The Money That Never Had to Move

On the island of Yap, in the western Pacific, limestone discs called rai have long served as a store of value. The largest are taller than a person and weigh several tonnes, and most were quarried hundreds of kilometres away on Palau and carried over open sea. A stone of that size cannot be tucked into a pocket or easily moved across a village, so when ownership changed hands the stone typically stayed where it was. The new owner simply became known to the community.

An account reported by the American ethnologist William Henry Furness III in the early twentieth century, and later retold by the economist Milton Friedman, describes a stone that sank during a voyage. Because those aboard vouched for its fine quality, the stone was said to keep its full value on the seabed, and its owner went on trading with it.

The story has been read as a lesson about what money is. Money, on this reading, is less an object than a record that people agree to trust. A modern bank balance is also an entry that nobody can hold, and the stone on the seabed makes the same point in the open.

Money, on this reading, is less an object than a record that people agree to trust.

Skeptics reply that the evidence is thin, drawn from a handful of early visitors, and that a community small enough to remember every transaction need not resemble a modern economy. A system that works because everyone knows everyone else may fail once strangers are involved.