Could we ever manage dealing with a currency, that we cannot even move due to its large size and heavy weight? I don't think so. This question popped into my mind, when I came across this unusual money, while I was surfing on the internet on the other day.
I wondered for a bit and I did my research. While we, in the modern civilization have currencies, that we cannot even physically touch or see, there is a tiny island called Yap within the Federated States of Micronesia in the Pacific Ocean, that has the currency made of stone and can be larger, than an adult human being.
The island of Yap was first discovered by Europeans in 1528 and known for their unique stone money called Fei. The value of the stones depend on their sizes and their history. The harder it takes to get a stone the more it worth. Large amounts of limestone were deposited on the surrounding islands. Yapese carved these stones to a shape of circle with a hole in the middle in Palau and transferred from there and from other islands on their small bamboo boats and canoes.
One of these large stones has such a history and its value is extremely high. When this huge disc was being transferred to Yap, a storm hit the boat just before they arrived and their giant stone coin sank into the Ocean. Then they managed to get it back and when they placed it on the island they told everybody what happened. Somebody owns this stone today. In most cases Yapese don't move the stones, but the owner of the coins can be changed. Smaller stones can be moved, but it requires hard work to take them from one place to another.
It is uncertain when this money system started, but for sure it has been there for centuries. The first stone money was carved to a shape of a whale and it was a gift. Almost half of the stone money were lost in the Ocean during being transferred due to strong storms. Many people died when carving or transferring the stones and amazingly the crew knew which stone was created by whom. Those coins worth the most, because of the loss of lives.
Milton Friedman's famous book called Money Mischief starts with “The Island of Stone Money" . Here is an extract from the book.
"Milton Friedman opens his book Money Mischief with the story about the island of Yap. In summary, this island of about five thousand people used a stone for their medium of exchange and called it fei, hence the title of the first chapter The Island of Stone Money.
What was so intriguing is that these giant limestone rocks weren’t passed around like today’s dollars, but were exchanged on simple acknowledgment of ownership. The stones would literally remain in the backyard of a person, but would be owned and used for bartering by its new owner, who might have lived on the other side of the island.
Even more, when Germany took over the island in 1898, they required the islanders to repair the roads and marked each stone with black paint – claiming the ‘money’ as the government’s until the roads were repaired. Without hesitation, the islanders of Yap repaired the roads and Germany erased the black paint from the stones, returning ownership and peace of mind to the natives.
The story sounds really pretty elementary and foolish and so out of place for our standards today. But before you think a ‘sophisticated’ bunch of people would never do such a thing, consider France in 1932. The Bank of France was afraid that the US would not stick with the gold standard of $20.67 per ounce and asked the Fed to convert a large part of its assets into gold. The U.S. Fed didn’t ship gold across the Atlantic Ocean but went to the vault and put a label on a drawer of gold that said “property of France.”
The headlines that soon followed cried about “the loss of gold” and expressed what a threat it was to the American financial system. To quote Friedman, “the so-called drain of gold by France from the United States was one of the factors that ultimately led to the banking panic of 1933.”
We operate in the same fashion today as the islanders of Yap did 100 years ago. Today we call our “fei” names like checking accounts, checks, stock certificates, bond notes. The actual hard asset is rarely ever exchanged, only ownership – and that often takes place electronically with the stroke of a key at a bank. We are quick to downplay the currency of a group of people like those on the island of Yap, but we assign purchasing power to our forms of currency even when it’s nothing more than a piece of paper."
Stone Money Bank
Stone money banks are located next to villages, where the most discs can be seen. There are banks by every village and the stones are lined up alongside the paths in various sizes. These banks are basically jungles with coconut trees and palm trees.
Today the stones are placed throughout the villages and in front of the houses as a symbol of wealth. Carving the stones was stopped in the 20th century. Because the way of transportation became easy the stone money started loosing its value and eventually by now they are absolutely worthless.
This is very informative!