A Brief and complete history of paper banknotes throughtout the world

The oldest existing bank note came from 14^th Century China; this was a 1000 Yuen banknote, 225 by 340 mm with a pile of coins depicted front and centre.

However, paper money can be traced back to 7^th Century China during the Song Dynasty when paper currency was used  as temporary ‘cash’ to tackle the copper shortage. These original banknotes were held with the intention that they could be traded at any time back to copper coinage.

It took 300 years after Marco Polo returned from China with stories of paper money, for the Europeans to adopt the novel idea. However, it had an interesting beginning. It began first (much like in China) as emergency money to substitute for coins and other tradeable items, silver, gold etc.

It wasn’t until the 17^th Century that banknotes went into proper European production. The first European banknote was printed in Sweden, thanks to Johan Palmstruch who printed his first ‘Kreditivsedlar’ (credit paper) in 1661. However, when the bank printed too many notes- Palmstruch was imprisoned for damages- making the Stockholms Banco-Notes rare collector’s items.

Still during the 17^th Century the battle over control over England’s money system was coming to a head. In the end- favour fell toward the idea of an independent credit institution and the Bank of England was founded in 1694.  The Bank of England printed Goldersmiths banknotes as promissory notes from English goldsmiths on account deposits. The State received a loan in exchange for the right to print banknotes. In time the Bank of England developed into the most influential Bank in the world commercially printing, and exchanging paper banknotes throughout the British Empire in the 17^th and 18^th centuries.

One year later, the Bank of Scotland was founded and carried a powerful monopoly over Scottish banknotes until 1717. Around the same time, Norway experienced the circulation of banknotes at the hands of Thør Møhlen; however the Norwegian public rejected the idea, turning their notes in for exchange to coinage, sliver or gold almost immediately.

Under Louis XIV, France began printing paper banknotes. Paper money was still seen as an uncertainty and as such, the most other European states waited until the late 19^th to begin printing and circulating their own State currencies, from here the rest is history.

Research Material: RE Fahy Pty Ltd Trading as The Right Note-Research and Historical Department.

Additional Research Material: www.moneymuseum.com.