David Roth

The History Of Retail In 100 Objects – Paper Money

Paper Money

It’s Tuesday so it’s The History Of Retail In 100 Objects post – This weeks object is Paper Money

The earliest paper money was used in China around 1000 BC and it was most commonly used as a letter of credit, transferred over large distances. the 13th Cent ury, when Ghengis Khan conquered China, he quickly grasped the potential of its paper money and began using it as a currency throughout his empire. He seized people’s existing supplies of gold and silver and gave them paper currency in exchange, leaving the population no opt ion but to trade with paper money. Although the use of paper money spread and continued for several hundred years, it was not wholeheartedly embraced. In Persia, its introduction in 1294 led to a complete collapse of trade. In the 15th century in China, the issuing of paper notes was mismanaged, leading to rapid depreciation of their value and causing inflation. As a consequence, the use of paper money in China ceased in 1455 and did not resume for many years. Europe came far behind Asia and the Arab world in its adoption of paper money, primarily because Europe didn’t have paper until around 1100 AD. The alleged first instance of use of paper money in Europe was in Spain in 1438 during a Moorish invasion (a Spanish military leader paid his soldiers with paper). Early on in the introduction of paper money, European governments took over its production and began printing ‘official’ paper money. These paper receipts were all given fixed values and people began leaving their heavy coins with merchants in exchange for them. The earliest known English goldsmith certificates were being used by 1633 as proof of ability to pay. Nations and colonies developed their own paper money, leading to the variety of notes in use today. In 1816, governments established the ‘gold standard’, to ward against inflation. This tied the value of paper money to a specific amount of gold, held in the government treasuries. The US officially adopted the gold standard in 1900. Today, not all notes are widely accepted and the average lifespan for a currency’s circulation is only 39 years. The longest running paper currencies are the British pound, (introduced in 1694) and the US dollar (introduced in 1792).

Contribution to Retail History

Paper money is a promise to ‘pay the bearer’ a set amount and as such its success as a currency depends on mutual confidence in its validity (unlike early coins which had an intrinsic face value of their own). It was pivotal to the opening of trade between regions and nations, offering a light, easily portable alternative to the cumbersome weight of coins.

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