Currency: From metal to paper

Recently I wore my old pair of jeans and I found some money in the pocket of it. It was a note. I’m sure this kind of incident happened with many of us. This incident made me realize how currency changed over a period of time. A piece of paper has a value that we can buy anything from it. So let’s start how the changes took place and getting us to introduce the banknote.

Barter system

Before any form of currency, people used to exchange stuff to get what they want. Suppose I’m a farmer and I want a pair of shoes, and there is a cobbler who wants some grains so I would exchange my grains with him and get shoes and he gets the grain. This was a very prevalent system in the old times and known as the barter system but it also had its limitations. Like if I need the clothes, the tailor needs grain, it’s okay, we can exchange it. But if I need clothes, tailor needs shoes and the cobbler wants grain we have to exchange our stuff to each other. And it would become a whole lot difficult and complicated because there were a large number of demands and people had to find the person to exchange their goods.

Metals and coins

We needed something that everyone wanted and could exchange their product with it. Metals were the first choice of humans to trade. Ancient people used silver as one of the first metals to use as money. In the 5th century BC, ancient Greece had enormous about of silver. They used to barter silver with any person to purchase something. The Greeks thought why not just use it like small pieces that would be easy to carry. So they made the very first coin with an owl figure crafted on it.

The Romans had less silver, so they attacked Greece and found silver. So they began to use their own coins. Ancient Rome made the Denarius as their first coin. This coin didn’t last very long so they introduced a new coin named the Antoninianus in 235 AD. Ancient Chinese didn’t value gold and silver as much as the Romans did. Also, that time gold was very difficult to find. And China didn’t have that much silver, so they preferred bronze over them. But as mining was done in its early stage bronze became common too.

Currency and China

So they shifted to copper, during copper age Zhou dynasty, whose empire lasted from 1016 BC to 256 BC, used copper and iron as money. But the money back then was represented by symbolic articles like knife and spade. They initially used weapons as money. After the Zhou dynasty fell, there was a rise of the Qin dynasty(221 BC to 206 BC) in China who omitted the weapons used as money and proposed to use coins with holes between them as money.

The hole allowed merchants to put a string through them and carry a large number of coins. After that, in the Han dynasty(206 BC to 220 AD) China invented paper and by 100 AD the Chinese were able to produce the paper on a large scale. By then big merchants we’re carrying heavy copper coins with the string. The Hans made a smaller and lighter version of the coin to solve that problem and named it the Wu Zhu coin which lasted till 621 AD.

Liang dynasty(502 AD to 557 AD) experimented with iron coins in Sichuan province. At first 2 iron coins were worth 1 copper coin but by 557 AD 10 iron coins were worth the same number of copper coins. In the rule of Emperor Gazoo, the first ruler of the Tang dynasty(618 AD to 907 AD), China made many advancements and he ruled a massive kingdom. Rich merchants carried thousands to coins that were not only inconvenient but susceptible to theft too.

Tang’s solution to that was the use of paper receipts which was also called flying money, which represented copper coins and can be redeemed at the provincial chancellery. The chancellery was like transfer banks storing cash and redeeming it at a 3% fee. The government got a little greedy at that time and increased the fee to 10%. Because of government greed, the use of flying money declined.

After the Tang dynasty, the Song dynasty(960 AD to 1279 AD) came to power. Emperor Tai Chi reunited many areas, made progress in food and cultivation, and also art and culture. The coins were heavy and there were problems in carrying them. So during the 993 AD, the idea of the paper as money came to mind. Song dynasty gave printing power to 16 institutions that functioned like deposit banks. In 1016 AD, these banks bailed out. After 1022 AD, banks were nationalized.

After nationalization, the government issued a Jiaozi paper note which was the 1st government-sanctioned currency. The use of paper money, considering all its benefits, became prevalent. During the voyage of Marco Polo in China, he saw the paper money culture and explained it in his book " The Travels of Maco Polo". After his voyage, he came back to Europe and the idea of paper money traveled with him and spread in the world.

That is how the culture of paper money extends and now we use these paper bills. Through one’s ideas of helping the community and curiosity, we have witnessed the improvements in the currency. So always let the rocket of your ideas and curiosity on fire and to know your curiosity level click here.