If you were to ask a group of people what is money according to them, they would all probably give similar answers. One might say it is a measure of wealth, or a method of payment. But the concept of money is more abstract than just that. Money is only paper, but so is a birth certificate, or a high school or college diploma. Why is a piece of paper so important? What gives it it’s value and power?
Growing up, I remember receiving money in birthday and holiday cards, sometimes I would even be given a gift card with a limited balance on it that could be spent at a particular store. Being so young and not even really needing money, I never knew what to do with it so I would put it away in a piggy bank. I knew the money was important enough to save but I didn’t really know why. However, I understood the purpose of a gift card well enough to know to put it in my wallet and carry it with me next time I went shopping. As I got older, I began to realize that money takes on many forms, other than just a green, rectangular piece of paper.
While reading, “The Island of Stone Money”, by Milton Friedman, I was introduced to a new idea of currency. Yap currency consisted of large pieces of limestone, that was also known as fei, and were sometimes too large to even move. I initially thought it was strange because limestone isn’t something that an individual can keep safe at a bank or to even carry in their wallet. The people of Yap would make purchases with the stone, however the stone did not have to be physically exchanged or even present in order for the new owner to accept the possession. Before passing judgement too quickly, I began to think about the society we live in today. Funds can be transferred or exchanged without physically changing hands. For example, going into a grocery store and swiping a credit card, resulting in the purchase of your grocery items. No money was present or even visible, but the transaction was still able to be completed. Despite the similarities we may have to the people of Yap, it is almost assumed that today, if you do not have physical money in your possession, then you are not as wealthy as someone who does. A fei at the bottom of the ocean near the Yap islands still has value and can still be used as an exchange, but if you were to drop a dollar in the street, that dollar is no longer yours and has no value to you.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.