Governments from across the world in both ancient and modern history have a long history of destroying their own national currencies, often forcing their citizens to resort to barter transactions or informal adoptions of various forms of commodity money. The Roman Emperors notoriously debauched the national coinage in order to create more money to spend, causing drastic declines in the purchasing power of the Roman money, and rapid increases in prices throughout much of the economy. After the demise of the gold standard, many modern governments have also destroyed their national fiat currencies in dramatic episodes of continual money printing that left the official currencies virtually worthless for practical purposes.
Postwar Butter Standards & Cigarette Currencies
After the devastation of the second world war, many were forced to resort to barter, and the Germans again lived in well-justified fear that the national currency would be destroyed by inflation. Soon, however, particular commodities such as chocolate, nylon stockings and cigarettes began to be exchanged not only in barter transactions, but as preferred forms of commodity money. In a devastated postwar economy, the quantity of both these things was sharply limited and the demand was high. Cigarettes were reportedly superior to both German Reichsmarks and black market US military currencies, and served as a useful measure of value, as well as a very practical medium of exchange. A single cigarette was said to be roughly equivalent to pocket change, while packages and cartons of cigarettes were equivalent to higher denomination paper bills. Cigarettes were also internationally recognized, and held their value reasonably well.
The fact that cigarettes were desired for consumption by smokers also assisted the cigarette money supply in self-adjusting to fluctuations in supply (without the need of government intervention): If the quantity of cigarettes expanded faster than the expansion of other goods and services that the cigarettes were used as currency to buy, the cigarette money depreciated in value. When this took place, many savers of cigarettes smoked relatively more of them than they had before. This caused the cigarette money supply to contract again, which made the remaining quantity of cigarette money appreciate.
Cigarette Currencies for American Prisons & Chinese Bribes
Even when a fully functional primary currency exists, cigarettes may still be used as a secondary currency for special purposes: As recently as the year 2012, Good Cat brand Chinese cigarettes were selling for as much as 5,600 yuan per carton (equivalent at the time to around $890) in the city of Xi'an. This was reportedly because of their high demand as an alternative currency commonly used for bribing corrupt officials with "gifts"— a common necessity in order to be allowed to do many types of business in the city. A Xinhua news agency editorial commenting on the incident remarked that “Because of corruption, you cannot do business. In effect, you can do nothing if you don’t send gifts to those in power."
Communist Romania: Where Kent Cigarettes Were Once "Like Gold"
In Romania in the 1980s, under the oppressive communist regime of Nicolae Ceausescu, Kent cigarettes were used as a preferred form of money for a wide variety of goods and services, including special or rare items, and for payment of bribes to persuade doctors or officials to provide services.
Apparently no one knew how or why the choice of Kents (and not other brands) became a premiere alternative currency in Romania. The phenomenon may have originated in the postwar era in a similar way to the use of cigarettes as money in Germany and Italy, but survived in Romania throughout the communist regime due to a lack of preferable alternative currencies.