It is time to give some space to banknotes history and evolution. Let’s have a look at it from II Century till nowadays.

We already posted an article about the coins origins and its two most important periods in History, during ancient Greek and  times. In this occasion we will travel a little further East as the first banknotes are situated in China. We will
find there the origins of paper money, something unthinkable to live without

Pre-paper money

The first evidence close to paper money we can find is in historian chronicles. They tell us about the deerskin notes of Wu Di emperor, in the II Century. It was a time of

economical expansion with the beginning of Silk route linking the Chinese empire
with European continent (among other commercial routes) that would make bigger
and bigger the land controlled by the Han dynasty. To control all of it would need a strong economy so the coin emission was centralized and other alternatives were found. One of them was the deerskin notes of animals bred in the imperial gardens. 

Although there is no physical evidence of them, it is thought that it was a piece of
30×30 centimeters of leather with fringes on the edges. Princes and aristocrats
would get one of them in exchange for 400 thousand copper pieces. As it was created like a fee charged to big fortunes and to not circulate outside of the court, it can’t be considered as paper money itself but it was the beginning of something very popular around the world a few thousand years later.

As we said, the banknote most remote origin was in China in VII Century but its use it won’t legal in the whole country till 812 A.C, two centuries later. In the beginning it was a kind of private certificate among individuals, equivalent to a certain quantity of gold or silver. The objective was to avoid the transportation of heavy metals during their commercial crossings. It was simply easier and safer. Another positive point was avoiding copper use, increasingly scarce. It also motivated the development of money alternatives.

Those first banknotes, issued by rich families but not by the Government, play soon an important role in the Chinese economy. That’s why the Government, under the Sung dynasty, decided to formalize the issue of paper money. The first Chinese
banknote that will survive was the 1000 cash, issued by the Ming dynasty during
the Big War (1368-1398).

China had all the elements to become the banknote pioneers: paper, ink, print techniques and a flourishing trade.

As soon as the first banknotes appeared, it also emerged fake versions and, as a
consequence, the first regulations around X Century. Private banknotes were banned
and only government issues ones were permitted. They were made with a black leaf of a moral tree, and also appeared other problems like the excess of the issue of banknotes, inflation or devaluation.

Paper money arrives to Europe

This new payment invention was known first in the West territories thanks to the Venetian merchant and traveler writings, Marco Polo. However, his tales about banknotes weren’t easily accepted by the European mind, far from understanding what were these valuable papers. Explaining to them that a bunch of papers could be more valuable than a golden or silver coffin coins was not an easy task. Anyway, Marco Polo really appreciated this step forward in the commercial world and he dedicates a whole chapter to it in his book. In it, he relates how the Great Khan ordered to make a big amount of paper money out of the blackberry tree and print his mark on it. It would be used as an ordinary payment. The paper would be taken back to the Khan when it was spoiled and he would replace it with a new one in exchange for a 3% commission fee.

They were necessary another 300 years to introduce paper money in Europe. The founder of Stockholm bank, Johan Palmstruch, was the first one to do it in 1661. By then, the government had started to mint lighter coins than before, with less copper.
The citizens were nervous about it and they were rushing to get their coins back from the bank. To calm them down, Palmstruch decided to give their clients a certificate of the coins they had in their entity, giving them the right to get them whenever they want.

Those banknotes were called Daler and already had all characteristics of actual banknotes: serial number, signatures and anti- fake measures.

The practicality of this payment system was undeniable. However, Palmstruch soon had the same problem that China: the excess of issues (in a way because of the abuse of power made by the King to get credits). News and discredit spread quickly
everywhere. His bank was closed and Palmstruch incarcerated.

First banknotes in Spain

Neighbour countries followed the Swedish experience by issuing their own paper money in XVII Century, being during the XIX Century generalized in the whole continent and, as a consequence, in practically the whole world.

In Spain, paper money was a way of financing the war against England.  It was first issued by the San Carlos National Bank (the predecessor of The Spanish Bank)on  the 1st of March 1783, during Carlos III’s reign. Their values were from 200 to 1000 reales de vellón. It became soon popular among Spanish society that
appreciated their practicality and safety.

From then on, each banknote has its own history and on them we could find kings, artists, Scientifics, monuments…

Do you still have pesetas banknotes?




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