When Did Paper Money First Come Into Being?

The title for first country to use paper money goes to the Chinese. The very first attempt was during the reign of Emperor Han Wu-ti, (140 to 87BC). Constant military expeditions against the Huns in Mongolia had exhausted the empire.

The private minting of money debased the value causing swings in its value. Wu-ti called in all the coinage and issued in its place a treasury note, each worth 400,000 coins.
The notes weren't actually made from paper but from the hide of a white stag − quite a rare stag as it happened. The notes were about 30cm square and bore a special marking. This first attempt was inevitably doomed as they ran out of stags.

However around 800AD the Chinese did produce paper money, called flying money owing to its tendency to blow away. It wasn't fully exchangeable. It was issued to traders by banks in return for money deposited in the capital. It could later be redeemed when traders returned from the provinces. This helped stop merchants being robbed by highway men on their way home.

Add Comment

Report

Man got along quite a long time without money. He used what we call the barter system. If a man wanted something he did not make or raise him self, he found another person who had what he wanted and offered something in exchange.

The first kind of money used by primitive man usually consisted of things to wear or eat. The American Indians used carved shells called "wampum". Other types of "money" have been tobacco, grains, skins, salt, and beads. Eventually, pieces of metal replaced the other kinds of money.

The first people to use coined money were the Lydians. In the eighth century B.C., they began to make pieces of metal money which were uniform in weight and design and which could be easily recognized.

Gold and silver had been used as money long before that, but not in the form of coins. They had circulated as bars from which pieces were cut and weighed, but there was no guarantee of purity or weight. It was the Lydians who first thought of stamping pieces of metal with some symbol as a guarantee. Other peoples imitated them and gradually the use of coins became widespread.

After the middle Ages the use of paper money started. It was found that a "promise" to pay money, if there was confidence in the person who made the promise, would serve as well as real money. So the goldsmiths, merchants, and money lenders began to issue notes, which were written promises to pay cash on demand.

This "credit currency", since it was in the form of paper, was safer and more convenient to handle than gold. Soon banks, and then governments, began to issue such paper promises, and "paper money" came into existence.

Add Comment

Report