Saturday, September 12, 2009
China Invented Every Single Major Form of Currency - Metal Coins, Paper Money and Fiat Currency - And Seized Gold Six Centuries Before FDR
You may know a lot about China's Renminbi Yuan.
But there is a lot about the history of Chinese currency that you likely don't know.
China Created the First Metal Coins
After trading for many years in shells (3000 to 4500 years ago), and then in shell-shaped currency made out of bone, wood, stone, lead and copper, China apparently moved into bronzed shells (circa 1500 BC to 1046 BC), various shapes of bronze coins such as small knives and spades (5th century BC to 221 BC) and then round bronze coins with square holes in the middle (starting around 221 BC ).
China Created the First Paper Money
During the Song dynasty (960-1279), a form of promissory note in the Sichuan province called "flying money" became very popular, and - in 1024 - the government took over production of printing flying money, and then expanded the system into the world's first paper money currency.
By the twelfth century, various forms of paper money had become the dominant forms of currency in China
China Created the First Fiat Currency
The world's first currency not backed by precious metals - called the "Chao" - was created during the Yuan Dynasty (1271-1368).
Six Centuries Before FDR, China Took Emergency Measures and Seized Gold
In order to prop up its fiat currency and prevent runaway inflation, the Yuan government attempted to prohibit all transactions in or possession of silver or gold, which had to be turned over to the government.
China has outlawed possession of silver several times since, and has just lifted the most recent ban.
Note: I have not seen any evidence that China invented shells as a form of currency.
The above information comes from numerous sources. A good introduction can be found here.