|
|
The History of Paper Currency
Thursday, September 10, 2009
InstructionsChinaStep 1:  The Chinese government, under the Sung dynasty, issued the first official paper money, which had an expiration date, was in short supply and was limited to select areas. The government required the money's replacement every three years, charging the person a 3 percent service charge in order to exchange it for new money. The old money was never retired or destroyed, however, leading to rampant inflation by 1106. The Yuan dynasty abolished the expiration of the money, allowed the paper to equal hard commodity rates such as gold, silver and silk, and transitioned the old Sung currency to its own currency. This dynasty also abolished the use of metal currency in favor of the paper currency and demanded that taxes be paid in paper currency. An internal war caused rampant inflation and collapsed the currency altogether, leading to its total disappearance by 1500. In the 1890s, banknotes were issued based on the yuan, which was on the silver standard. The country issued currency through its banks, which led to differing currencies in the 1930s along with the Japanese who invaded at that time. Since 1948, China has been on the gold standard, calling its currency the gold yuan.
ScotlandStep 1:  The Bank of Scotland, established in 1695, issued 5, 10, 50 and 100 shilling banknotes, beginning its business ventures by making commercial loans and doing business with only the very wealthy. The bank introduced a 20-shilling banknote in 1704. Unlike modern paper money, these banknotes looked more like checkbooks without the perforated edge. The Scots were the first to incorporate color into their money in 1777.
GermanyStep 1:  In 1873, Germany issued its first paper currency, calling it the gold mark. German paper currency was called the papiermark, beginning in 1914 as the mark lost its link with gold because of World War I. In 1924, Germany introduced the reichsmark, replacing the papiermark because of the rising inflation. Because the value of a reichsmark was worth 1 trillion papiermarks, a rentenmark bridged the gap, which was based on the gold standard. In 1948, the United States, France and Great Britain issued the Deutsche mark to West Germany, replacing the reichsmark and rentenmark. The Soviets issued their version of the Deutsche mark later that year. In 1990, after the collapse of the Soviet Union, the West German Deutsche mark helped unify the country. In 2001, Germany joined the European Union, replacing the Deutsche mark with the euro.
JapanStep 1:  In 1872, attempting to establish a standard type of money, the Meiji government established the first, widely accepted paper currency called the yen. The yen adopted the gold standard, and the first banknotes resembled U.S. banknotes. After World War I, the yen was tied to the value of the U.S. dollar, until 1973 when the United States abandoned the gold standard. As of 2007, the value of the yen has been kept low as the Japanese economy focuses on high exports, low interest rates and policies that strictly regulate inflation.
United StatesStep 1:  The Massachusetts Bay Colony issued the first paper money on American soil in 1690. In 1775, the Continental Congress issued paper currency--called continentals--to pay for the Revolutionary War. Instead of backing the paper money's value with precious metals, the money was backed with anticipated tax revenues, which led to counterfeiting and devaluation. Established in 1791, the first bank of the United States issued banknotes to eliminate confusion and simplify trade. In 1861, Congress authorized the United States Treasury to issue paper money called demand notes, which were non-interest-bearing, in order to pay for the Civil War. In 1865, the U.S. Treasury issued gold certificates against gold bullion deposits, taking them out of circulation in 1933. In 1877, the U.S. Treasury took over all printing and engraving in 1877. In 1973, the Unites States departed from the gold standard.
Photo/Video CreditEuros by Andrew Netzler: Wikipedia.com
Related Content
Modern Germany is a key member of the Eurozone, and as such it uses the euro as its currency. However, the monetary policies behind this pan-European currency are very German in origin and are...
A banknote is a promissory note provided by a bank or government. In other words, it is any paper money that has no intrinsic worth on its own. Banknotes are the basis for most currencies used in...
The designs of world coins present a wealth of information about the countries they are from. Each nation has its own coinage. Individual issues vary by denomination, value and metal content. Coins...
The history of currency exchange and how it works is a long tangle and is bound up in why money is worth anything in the first place. Even ancient coins, made out of gold and silver, could make...
Paper currency is used by countries around the world. According to the Federal Reserve Bank of San Francisco, the Massachusetts Bay Colony was the first to issue paper money in 1690 in what would...
|
- Relationship advice
- Brain teasers, trivia & jokes
- Random questions
- And much more!
go