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In the last decades of the 14th century, the Ming Dynasty found what seemed to be an unlimited source of money in the issue of paper money. The imperial government put in circulation millions of notes, but as they were unredeemable and issued in huge quantities, public confidence in the notes plummeted, eventually leading to the failure of paper money in China.

Mulberry bark paper

Did you know that...

Ming notes were printed on paper produced from the bark of different species of mulberry, as well as other plants like bamboo and hemp?

In the first half of the 11th century, the Song imperial government issued in China its first notes convertible to hard currency (jiaozi), thus regulating and centralising the paper money issues previously made by private merchants. The issues continued under the Yuan Dynasty, and by the end of the 13th century Marco Polo could report with amazement the circulation of such notes in China.

The paper money issues of the Ming Dynasty take root in this centuries-old tradition. The Ming notes were issued from 1375 to c. 1424 and became known as Da Ming baochao (‘Great Ming Treasure notes’). There were various denominations, the highest being 1 guan, a unit of account worth 1,000 bronze coins of 1 wen each. The idea of its monetary equivalence was made explicit not only in the note’s denomination, but also in the string (guan) of coins displayed on the centre of the note.

The text in the lower panel of this note contains messages of great significance. If, on the one side, the text warns that counterfeiting was punishable with death and forfeiture of property, on the other side, it encouraged people to report the crime by offering the informants 250 taels of silver (around 9.4 kg) as well as the property of the criminal.

As the notes were unredeemable and its issue excessive, this fuelled great distrust among the public, caused rapid depreciation of market value of the notes and eventually brought widespread discredit on paper money. In fact, in 1394 the market value of the 1 guan notes had fallen to less than 20% of their face value. The government even banned the use of coin and silver in transactions. However, inflation and the sharp depreciation of the notes eventually forced the imperial government to abandon paper money in the 1430s.

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