Chinese Inventions: Paper Money

Neha & Emily

Paper Money

Paper money started in the 9th century of China

Paper money used to be called called 'flying money' because it was so light it could blow out of your hand.

The government used paper money for tax payments.

Real paper money was created to replace the heavy metal coins.

In 1661, the first Western money was brought to Sweden. Paper money came to America in 1690, France in 1720, England in 1797, and it came to Germany in 1806.

When the Mongols came to power in China, they issued a quaint form of paper money called 'silk notes'.

The notion of using paper as money is almost as old as paper itself.

China is recognized to have been the first country in the world to use paper money.

The history of paper money is interesting not only from the idea and technolgy of printing, but also from the perspective of trading with a commodity that in itself has no intrinsic value. Clearly the issues of paper currency must inspire confidence for trading something of worth for items of no specific worth, and with the potential to be abused by the issuer as a way to increase the supply and control of items of value, thus creating inflation.

For much of its history, China used gold, silver and silk for large sums, and bronze for everyday transactions. The notion of using paper as money is almost as old as paper itself. The first paper banknotes appeared in China about 806 AD. An early use of paper was for letters of credit transferred over large distances, a practice which the government quickly took over from private concerns. The Chinese, with their great gift for pragmatism, labelled this practice "flying money". The printed notes were normally military scrip or other emergency measures issued in dire circumstances, but for the most part these notes disappeared quickly. The first real use of a paper money system was in Szechwan province, an isolated area subject to frequent copper shortages (which is a component of bronze). It had reverted to an iron currency of coins, and paper was a welcome option. Iron banks sprang up to facilitate the trade, and the government was quick to take over the profitable enterprise. Amazingly, the Chinese only used paper money on any meaningful scale for about 300 years of a 400 year period between 1050 and 1450, overlapping the Song, Yuan (Mongol), and Ming dynasties.

The chinese invented paper money. They wore coins around their necks as necklesses so they would always have it around.
The Origin of Paper Money in China
A World of Money - Paper Money