatly increased its value.