According to the Time Magazine, the word cash has its origins in kai-yuans. These were round bronze coins with square holes circulation during the Tang Dynasty (618 to 907)
Also called Kai Yuan Tong Bao.
Kai Yuan meant the start of a new epoch.
Tong Bao meant treasure in circulation.
During the rule of the Tang dynasty, China was a great commercial hub and had extensive trade ties with many neighbouring countries, kai yuans started to circulate outside the country, resulting in shortages.
In the later periods, Chinese emperors innovated and created something known as Fei Qian which means flying money. Flying money was the earliest form of paper money and the name still sounds so appropriate even now Back then, probably because it was weightless and now any amount we have cannot keep it from flying away.
In fact it was the Chinese who were the first to come up with the concept of paper money 1000 years ago and it was Marco Polo who “liked” and “shared” this big idea with fellow Europeans.
Marco Polo had spent a considerable time with one of the greatest Chinese Emperors, Kublai Khan and was fascinated with the many things he saw for the first time-rich silk, spices and the gun powder and a fascinating form of currency.
Way back then, China was the epicentre of trade and commerce. (See how history goes in cycles) Kublai Khan did not want gold and silver going out of the kingdom, so he thought of substituting copper and when copper supplies dwindled he experimented with iron. But using iron did not work out because there were issues with the intrinsic value and also with the weight. People had to carry a sack full of iron coins to do grocery shopping.
That’s when the search for another viable alternative began.
The Chinese started issuing something like modern exchange bills which they called jiaozi which could be redeemed for gold or silver. The bills did well for some time until Kublai Khan thought of this rather ingenious method where the gold remained in his treasury, people exchanged goods and services on something worthless but extremely valuable.
The Chinese used Mulberry trees to create a unique currency. They extracted some material between the bark and the wood and made black sheets out of that. The sheet was cut up into various sizes and finally with a solemn seal of authority, Kublai Khan was on to a flying start. People deposited gold and silver in the treasury for the currency they could spend on buying exotic things which made them feel richer and important in society.
Anyone who dared to forge the notes was sentenced to death.
The beginning of fiat currency!
The word fiat is a Latin one and means “let it be done”
And so it is till now.
Kublai Khan had this brainwave in the thirteenth century and built a great and formidable empire from the bark of the mulberry trees. What happened in Bretton Woods in 1944 can maybe be called “counterfeiting and flooding the world market.”
It’s interesting how words keep getting a different meaning as time goes by. Nobody would have thought that currency could be mined and that too by “commoners”, leaving many to figure out new ways to control and retain power.
Words like POW, signature and keys have a different meaning depending on the virtual or a real context.
The right to issue currency and the authorization to collect and use data have always been associated with supreme sovereign power. Now, you and I can also do that.
Like for other things we don’t know the future of money but it’s interesting to know some of the history behind it.
Which will be the Tong Bao for now?
And for those of you who want to read more interesting things, go through Tim Harford’s 50 Things That Made the Modern Economy and the Under Cover Economist. Both remarkable.