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Among many Pacific Northwest Native American and First Nations cultures, a potlatch is a gift-giving festival that traditionally served as the foundation of the cultures’ economies. The word itself derives from Chinook jargon, the pidgin trade language used in the region in the 19th century (with about 100 native speakers remaining today).

The word is a false cognate for “potluck,” though in white communities in some parts of the country, potluck dinners are sometimes called pot-latches, possibly out of the erroneous belief in an etymological connection. Potlatch nations include the Coast Salish of British Columbia, Washington, and Oregon (which includes the Snohomish, Skagit, Snoqualmie, and other peoples); Haida of British Columbia and southeast Alaska; Heiltsuk of British Columbia's Central Coast; Kwakaka'wakw of Vancouver Island; Makah of Washington; Nuuchahnulth of British Columbia; Nuxalk or Bella Coola of British Columbia; Tlingit of Alaska, British Columbia, and the Yukon; and Tsimshian of Alaska and British Columbia.

The Kwakaka'wakw are sometimes erroneously called the Kwakiutl, and the first major anthropological work on the potlatch system was part of German American Franz Boas's in-depth study of the Kwagu'l people, a Kwakwaka'wakw tribe whose government is called the Kwakiutl First Nation. Throughout the region where the potlatch system is used, property concepts and traditions are well established, in contrast with stereotypes of Native Americans (based on tribes farther east) as being blissfully ignorant of concepts of private property or land ownership. Hunting and fishing grounds are traditionally passed down within families.

A basic barter system originally supplemented what was primarily a subsistence economy, meaning that each family or group of families provided for its own needs: hunting, fishing, growing, foraging, and preparing its own food, as well as the raw materials necessary for clothing, shelter, tools, and other items. The barter system allowed not only for specialization and differentiation of labor but also for value to accrue according to rarity, making food and furs more valuable in hard times, and imparting extra value to well-made goods, which in turn provided the motivation for artisans to develop their skills beyond the bare necessities. Precious minerals and metals, especially copper, were an important part of the trade system.

Over time, the potlatch system supplanted this barter system, depending on surpluses of goods. In the potlatch system, social status is determined not by wealth per se but by the capacity to give wealth away. In order to demonstrate one's social status, a family would host a potlatch ceremony at which it was expected to provide gifts for all who attended. The most common unit by which wealth was measured was the wool blanket, which had several advantages for this purpose, namely, that it was nonperishable, could be produced by most families, did not exhaust a resource, and served a practical end.

Pieces of copper could be exchanged for blankets, and the value of any given coin was referred to in terms of the number of blankets it could be exchanged for, but it would be misleading to consider these coins or currency in the same sense as in Western economic systems.

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