Jiaozi — the First Banknote
In Sichuan under the Northern Song, paper deposit receipts began circulating in place of heavy iron coin. It started in the Jingde era (1004–1007) with sixteen wealthy merchant houses of Chengdu printing on silk paper, and in 1023 the state took it over with an office called the Yizhou Jiaozi Bureau. At that point the reserve was 360,000 strings against an issue of 1,260,000 — a reserve ratio of twenty-eight per cent. Nothing teaches so plainly that money itself is a child of selling promises. And nothing teaches so plainly what happens when you print too many of them. After 1093, over-issue and the suspension of convertibility drove jiaozi down; under the Southern Song, huizi were printed to a scale of 650 million strings during the Mongol wars. The Yuan exchanged huizi for jiaochao, could not stop the slide, issued zhiyuanchao in 1287, and by the fourteenth century value had fallen to roughly a third. Marco Polo, incidentally, gave a whole chapter of his book to this paper money and described how it was made from mulberry bark. A traveller often called flat in his prose is unmistakably astonished at the sight of tree bark turning into money.
The myth, corrected
Jiaozi was the world's first banknote, and it stuck
It did not stick. It lost value through over-issue, and was replaced under the Southern Song by huizi, under the Yuan by jiaochao, then by zhiyuanchao — changing its name while repeating the same failure four times over. «A promise on paper dies if you print too much of it» is the most expensive experiment on this map.