A History of the World in 100 Objects - Dr Neil MacGregor [182]
To counterfeit is death. The informant will receive 250 taels of silver and in addition the entire property of the criminal.
The much bigger challenge was to keep the worth of the new currency intact. Here, the key monetary decision of the Ming was to ensure that the paper note could always be converted into copper coins – the value of the paper would equal the value of a specific number of coins. Europeans called these coins quite simply ‘cash’ – they are round coins, with a square hole in the middle, which the Chinese had already been using for well over a thousand years. One of the things I love about this Ming note is that right in the middle of it is a picture of the actual coins that the paper note represents. There are ten stacks of coins with a hundred in each pile, so a total of a thousand cash or, as it says in writing on the note, one guan. You can get some idea of just how useful and welcome this early paper must have been when you compare carrying the paper around with the actual coins represented. Pictured here is 1,000 cash: 1.5 metres (5 feet) of copper coins all on a piece of string. They weigh about 3 kilos (7 lbs), are extremely cumbersome to handle, and are very difficult to subdivide and pay out. This note must have made life, for some people, very much easier. A contemporary wrote:
Whenever paper money is presented, copper coins will be paid out, and whenever paper money is issued, copper coins will be paid in. This will never prove unworkable. It is like water in a pool.
The middle of the note shows a string of ten stacks of coins
It sounds easy. But the words ‘never prove unworkable’ would come back to haunt the Ming emperor. As usual, the practice turned out to be more complicated than the theory. The exchange of paper for copper, copper for paper, never flowed smoothly, and, like so many governments since, the Ming just couldn’t resist the temptation of simply printing more money. The value of its paper money dived, and fifteen years after the first Ming banknote was issued, one official noted that a 1,000-cash note like this one had plummeted to an exchange value of a mere 250. What had gone wrong? Mervyn King explains:
They didn’t have a central bank, and they issued too much paper money. It was backed by copper coin, in principle – that was the idea behind it. But in fact that link broke down, and once people realized the link had broken down, then the question of how much it was worth was really a judgement about whether a future administration would issue even more, and devalue its real value in terms of purchasing power. In the end this money did become worthless.
But I don’t think paper money is always doomed to failure, and I think if you’d asked me four or five years ago before the financial crisis I would have said, ‘I think we’ve now worked out how to manage paper money.’ Perhaps in the light of the financial crisis we should be a bit more cautious, and maybe – to quote Zhou Enlai, another great Chinese figure, when asked about the French Revolution: ‘Well, it’s too soon to tell’. Maybe we should say about paper money after 700 years it is perhaps too soon to tell.
Eventually, around 1425, the Chinese government gave up the struggle and suspended the use of paper money. The fairies had fled – or, in grander language, the faith structure needed for paper money to work had collapsed. Silver bullion became the basis of the Ming monetary world. But however difficult to manage, paper currency has so many advantages that inevitably the world came back to it, and no modern state could now think of functioning without it. And the memory of that very early paper currency of the Ming, printed on Chinese mulberry paper, lives on today in a little garden in the middle of London. In the 1920s the