IslandMoney - February 1, 2004 Federal Reserve Bank of...

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Weights and Measures Curiously, rai are not known to have any particular use other than as a representa- tion of value. The stones were not func- tional, nor were they spiritually signifi- cant to their owners, and by most accounts, the stones have no obvious ornamental value to the Yapese. If it is true that Yap stones have no non- monetary usefulness, they would be different from most “primitive” forms of money. Usually an item becomes a medium of exchange after its commod- ity value—sometimes called intrinsic worth—has been widely established. Lacking intrinsic worth, Yap stones may be an especially useful object of study for students wishing to understand the significance of U.S. dollars, which, after all, have no value other than as a mone- tary unit; they’re what economists call a “fiat” money. Precisely how the value of each stone was determined is somewhat unclear. We know that size was at best only a rough approximation of worth and that stone values varied depending upon the cost or difficulty of bringing them to the island. For example, stones gotten at great peril, perhaps even loss of life, are valued most highly. Similarly, stones that were cut using shell tools and carried by February 1, 2004 Federal Reserve Bank of Cleveland Island Money by Michael F. Bryan ISSN 0428-1276 On a small group of islands in the South Pacific, the people use a “money” so astonishing it often gets mentioned in classroom discussions on the subject. This Commentary takes a closer look at the stone money of Yap and asks what such an odd form of money can teach us about our own. Equally remarkable. ..is the native money of Yap. .. These pieces of money are disks of aragonite, a stone in appearance, like large crystals of quartz. . ..We had information of one piece. ..being nine feet four inches in diameter and weighed four and one half tons. These extraordinary stones are set up in front of the owner’s house, his importance and wealth being betokened by the number of “dollars” he can set up. J. R. LeHunte, “Report of HMS Espiegle,” October 10, 1883 1 E conomists are fond of describing their economic models by telling stories about imaginary islands where inhabi- tants have particular preferences and endowments and trade in rather isolated and simple markets. These “island economies” are almost cliché in the profession. In this Commentary , I turn that parable on its head by considering the unique and curious money of Yap, a small group of islands in the South Pacific. This is a useful exercise because we rarely think very carefully about the nature of our own money—it does what we ask of it, and that is generally all we care to know about it. But to gain a deeper under- standing of money, we need a better appreciation for the role money plays. A good way to gain this appreciation is
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IslandMoney - February 1, 2004 Federal Reserve Bank of...

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