In this weeks Skeptics Guide to the Universe Rebecca Watson mentioned a tribe using large stones being used as money – these are called the Rai-Stones (or Raay-Stones) from the island of Yap.
While listening I was reminded of an old article in the February 2001 edition of the German magazine “mare”, by two reporters travelling to Yap, telling the history of these Raay-Stones. Unfortunately the article is in German and only available in the print version, so I try to summarize the most interesting findings – but if you want to read the whole article, the magazine is always worth a try, and the pictures are simply amazing.
One short note to the readers: there is a Wikipedia article on the Rai, but I rely on the facts reported in the magazine, as they are less covered in the net.
The stones are up to 3,6m in diameter and weigh almost one ton. Due to this fact, the stones usually change hand without changing place. Often they are stored in a public place along the road, sometimes covered by roots and branches.
There are about 6500 “coins” currently on Yap (a small island with a population of about 6000). Each one of these has a personal history with all (or at least most) of the exchanges it was used in and a name attached to each stone. While goods of daily use are by now paid in US-Dollars, major exchanges like the sale of a house, a marriage or fines after a crime are still paid with Raay.
As the stones are made out of Aragonit, a sandstone from Palau that is not found in Yap, they all have to be transported 400 km by sea to their final destination. Archeologic findings have dated the oldest Raay to the year 125 a.d. and the last ones were produced 70 years ago. Originally they were produced with stone tools and smoothened by dragging them over the beach in Palau. The Yapese also had to serve the inhabitants of Palau for the rights to use their stones, so the production of one stone would take a group of men several month.
Transport could only be done in May and June, with the monsun. A special raft was constructed with the stone in the center hanging partially in the water and serving as keel. The hole was used to keep the stone on the raft with the help of a beam. The raft was dragged by a canoe, and posed a great danger to the men transporting the Raay home. Experts estimate that only half of the stones arrive in Yap, with the rest remaining on the sea floor, often dragging the sailors with them.
The authors state that the amount of work and risk give each Raay extreme value (according to the labour theory of value), which depends on the size, the complexity of the transport and whether someone was hurt or killed during transport. On the other hand, the value of each individual Raay also depends on the transactions it was used for in the past. The Bank of Hawaii has a branch office in Yap and once calculated the value of the stones as: diameter x thickness (in inch) x 75 = value in US$. This does of course not account for the history of each stone or serve as currency exchange price, but it was used to calculate the credit that could be given with one Raay as collateral.
The value of the Raay began to change when in 1871 an US sailor named David O’Keefe was the only survivor of the sunken bark “Belvedere”. When he saw the Raay and heard of their history, he returned to Honkong (Yap had at that time regular visits from merchants), bought heavy tools and returned to Yap. Together with some Yapese he transported large amounts of Raay from Palau to Yap and exchanged them for copra, which he sold in Honkong. He used the money to buy western goods and returned to Yap increasing his influence. He ended up as self proclaimed “King of Yap” – although he mainly used the title to defend the independence of Yap against German, Spanish and US interests at that time. With the increasing amount of Raay transported to the island, and the less complicated production, the value of these new Raay decreased compared to the older stones that were in use. Finally the Islands were sold to the German emperor, who also tried to take part in the Raay-trade. As the Yapese refused to cooperate with anyone except O’Keefe, the production of Raay was prohibited.
Due to the expansion of stone production in the years after 1871, there were about 13000 Raay in yap, when prohibition set in. In 1914 the Germans left and Japanese troops occupied Yap. They destroyed Raay as a method of punishment when the inhabitants refused to work or to cooperate, which halved the number of Raay until 1945. The last Raay was produced in 1931 by an expat, who used it to buy the right to return to his home village. Today the export of Raay is prohibited and set with a high fine (to be paid in Raay).
Apart from the strange history of the stones as a currency, the Raay might also be used as an excellent subject to study monetary theory. We know the exchange value of each coin through history, we know about the loss of value, when O’Keefe introduced new Raay that were produced more easily and we can trace all the transactions that were done with each coin.
This might be an excellent paper for an economics PhD with and Austrian tendency or someone interested in ethnologic economics. Someone like Pete Boettke or Peter Leeson: step up and help us out.