Where “Makin’ Paper” Began

Paper money was first created in China during the Song Dynasty. China, being the first to create paper in 25 CE, was naturally ahead of the world in terms of realizing the creative potential paper provided. The first recorded printing of paper money began in 960 CE. The main motivation for creating a paper currency arose from the inconvenience of China’s coin-only currency. Business people found the weight of these metal coins inconvenient, and the production of them inefficient. This desire for convenience is also believed to have birthed the beginning of banking, as merchants began leaving their coins behind with trusted agents. 

The integration of paper money was a gradual process. This process began with the legalization of shops and agencies that would allow citizens to exchange their coins money for paper notes. Many years later the government began issuing the paper notes out themselves, removing the need for these shops and directly controlling the flow themselves. This printed paper money was called “Jiaozi”. Jiaozi was also referred to as “promissory notes” or a “note payable”, as they acted as a legal instrument promising one party would pay the other. These initial notes were issued in 1000 qiàn ( a high value for the time)  to support private merchants. The equivalent to 1000 qiàn in coins weighed 25 kilograms. While this value was helpful for large merchants it was much to large for common citizens to make use of. This production of notes was an enormous help to increase the efficiency of spending currency, but only for the already wealthy. When the government first began releasing these notes they struggled to regulate their production. Furthermore they didn’t produce enough steel coins to back up the paper notes.  This resulted in unreasonably high levels of inflation which landed numerous merchant companies in bankruptcy. This inflation led to the Jiaozi banknotes eventually being replaced with the currency of Huizi. 

Sources:

Banknote World. “Who Invented Paper Money?” Banknote World, 25 Aug. 2021, www.banknoteworld.com/blog/who-invented-paper-money.

—. “Jiaozi (Currency).” Wikipedia, 9 Sept. 2021, en.wikipedia.org/wiki/Jiaozi_(currency).

Asia for Educators, Columbia University. “The Song Dynasty in China | Asia for Educators.” AFE The Song Dynasty In China, afe.easia.columbia.edu/songdynasty-module/econ-rev-money.html. Accessed 20 Oct. 2021.

“Chinese Paper Money – Silk-Road.Com.” Silk Road, 1 Oct. 2018, www.silk-road.com/artl/papermoney.shtml.