First paper, then paper money. This is pure logic. It is hardly surprising that the first notes or better, the first paper money, appeared in China. With the invention of paper and printing on its account, this country was almost destined to produce the first paper money.
During the Tang Dynasty (618-907) there was a growing need of metallic currency, but thanks to the familiarity with the idea of credit the Chinese were ready to accept pieces of paper or paper drafts. This practice is derived from the credit notes used by merchants for their long-distance trade.
At the end of the Tang period, traders deposited their values with their corporations. In exchange, they received bearer notes or the so-called hequan. Those hequan were a real success and the idea was exploited by the Authorities. Merchants were invited to deposit henceforth their metallic money in the Government Treasury in exchange for official “compensation notes”, called Fey-thsian or flying money.
During the Song Dynasty (960-1276) booming business in the region of Tchetchuan likewise resulted in a shortage of copper money. Some merchants issued private drafts covered by a monetary reserve which initially consisted of coins and salt, later of gold and silver. Those notes are considered to be the first to circulate as legal tender. In 1024 the Authorities confer themselves the issuing monopoly and under Mongol governement, during the Yuan Dynasty (1279-1367), paper money becomes the only legal tender. During the Ming Dynasty (1368-1644) the issuing of notes is conferred to the Ministry of Finance.
On all notes issued between 1380 (13th year of the Emperor Hung Wu’s reign) and 1560 the names of Hung Wu and the Minister of Finance can be read. Those notes were issued in values of 100, 200, 300, 400 and 500 wen and 1 kuan or 1000 wen. Thus one kuan had the same value as 1000 copper coins or 1 liang (1 tael) of silver; 4 kuan equalled 1 liang of gold.
Unfortunately, those notes were issued continuously without redrawing from circulation the old ones. This practice of course led to an inflationary spiral: in the beginning, in 1380, one guan was worth 1000 copper coins, in 1535, one guan valued merely 0,28 copper coin!
The note in the showcase dates back to the same period. It is fairly large (340 x 221 mm) and printed on dark slate paper of the mulberry tree. The inscriptions in the heading read the name of the issuer and the name Hung Wu, the founder of the Dynasty. The value of Yi guan (or 1 kuan) is represented by the two characters and by ten heaps of coins just beneath them. The inscriptions left and right of the value there read as Note of the great Ming dynasty and Circulating within the Empire.