History of Money, 806 –– 1275

806 - 821

A Shortage of Copper Helps to Invent Paper Money

China has a severe shortage of copper and cannot make coins. The emperor begins to issue paper money notes.


China has an import problem

The Chinese print vast amounts of paper money in an attempt to buy off potential invaders from the north and pay for imported goods. This causes inflation.

1000 — 1100

Only the goldsmiths know for sure

In England goldsmith's offered to keep people's gold in their vaults and gave them paper receipts for what they left. They soon were able to use the paper receipts for purchases. They never made the connection that the gold could just be replaced entirely by paper which kept them at war always trying to steal some other countries gold or cattle or woman.


Off with their hands

On Christmas day all the mint masters at the Assize of Winchester are punished by having their right hands cut off. The quality of coinage was improved but only temporarily.

1160 — 1200

King Henry the First figures it out

England's King Henry the First was the first to figure it out. But that isn't why they called him Henry the First. He used sticks of polished wood. Notches in the sticks would signify the denominations. These Tally sticks (a fiat currency) were split to foil counterfeiting, one half the Kink kept and the other half was circulate as money. People used the sticks because they could pay their taxes with them and so they used the tally sticks as money. This system worked wonderfully for 626 years and was the most successful form of currency in recent history. But they always skip that part in econ 101.


The Jews are expelled from England

In England Edward I forbids the Jews to exact usury. This lead to a shortage of money and a decline in the quality of coinage (due to an increase in clipping). The Jews are blamed and there are wholesale arrests of Jews in 1278. They are expelled from England in 1290.

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