Dayo the Potter and the creation of money
Chapter 1 Marriage and Death
Once upon a time, many, years ago there was a little girl named Dayo. When she was 14 years old, her father arranged a marriage for her to a successful potter. At that time the potter was 28 years old, and because Dayo was very pretty the father demanded a bride price of 18 sheep. The potter thought that 18 sheep was a bargain for not only was she pretty but she had artistic talent. So in addition to all of the normal wifely duties he figured that she could be put to work decorating some of the pottery he made.
Dayo a good artist and a quick learner was soon able to do all aspects of the pottery business. Their beautiful pottery became very popular, and they prospered. The only problem was that Dayo’s husband sometimes drank to much and it was his drinking that changed her life. For one night coming home very drunk he fell off of the foot bridge into the flooded stream and drowned.
Fortunately for Dayo she had a young sister of 9 who moved in with her to take care of the baby and do the cooking and housework this enabled Dayo to continue full time (14 hours a day) making beautiful pottery.
Dayo was a wealth creator. She turned the clay into pottery . She also caused other people to create more wealth. Like when she traded her dishes for a wool coat. To make the coat, the Cloakmaker had to shear her sheep, clean and dye the wool, spin the thread and weave the cloth for the coat.
It turned out that the Cloakmaker didn’t really need new dishes, so she traded them for the thatching of her leaking roof. The Thatcher gathered the long grasses along the river, tied them into bundles, and thatched the Clockmaker's house.
Well, the Thatcher didn’t need more dishes so he traded them to a farmer for a pig. The farmer’s wife wanted the new dishes and that was the end of this story. So not only did Dayo create wealth, her creating wealth enabled cloakmaker, thatcher and farmer to also create more wealth.
Chapter 2 Dayo Invents Money.
As Dayo became more successful, she started thinking about building a new house. She made extra pottery and set it aside. When her inventory was large enough she invited the local stonemason over and told him she wanted to build a new house. He looked at the many sets of dishes in amazement for they were beautiful. But, as beautiful as they were, they also appeared to be fragile. The stonemason was afraid that if he put the dishes in his stone hauling cart they would all be broken by the time he got home. So reluctantly, he told Dayo that he could not accept the dishes as payment and that she would have to find someone else. But, Dayo did not want to find another stonemason, because she and everyone in the village knew that this man was the best.
That night, Dayo could not get to sleep, wanting to find a way to employ the stone mason. Then she had an idea. So in the morning, she rolled out some clay into a thin sheet and cut it into squares, then on each square she printed the words “IOU one set of dishes”. Then she fired the square tokens. That afternoon she met the stonemason and told him that she would give him these IOU’s in exchange for the stonework. When he wanted a set of dishes he could give her one of the IOU’s and she would give him a set of dishes. Also he could trade the IOU’s with other people for chickens, grain, etc. and when they presented her with one of the IOU’s she would give them a set of dishes.
Well he thought about it a bit, and knowing that Dayo was an honest person, he decided to give it a try. And so money was invented. (Note: Money has been invented many times by many different people.) Well this worked out OK for the stonemason. He used his little clay coins to trade for many things. This money was the talk of the town and people saw how much more convenient it was. And so, others like the chicken and grain farmers, all started making their own IOU’s instead of lugging chickens or large sacks of wheat around.
Chapter 3 Inflation
Now after some time there were problems, for not all of the people were as honest as Dayo. There was a wheat farmer who created 100 wheat IOU’s when he only had 75 sacks of wheat. Then, when the people came to collect their sacks of wheat, he said ‘Oh I’m so sorry but all of my cost have gone up and so I can only give you 3/4 of a sack of wheat for one wheat IOU.’ Inflation happens, when there is more money printed then there is wealth to back it up.
One day a pig farmer came to Dayo and said I need a loan to finish fattening my 10 pigs. Would you loan me some of you coins? After a little haggling. Dayo and the Pig Farmer agreed that a pig was worth 7 of her dish coins. And so, Dayo offered to loan him 5 dish coins per pig. And, when the Pig Farmer sold them he was to pay her back 6 dish coins. This is how Dayo became a banker--loaning out dish coins to people like the Pig Farmer. Now as time went by, more and more townspeople went to Dayo to borrow her coins. To keep up with the demand, Dayo worked hard to stash away enough dishes so that she could be reasonably confident that she would have as many dishes as people might want.
Chapter 4 Dayo’s Bank
Well, as Dayo got older and richer she tired of making and storing so many sets of dishes. So she started trading the dishes for gold. Then, she made a new kind of coin. This coin had a picture of the King on the front and a picture of gold nuggets on the back. So now, when people came to Dayo’s bank they could exchange the new coins for gold nuggets instead of dishes. And because people trusted the value of gold more than the value of dishes, they liked Dayo’s new gold standard coins even better.
Now, when Dayo made loans, she was very careful to see that they actually had the collateral that they claimed to have. And so, you would often see Dayo out counting pigs, chickens, and sacks of wheat.
(Today money is still an IOU, look at a dollar bill and at the top it says Federal Reserve Note. Note is another word for IOU, and when the government prints more money then there is wealth to back it up we still get inflation.)
Chapter 5 Dayo on Importing and Exporting.
In the village where Dayo lived there was a river. Dayo lived on the west side of the river and ferried her pottery across the river where she traded it on the east side. One of the items she often traded for was leather goods that she got from the tanner across the river who didn’t want her money. The tanner was a very skilled and careful man who produced top quality leather goods. In contrast, the tanner who lived on her side of the river was lazy and often didn’t clean his hides of all of the fat and meat. So when his leather goods got wet, they would start to rot and stink.
Now, there was also a potter on the East side of the river. He was also a lazy man and his work was often poorly done with no attention to detail. So, people much preferred Dayo’s work. As a result, Dayo did a good business when she crossed the river. After some time, it came to pass that the sloppy potter complained to the local politicians that Dayo’s pottery was causing him to lay off people and that she was unfair competition. Now because the sloppy potter gave generously to the politicians, they listened to him and passed an import duty on pottery that was brought across the river. Well, the sloppy tanner also heard about this and he approached the politicians on his side of the river and got a import duty applied to leather goods which were brought from the east side of the river.
Now, to collect these duties customs agents were employed. Then, because some enterprising people started smuggling the good pottery and the good leather across the river at night, a border patrol was employed. Finally, when the border patrol caught smugglers, jails were built. Now, jailers, judges, lawyers and others were also employed. The point is that all of these government people are wealth-destroyers. They eat food and wear out clothing, yet they create no new wealth, some of them even take bribes. All of this creates a drain on world wealth.
The winners were the politicians, and the lazy east side potter and west side tanner. The losers were the high quality tanner and the workers he and Dayo laid off. The customers were also losers for they got poorer quality products and also had to pay higher taxes to support customs agents, border patrols, jails, and jailers, prosecutors , judges and politicians.
This is not to say that all government is bad. Teachers, for example, are wealth-creators. because knowledge is valuable to both the individual and the society. Firemen and police help preserve wealth, as do some of the environmental programs. But having said this, there is evidence that large government bureaucracies and red tape may be a significant contributor to world poverty.
Chapter 6 Dayo and Charity
Now Dayo was a generous person. And so, when a very old and frail lady came to the door begging for bread Dayo gave her bread. Now this old lady went home and ate the bread thus destroying wealth. This is the price society needs to pay for there are those who are unable to feed themselves: orphans, the old, and sick. However, when a young man came begging at Dayo’s door saying his wife was pregnant and that they had two other children for which they had no food, Dayo took a different approach to helping him. She said. “Look at the short road that you have taken to my house, when it rains it becomes a muddy mess, do you think you can fix it?”
Why, yes” said the man. “I’ll haul some gravel from the river and I’ll dig a ditch to channel the water away from the road.” Dayo said that would be fine. “When you are finished, I’ll give you 8 loaves of bread.” And when the man went home to his wife he told her how he had solved the potter’s problem and been given 8 loaves of bread in return. He was a proud man whose self-esteem remained intact. And even though he and his wife ate all the bread over the next week (which made the world poorer) the better road that he created, made the world richer. Turning labor into wealth can feed people and make the world richer.
The end.
