Origin and growth of
Bank Notes and Currencies - 2
(Written by N.R. Jayaraman)
A Banknote or Currency called as paper money is a type of negotiable instrument or a promissory note and the amount indicated on it payable to the bearer on demand. When banknotes were initially introduced, they were like instruments of promissory bonds assuring to pay the bearer in coins, and as the age passed, they gradually became a Paper Currency, a substitute for the coins.
The first banknotes in the form of Paper reportedly appeared in China some time in 910 AD and continued to be experimented in the Five Dynasties period. It became a familiar currency by the end of the century when under the Northern Song Dynasty a group of merchants issued something like an assurance note in print form called 'Jiaozi note' that carried a text reading ' the bill may be used instead of 77,000 wen of metal coinage'. They contained some pictures like group of people, houses etc along with some anti-counterfeiting marks and printed alternately in red and black inks. Those notes were convertible into hard currency and were readily accepted and circulated widely. This was done to relieve the burden of merchants carrying bulky Iron coins for commercial transactions. Of course they were not Currency meant to be replacement to the Coins , but were only guarantee notes akin to Currency note.
When the limited exercise of issuing Paper Currency commenced by the group of merchants gained momentum in the trading community, in the year 1023 the Song Dynasty officially began printing and issuing Jiaozi Paper Money by officially setting up banks.
Jiaozi, a form of banknote that surfaced around 10th century in the Sichuan capital of Chengdu in China was viewed by the Numismatics as the first attempt in the history of Bank Notes and Currencies towards issuance of paper money.
Though the 'Jiaozi note' was not considered Currency, it was nevertheless a promissory paper meant to guarantee payment of '77,000 wen of metal coinage' and used by the merchants in limited sphere for transacting the business. One very intriguing aspect found in those notes were multiple Banknote seals stamped on the note to prevent counterfeiting! The note bore the illustration of some merchants, with several seals found on the top portion, followed by guarantee text below the seals.
Though the Jiaozi was issued during the Song Dynasty, later dynasties also adopted the use of paper currency, such as the Yuan, Ming, and Qing Dynasties, though they never officially replaced coinage. Subsequently each emperor had the practice of casting new currency to replace the old one, and some even had several different versions of currency issued during their own reign. Perhaps such development might have prompted the Mongol Empire Kublai Khan ( Also called Genghis Khan) of China to issue the first ever Paper Currency and made it mandatory to use them in replacement to the coins.
I mentioned earlier, though the first known Bank note was developed in
China during the Tang and Song dynasties during 7th century, in
Europe the concept of Banknotes was first seeded into the minds of the
European rulers during the 13th century by travelers like Marco Polo who
had seen the Paper Currencies issued by the Mongol emperor
............to be continued