Front Page Titles (by Subject) Early History of Representative Money. - Money and the Mechanism of Exchange
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Early History of Representative Money. - William Stanley Jevons, Money and the Mechanism of Exchange 
Money and the Mechanism of Exchange (New York: D. Appleton and Co. 1876).
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Early History of Representative Money.
Ancient nations were unacquainted with the use of paper money, simply because they had no paper. But it would be a mistake to suppose that they did not employ representative money exactly on the same principles as we use bank-notes. Some few particulars on the subject have long been known, but a recent article by M. Bernardakis in the Journal des Economistes (vol. xxxiii. pp. 353-370) has added much to our knowledge, and made it quite clear that the ancients were more acute in matters of currency than we have given them credit for.
One of the very earliest mediums of exchange, as we have seen (p. 20), consisted of the skins of animals. The earliest form of representative money consisted of small pieces of leather, usually marked with an official seal. It is a very reasonable suggestion made by Storch, Bernardakis, and other writers, that when skins and furs began to be found an inconveniently bulky kind of money, small pieces were clipped off, and handed over as tokens of possession. By fitting into the place from which they were cut they would prove ownership, something in the same way that notched sticks, or tallies, were for many centuries used to record loans of money to the English Exchequer. We know by experience in the case of paper money, that if a people had become thoroughly accustomed to the circulation of these small leather tallies, they would in time forget their representative character, and continue to circulate them, when the government, or other holders of the skins themselves, had made away with the actual property. Such is no doubt the history of the leather money which long had currency in Russia.
It is impossible to ascertain what was the character of the leather money which, according to an obscure tradition, was in use at Rome before the time of Numa. There is no doubt that the Carthaginians had a representative leather currency, for Æschines the Socratic tells us that they used small pieces of leather wrapped round cores of unknown material, and then sealed up. Neighbouring nations refused to receive these curious pieces of currency, whence we may safely infer that their value was nominal.
It is however in China that the use of paper money was most fully developed in early times. More than a century before the Christian era, an emperor of China raised funds to prosecute his wars in a way which shows that the use of leather tokens was familiar to the people. The tokens having been made of the skins of white deer, he collected together into a park all deer of this colour which he could find, and prohibited his subjects from possessing any animals of the same kind. Having thus obtained a monopoly of the material, reminding one of the monopoly of the Bank of England in water-marked paper, lie issued pieces of the white leather as money at a high rate.
In the middle of the thirteenth century, Marco Polo found a paper money in circulation in China, composed of the inner bark of a tree beaten up and made into paper, square pieces of which were signed and sealed with great formality. These notes were of various values, and were legal tender, death being the penalty imposed upon those who refused to receive them. Counterfeiters likewise incurred the same penalty. Another traveller, who visited China in the fourteenth century, gives a very similar account of the paper money then circulating, and adds that, when worn or torn, it could be exchanged for new notes without charge. It is needless to follow out the long and doubtful history of the subject in later times, many particulars of which will be found in the article of M. Bernardakis, or that of M. Courcelle-Seneuil on Papier Monnaie in the "Dictionnaire de l'Economie Politique." It may suffice to say that the history resembles that of most inconvertible currencies. The quantity of paper afloat increased so much under the Mongol dynasty as to cause great evils, and the Ming dynasty, continuing the issues, went so far as to prohibit the use of gold or silver money. The value of the paper fell so low, it is said, that one metallic cash was worth a thousand paper cash, reminding us of the present state of the paper currency in San Domingo. The result was a collapse and reaction in the fifteenth century.
Among other Asiatic nations, the Tartars and the Persians also understood the use of paper money, and Sir John Maundeville, who travelled in Tartary in the fourteenth century, gives the following account of the advantages which the Great Chan enjoyed in consequence. "This Emperour may dispenden als moche as he wile, withouten estymacioun. For he dependethe not, ne makethe no money, but of Lether emprented, or of Papyre. And of that money, is som of gretter prys, and som of lasse prys, aftre the dyversitee of his Statutes. And whan that Money hathe ronne so longe that it begynnethe to waste, than men beren it to the Emperoure's Tresorye; and than thei taken newe money for the olde. And that Money gothe thorghe out alle the contree, and thorghe out alle his Provynces. For there and beyonde hem, thei make no Money nouther of Gold nor of Sylver. And therefore he may despende ynow, and outrageously." Not a few great emperors and kings and even republics have imitated the Great Chan, and have spent their paper money, "ynow and outrageously."