The concept of money or wealth is an aspect of life that has existed, and will continue to exist until the end of time. Money creates nations, it controls people, and can turn good people cruel. However, throughout history, different nations have had different concepts of “money”, and what value it actually has. For example, when we think of money here in the United States, we think of paper dollar bills. However, in the past, there have been more unusual types of currency in history, such as the tribes of the island of Yap using giant stone “coins’ referenced in Milton Friedman’s article “The Island of Stone Money”. As Friedman speaks about in his article, even though the natives never moved or traded these large stone coins, the residents recognized their value and ownership through word of tongue and acknowledgement. One of the best examples of how the natives use each other’s word for value is the story mentioned by Friedman about one of the most wealthy families on the island. The way the natives get these stones is to travel to another island to mine the stone, and then travel back home with the stone, to then have it claimed by someone on the island to who it should go to. Accidents do occur though, and one of the largest stones yet was lost from the boat and submerged underwater never to be seen again for quite some time. Those who mined it came back and explained the situation, and even though the stone was missing, the natives acknowledged its value through word and life continued on without any actual proof. While, this may seem primitive to those who read the article, is it really that much different to how money is handled today?
When we think of those who are extremely wealthy in our world today or ourselves, how do we value the wealth? Do we actually count their dollar bills, is it a number in a bank account, or what they actually own? In all honesty it is all three, however for most people their actual money is in a bank account. Citizens give their money to their bank to store so they don’t have to worry about losing it, and what they get back is the number they deposited. In some ways this is similar to how those on Yap Island conducted business. At the end of the day, money is just an object, and the more you have of it, the wealthier you are. This is similar to the situation on Yap Island, where your value is tied within these stone coins, and the larger it is the more money you have. Another similarity between the Yap natives and our current form of economics is how the money can become defaced. Early in the 20th century, the island of Yap was eventually claimed by Germany, and the island’s roads were in rough shape. Early on the natives of Yap were not willing to fix the roads, so the Germans had to find a way to get them to work. They learned the value of the stone coins to the natives and decided to defaced them, by painting a large black X on them. This, in turn, got the natives to do the work as the Germans promised they would remove the marks if the work was completed. This is similar to our world to our world today, as we are threatened daily to work to pay for stuff, as well as money damaged is therefore worthless. Money, just like in the past, has been something that has always more word of mouth, or even non existent, than an actual physical thing.
In terms of a more recent example of currency that is more “word of mouth”, or a fallacy than an actual physical thing would be the emergence of “Bit Coin”. Now whether or not you believe in actually investing in Bit Coin is up to the investor, but according to Jeff Reeves and his article “Bitcoin has no place in your-or any-portfolio”, it is not a wise idea, due to the fact that it is essentially nothing physical. Just like your bank account is nothing physical, Bit Coin is basically just a form of virtual currency that constantly gains and loses value. Now in contrast to current US cash, and the stone coins of the Yaps, Bit Coin can’t necessarily be damaged or defaced, but it most definitely can be stolen. Even though Bit Coin is completely virtual and something created a 100 years later, it is still handled very similarly to how money was handled back then.
Even though Bit Coin is something that can’t be defaced or marked, defacing or changing money for personal gain or advantage is a practice that has been happening throughout history. Another great example of this would be the U.S government in the early 1930s, and how they used marking money to their advantage. As stated by Friedman in his article, the U.S government did not want to take the time or resources to ship back the French’s gold so they came up with the solution of marking the gold as France’s gold, and marking their gold as U.S gold. Even though the gold was still technically France’s gold, it still worked more in the favor of the U.S government as they were still in possession of the gold themselves. Now, in comparison to the Yap natives, you could say, like the natives, the U.S government preferred physical cash as opposed to modern money that doesn’t really exist, however value is still word of mouth or because of a market, similar again to the island of Yap.
Money is an aspect of life that will never go away as long as their is mankind. We rely on some form of currency everyday in our lives, and is an essential part of us as human beings. No matter who or how you value it, at the end of the day it makes the world go round.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
The Invention of Money. (2018, February 19). Retrieved from https://www.thisamericanlife.org/423/the-invention-of-money
Reeves, J. (2015, January 31). Bitcoin has no place in your – or any – portfolio. Retrieved from https://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28