Island of stone money - Essay Example

The Island of stone money The use of stone in Caroline Islands as money is proof of the many items that have been used through history to help effect economic transactions. In addition, many reasons existed that justified Fei as money. The qualification of Fei as money Acceptability by all Islanders that Fei was the official currency in the Islands was something that justified it as money. It was unanimously accepted as the medium of exchange in the islands. Fei qualified as money because of its durability.

As money, Fei retained its shape, substance, and form for a long time without decomposing or degrading. Additionally, the durability of Fei fulfilled the requirement of money to be socially and institutionally durable. The uniformity of Fei was another element that added to its qualification as money. As a trait in Fei, the stone could not be duplicated and this helped to restrict the use of alternative commodities as currency. Fei was a viable item for money because it was transportable. It had a hole in the center that helped in carrying it around especially when the need to complete a transaction arises (Friedman 1).

The suitability of Fei to perform the function of medium of exchange underpinned its qualification as money. Fei allowed the islanders to transact buying and selling goods amongst themselves conveniently. Money helps in storing value and so did Fei. For example, a family in the Islands was renowned for its wealth because of an ancestor who had discovered a Fei that, besides having sunk in the sea, it still gave them a sense of wealth (Friedman 2). Fei as commodity money Fei was commodity money because its users accepted it as a form of payment even when they did not have a specific need for it.

This is the reason why it was not necessary to carry the Fei from the buyer after completing a transaction. The value in use of Fei is one paramount aspect that justifies that it was commodity money. Fei had intrinsic value and besides helping the buyer to get the goods and services they needed, the seller obtained a sense of wealth and he or she enjoyed the prestige ascribed to people in possession of it. It therefore helped fulfil the goal of an economic activity of acquiring the value of commodities and services.

Fei is commodity money because using it in transactions resembles barter trade only that it has a single recognizable unit of exchange (Friedman 2). Fei also qualify as commodity money because it has value in exchange. Exchanging Fei for other goods helped buyers indirectly acquire other items. Fei had value in exchange and if its value in use changed, it would have interrupted the economy of the Islander such as what happened when the German government threatened to take some of the Fei (Friedman 3).

In conclusion, acceptability and durability are elements that qualified Fei as money in Caroline Islands. The value in use and value in exchange of Fei are evidence that it was commodity money. Work CitedFriedman, Milton. The Island of Stone Money: Working Papers in Economcs E-91-3. The Hoover Institution Stanford University, February 1991. Print.