How Money Was Invented: The Chinese Way 🪙 [Ancient History Documentary]

2,700 years ago, in the heartlands of ancient China, and in a small kingdom in what is now Turkey, a revolutionary idea was born. And so began the fabulous story of money. These first coins, if you were to compare them to a modern monetary unit, were not one-euro coins, but bills of 500 euros, perhaps more. In the West, it was a mixture of gold and silver. While in Asia, bronze coins were minted by the billions. There are a lot of coins. There were no banks at the time, so people couldn't deposit their money anywhere and had to find somewhere to bury it. Why did money spread all over the world? Was it for war or trade? From a world where people didn't use money, it now circulated absolutely everywhere, including in the remotest areas. From Alexander the Great to the heyday of Rome... Gold drives one mad. Gold corrupts minds. ...from the invention of paper money just 1,000 years ago in China... It was a watershed event. ...to the French Revolution and the Great Depression in the United States. There was this idea that the gold standard was the cornerstone of civilization. Of course, that turned out to be totally wrong. Discover how money changed the course of human history. Since its invention, whether in the East or the West, money had always come in the form of a piece of worked metal, until one day, in 1024, in the city of Chengdu. In 1024, in China, the government officially launched paper money in the province of Sichuan. It was a big turning point in the history of money in the world. This form of money was called jiaozi. Jiaozi, which means exchange. Paper money has existed in China for 1,000 years. It was issued 600 years earlier than in the West. Why did the Chinese invent the first paper money? And why did they carry out this experiment long before the rest of the world? Undoubtedly because, since its beginnings, China has done things its own way. In China, value wasn't measured in gold or silver, but in objects with great symbolic importance, small objects first found in the graves of high-ranked people dating from around 3,000 BCE. Cowries, small shells gathered on the southern coast of China, or imported from around the Indian Ocean. In the graves, cowrie shells were placed mainly around the deceased's head and around the neck. And we also found some single shells, most often inside the mouth. What kind of objects would they place inside the mouth? Clearly, those that they truly believed were the most sacred. In those ancient times, cowries appeared to have only been used for burials. It was only very gradually, under the Shang dynasty, that they started to take on attributes which suggested a future currency. The first characteristic of all types of money is rarity. An object that's found everywhere couldn't become money. Seashells came from far away and were very rare, so they were expensive. What's more, they could be counted. Cowries were then used on strings. They made a small hole in the cowrie shells and then threaded a number of them on a length of string. Five or ten, we don't know exactly how many per string. And they made cowrie strings which represented units of currency. These strings were first used to define the price one was willing to yield goods for. We know that from an inscription inside the lid of this kettle, dating from the 10th century BCE, which indicates the terms of a transaction between two people. The first was conceding land to the second, who paid with two tablets of jade and some fur. The value of each of these goods was evaluated in cowrie strings, which thus became units of money. How much is your fortune worth in cowries? What's the value of your merchandise in cowries? Cowrie shells were first used to compare the value of goods that people wanted to exchange. Were these strings of shells once used physically, just as we use coins and banknotes today? That's what the form and meaning of certain Chinese characters suggest. Take the character for cowrie. It's changed down the centuries, but it still contains this root in the characters used for money and commercial transactions. It's used, for example, for the words and also in financial terms, a sure sign that since ancient times this small seashell had a key role in all kinds of transactions. In the 13th century BCE, cowries were reproduced in bronze, a clear indication that a line had been crossed. But the determining step would come later, at a crucial moment in China's history. Between the 8th and 3rd centuries BCE, China experienced violent clashes between opposing factions. These were the so-called spring and autumn and warring states periods, an era of conflict, but also of technological progress and population growth. This time, China carried out its first experiment with a genuine currency, but a currency that took a rather unexpected form. Spades and knives, objects that were practical but also very symbolic to the people. Farming tools and everyday utensils were made of bronze. For example, in the central plains, spades were made of bronze. For the nomadic peoples in the east and north, the most important tools were knives, and they were all made of bronze. So when the first bronze money came about, it was inspired by these same tools and everyday utensils. The money function would impose itself on these objects, and their primary functions would gradually be sidelined until they were mere representations of knives and spades. The first coins were replicas of the tools in question. Early spade coins even had a socket at the top where the shaft would have gone. These were known as hollow-headed spades. This feature later disappeared. The blade became flat, and each kingdom produced its own preferred form. A few years ago, a very unique ancient money workshop was discovered. It was located in the middle of this group of enemy states, allies or conquerors, in the city of Qincheng, in the central plain of modern-day China. There, archaeologists Ma Xuncai found dozens of casts which, each in its own way, tells the story of money in China at this key moment in its history. At the time, these money casts were considered state-of-the-art technology, so they were kept top secret. Many of them were broken up after use, because it was feared that the technology would spread, or that thieves would steal the casts. These very large Kongsu Bu, hollow-headed spade coins, are the oldest examples of cast metal money in the world. They date from around 600 years BCE. Kongsu Bu were believed to be the first standardised monetary units in Chinese history. As Kongsu Bu were big, they were difficult to transport. So, during the early Warring States period, coins became increasingly smaller. Here's a cast from that period. It's no longer a Kongsu Bu, but a Sisu Bu. Money became even smaller in the late Warring States period. One cast could then be used to make four coins. Here, in the heart of the central plains, there was lots of room and fertile land. It was much easier to survive here, and there was a relatively high population. So it very soon became an international metropolis. Lots of people from neighbouring countries came here to trade. The discovery of these money casts from so many different countries shows that there was an important market here at the time. So it was high demand that allowed the use of money to increase. Between the 5th and 3rd centuries BCE, money reduced in size by half. Casting processes became quasi-industrial, and mass production began. Over time, the shape of these curious monetary units no longer resembled the tools that inspired them. Each kingdom now had its own style of money. More than 60 of them have been recorded. And then one day, one of them radically changed shape. Round coins appeared in the first quarter of the 4th century BCE. We think it originated with the jade disc, called pi, which had a round hole in it. In Chinese social life, people wore jewellery and gave gifts, objects which reflected social status, and jade was one of these. That could be where the round coin came from, but there's no proof of that. It's a possibility, a hypothesis. In the early 3rd century BCE, another kingdom adopted the same idea. Only the round hole was replaced by a square. Maybe, and this is another hypothesis, to place the newly minted coins on a rod so that the rough edges could be smoothed. Again, the idea behind this was mass production. For the Chinese, money was something which should circulate. If money has an intrinsic value, like gold or silver, people tend to hoard it. In that case, it stops circulating and is no longer used as money. So the ideal is to have a monetary unit of no intrinsic worth. Round coins with a square hole became the general norm in 221 BCE. When Qin emerged victorious from the civil wars, its king Qin Shuang had conquered all the other warring states and became the first emperor of China. His capital was Qingyang. It was here that he was buried, close to his famous terracotta army. 50 years after the site's discovery, archaeological digs are still ongoing. The reign of the emperor Qin dates back to more than 2,000 years ago. Qin Shi Huang was the first ruler in Chinese history who managed to unite all of the feudal kingdoms. He united six states and built the Qin Empire. He took unprecedented decisions. He harmonized writing, weights and measures. He also established a single currency. Before that, each state issued its own money, but Emperor Qin unified these. Emperor Qin's currency was called Banliang. The name indicates the coin's standardized weight of around 8 grams. This coin shape originated in ancient China and lasted until the late 19th century. We've always had round coins with a square hole. A few hundred meters from the terracotta army mausoleum, Xiang Wenxiao led the digs at another vast tomb. It belonged to a member of the emperor's family or to one of his generals. In our tomb, the Banliang we found were placed mainly around the deceased's head. More than 6,000 coins were discovered. These coins are perfectly preserved. They're inscribed with Ban and Liang. They're the characters of the time. On the back, there's nothing, no inscription at all. They're really beautiful. Qin Shi Huang's reign as emperor lasted only 15 years. He was buried beneath this huge mound, supposedly protected by rivers of mercury. How many coins can be found inside with the remains of the first emperor? We have some idea thanks to a recent discovery. The tomb of a great figure from the following dynasty, the Han. The Marquis of Haihan reigned over China for only 27 days in 74 BCE. But on his death, he took with him a huge quantity of bronze coins. Today, they're being studied in the lab of the museum that exhibits these treasures. Wuzhu, the cash coins of the Han dynasty. When we opened the tomb, what was the first thing we saw? It was money. How come this dead man had so many coins? How come he was so wealthy? There were so many of them. They formed a mountain. We estimated there were 2 million of them. They weighed more than 10 tons. When we started cleaning them, we noticed that they were joined together by strings. We counted them and realized they were in groups of 1,000. In ancient China, a thousand coins tied together was called a string. And a string was a recognized unit for counting. Back then, China still had a feudal system. And a treasure like this could only have belonged to someone of a very high rank. This system remained in place until the Tang dynasty, which increased the number of coins in circulation. Land, which until then was granted to peasants by the state, was bought and sold freely. And military conscription was abolished in favor of a professional army. Money entered all walks of society and fed the already spectacularly booming Chinese economy. This is confirmed by this vast archaeological dig in downtown Zhengzhou, a city that now has 10 million inhabitants. It reveals one of the most important urban centers in Chinese history. And another extraordinary discovery has just been made. Zhengzhou sits in the center of the Great Plain of China. Its geographical location is incredibly strategic in terms of transport. Goods entering Zhengzhou come from every direction. The total surface area of the site is 65,000 square meters. So far, we've excavated more than 90% of it. The ruins of the ancient city of Zhengzhou contain all the history of China. Pottery dating from around 1500 BCE. But also a large number of more recent objects from the Tang and Song dynasties. It was during these periods that commerce and the issue of money reached spectacular heights. In the section dating from the Tang and Song dynasties, I discovered five roads, dividing up several districts. Inside each district, we discovered specific functions. For example, over there is the craftsman's district. We found lots of remains of their production. And over there, it was probably a residential area, because we found lots of houses with hearths and wells. It was in this residential area that Song Qianmin discovered some large urns filled with bronze coins. Undoubtedly, an important businessman's fortune. We found four urns. Each of them weighs several tons. If one coin weighs between two and three grams, it means that each urn contains almost 100,000 coins. There were a lot of coins in circulation, but there were no banks at the time. So people couldn't deposit their money anywhere and had to find somewhere to bury it. Firstly, to make sure the coins weren't stolen, and so they could be grouped together in one place. The urns contain coins from many different periods. Some are almost a thousand years old. But at the time, each coin was legal tender, however old they were. Back then, merchandise produced in Zhengzhou was very much in demand. Consequently, there was a great need for cash coins. When there's an economic boom and trade increases, you need more cash in circulation. In the 9th century, across all China, 300 million coins were cast every year. Chinese currency had reached a first stage of maturity, when an event occurred that would trigger a decisive innovation. It was the year 907, and the Tang dynasty collapsed. The empire broke up, and the province of Sichuan declared itself an independent kingdom. When, after 60 years, the Song finally reunified the country, they decided to punish this wealthy province that had been so intent on going its own way. And this punishment consisted in depriving it of bronze coins. The first step of the punishment was to ban the transporting of bronze coins outside of Sichuan, and the next step was to ban all bronze coins entering Sichuan. The implementation of this punishment aimed to weaken Sichuan's financial might by preventing it from establishing an independent economy and from setting an example for separatism. That turned Sichuan into an iron currency zone. Iron coins had two main disadvantages. The first was they were too heavy. At the time, it was said that when sending iron coins from Chengdu to the province of Shaanxi, the transport costs represented half the value of the coins, so the costs were very expensive. The second disadvantage was that the value of this currency was very low. It's said that at the time, a roll of silk cost 20,000 iron coins. That's a frightening amount. Bearing that in mind, qiaozi, or paper money, was a logical alternative, especially as a new type of paper had recently been invented in Sichuan. In today's China, craftsmen who keep this know-how alive are very rare. The elders in the village of Beijing are among the few who still make the paper that was used a thousand years ago for the first paper money. The paper manufactured in the village of Beijing is made from the bark of the Chinese mulberry tree. It's a tree with a very strong vitality, so well-suited for making paper, because it's very resistant and it grows quickly. As it grows quickly, they can remove the bark quite frequently. It's easy and it's inexpensive. They're crushing the fibers to make them more supple. Today, the paper industry uses machines to crush the fibers, and they come out very short. Fibers cut by hand are much longer. And when the fibers are long, the paper is more resistant. That makes it very difficult to tear. Once the fibers are crushed, they become a paste. This paste is then dissolved in water. The next step is to retrieve the pulp with a bamboo filter, and then to remove the water to obtain paper. This is the most complicated step. Once drained, the following morning, a packet of raw paper is left, from which the sheets are removed one by one before drying. The process takes three days, from bark to sheets of paper. For the final step, they're placed on a wall for the last of the water to evaporate. Under the Northern Song dynasty, this paper was used for the printing of paper money. One of the main reasons it was chosen is because it's very white and very soft. What's more, there are many steps in its manufacture, 72 in all, so it's very difficult to reproduce. It can't be counterfeited. Plus, the paper is light and easy to transport. A new, more resistant paper that's difficult to make. Coins which were too heavy and unsuitable for trade. All the conditions were in place for the invention, in Sichuan, of paper money, called jiaozi. The first appearance of jiaozi was among the people. At the time, there were 16 wealthy merchant families in the city of Chengdu. They formed an alliance for the issue of paper money. A new industry became specialized in this business area, jiaozi shops. People could deposit their iron coins at the jiaozi shop in exchange for a receipt. This receipt showed how many coins had been deposited. People in possession of a jiaozi could then use it for other transactions. They could also go back to the jiaozi shop to exchange the receipt for iron cash coins. The jiaozi system made it much easier to carry out transactions in the marketplace. But there was a problem. Fraud. Dishonesty. The 16 wealthy merchant families soon discovered that the jiaozi shops were prospering better than their own businesses. Gradually, some of the jiaozi shop owners started using the coins deposited with them to buy real estate. So the reserves of coins were no longer sufficient. And when people with jiaozi wanted to redeem them for iron coins, it was no longer possible. Trust was broken. The jiaozi shops were finished. But the system had worked well for 20 years, and its disappearance wasn't good for business. So the authorities looked for a way to save the system. The Sichuan finance minister decided to take charge of the system, but the bills would be issued by the state. So in April 1024, the first official bills were issued. They were backed by only 28% of the total amount of coins deposited. That means that for a bill issued for 100 coins, there were only 28 in the reserves. From then on, paper money was no longer simply a representation of coins. It was a currency in its own right, based in large part on the trust of its users. At regular intervals, people had to change their bills for new ones. This helped to fight against forgery. Each time, new bills were printed, but in measured amounts. But over time, the system crossed Sichuan's borders, and new bills were issued without removing those already in circulation. At the time, the Song were often warring with their neighbors. And in times of war, they issued more paper money than was necessary. The Song government used jiaozhi to deal with financial problems, to settle problems of payment. As the civil war spread, the issue of paper money also increased. But if you issue too much paper money, it loses its value. For the first time, China experienced the dangers of the uncontrolled printing of paper money, hyperinflation, and the collapse of the entire system ensued. What's more, all the expenditure wasn't enough to halt the Song's enemies. In 1127, enemy forces conquered the northern part of the empire. The Song dynasty lost half of its territory. But having survived this testing time, China soon enjoyed a new period of expansion. On the south coast, in Wenzhou, archaeologists have discovered remains of this, a considerably big harbor for the time, and the wrecks of three large ships, owned by Chinese merchants, which sailed as far as Arabia. They exported the country's merchandise, of course, but also, and this is much more surprising, its bronze coins, hundreds of millions of them. This type of ship was used to transport goods, which were stored in these compartments. The archaeological remains which we have retrieved, and which we can still restore, weigh around 20 tons. Naturally, most of it is pottery. The southern Song dynasty saw a peak in the art of Chinese pottery, which was produced in quasi-industrial quantities. These pieces are celadon, or greenware, a specialty of the region. The archaeologists have even found some pieces still intact, as if waiting to be shipped. After the Song dynasty, this type of pottery was found all over the world. China sold large quantities of it to Southeast Asia, East Africa, North Africa, and Europe. This boom in business led to a massive increase in the demand for bronze coins. But for the first time in Chinese history, their production was unable to keep up with the requirements of the economy, and notably because the country had discovered a new kind of trade, practiced on a considerable scale. Ng Wenzhou wrote one eyewitness of the time, Like in the other large ports on our coasts, the moment night falls, merchants set sail on ships carrying up to 100,000 strings. They sailed to Japan, but also to Southern Asia and countries yet to have a monetary system, which, in order to remedy this, adopted their giant neighbour's currency. A number of laws prohibiting the export of money from China were put in place, but with little effect, and the financial bleeding continued. The old bronze coins, once so abundant, were now running short. The only alternative was paper money. New bills, for which you can see one of the printing plates, were produced in millions. In the following centuries, they would become the sole means of payment when the bronze coins crisis reached a peak. Soon, a new revolution would take place. On the other side of the globe, in the Bolivian Andes. In the 16th century, Spain seized mineral ore deposits of infinite wealth. First in Potosí, where the conquistadors laid their hands on a mountain of silver. A holy mountain, celebrated here by the Spanish king Charles V and the Pope. From it, unprecedented wealth would spill forth into Europe, and later, China. Because for the first time in history, the Spanish found a way to produce almost unlimited amounts of silver. To process the ore, they first copied the local population, who used these small earth furnaces. They found hundreds of them when they arrived in the Bolivian mountains. These cylindrical furnaces are an ancient technique used by the Incas to smelt ore with a high silver content. The fire is fed by the strong wind. At the time of the Incas, it was an appropriated technology, because in the pre-Columbian era, metals were primarily used to make precious objects, symbolic objects, objects of power. But in the colonial era, they needed to produce silver as quickly as possible, for Spanish and personal wealth. This was a problem, because such a huge amount of charcoal was required for the Spanish to get the quantities of silver they wanted. There were cauinia forests all over the Potosí region, but this resource soon ran out. So they had to find a larger-scale smelting process. And that meant a change in technology. The charcoal shortage had become the insurmountable problem since the Spanish started extracting silver ore. In the Bolivian mines, they found a way to get round this. They ground the ore into powder, and then had local labourers mix it with mercury. The result was pure silver, without having to smelt the ore, and therefore with no need of wood. Although mercury amalgamation was very effective in separating silver from other minerals, it was a massive danger to the ecology and to public health, because mercury is an extremely poisonous metal. But the colonial appetite for silver continued to grow, and the number of mining towns increased. One of the biggest, Olagas, had more than 10,000 inhabitants at the peak of silver production. The first side effects were hair loss and nail loss. The mercury entered the workers' bodies. Their bones became brittle and broke. Their organs were damaged, and people ended up dead. Some accounts tell of how, when the graves of local people were opened so that more people could be buried on top, they could still see the mercury in the bones of the dead. At some mines, local populations were subjected to forced labour. In Olagas, they earned a pittance. The life expectancy of the workers rarely went beyond two years. That was the human cost of the vast quantities of silver arriving in Europe. In the last decades of the 16th century, 2,700 metric tons were shipped to Spain. 90% of the world's silver came from Bolivia. This exceptionally pure metal was used to mint coins whose reputation went beyond borders. The small coin, the real, weighed a little over three grams. The real de ocho, the piece of eight, 27 grams. These pure silver coins became a referential currency across Europe, all the way to Asia, and reached China via trade through the ports in the south and east. These Spanish silver coins would take the city of Zhengzhou from poverty to prosperity. One of the city gates shows foreign traders paying with silver coins for Chinese merchandise. Pottery, tea, lacquered objects and silks. From here and the other main ports on the coast of China, they would spread through the rest of the country. The Chinese would gradually become familiar with these strange coins in silver, a metal which until then had never been used for such a purpose. The silver coin period started with the opening of Zhengzhou to foreign trade. That brought this money into China. You could say that Zhengzhou was a kind of laboratory for the circulation of this money. In the 16th century, China gradually adopted Spanish silver coins. And its economy, which was largely self-sufficient, experimented with what is known these days as proto-globalization. These silver coins were completely new to the population. So lots of people weighed them and melted them down. This was a complete coin. But to give a buyer his change, the seller cut part of it off. This is two-thirds of the coin. The other third was cut off and given back as change. The local people of the time didn't know the kings featured on the coins, like King Charles or King Ferdinand. So they called these silver Buddha coins, because the king's heads looked a bit like Buddha. Most of the population didn't know how to authenticate them. So when the coins were deposited in banks, they were hallmarked as proof of good faith. The coins ended up covered in these hallmarks, which we called chop marks. At the time, there were a lot of silver coins in circulation. So there was a strong need to determine real ones from fakes. For that, they used a stone like this, with two holes, to listen to the sound. This real coin has a relatively long, sharp sound. Whereas this one, which is fake, has a clearer sound because it contains bronze or other impurities. Lots of coins went in and out of the banks, which is why they needed something like this to tell the real ones from the fakes. It's like an ancient forged money detector. The main winners in this new chapter of the history of money were the traders and manufacturers in the big Chinese coastal cities. And the losers were the peasants, most of whom worked inland. Close to the city of Jiankou, one of the most spectacular finds in China in recent years was made. A huge treasure found in the bed of this river. 52,000 objects, which have since been restored and recorded in this lab. Each of them bears witness to the split that occurred in Chinese society at the time. A host of jewellery and ornaments in gold. But more impressively, thousands of silver ingots. Professor Wan, this is a silver ingot found in the riverbed in 2017. The inscriptions are very clear. It's written Ganju Prefecture, Jiangxi Province. Yes, Ganju Prefecture. At the time, taxes had to be paid in silver coins, as ordered by the Ming Emperor. The coins collected were melted down into ingots by the tax authorities in each province. These ingots show that in the last period of the Ming Dynasty, silver had become the main currency, and the main objective of this first taxation, as it were. Lots of ministers of the Ming Dynasty complained about this to the Emperor. They said that only seeds could grow in the earth, not silver. And yet the people were forced to pay their taxes in silver. So the common people suffered greatly. This taxation policy was one of the causes of the peasant revolts that ravaged China from 1627 on. Rebel armies caused havoc across the land. One of their leaders was a certain Zhang Qiangcheng. In Henan, Shaanxi, Huguang and Sichuan provinces, he pillaged imperial treasuries where silver ingots were stocked. This episode lies behind the treasure found in the bed of the river in Qianku. In Chinese history, Zhang Qiangcheng is a legendary yet controversial figure. People see him in two very different ways. On the one hand, as a cruel man who liked to kill. He's reputed with massacring the population of Sichuan. But on the other hand, as the man whose treasure sank here in Xiangkou. In 1646, hunted by the government army, the rebel chief decided to flee with his treasure. At this point on the river, his boats fell into an ambush and came under enemy fire. A large amount of gold, silver and military equipment sank in the river here. Zhang Qiangcheng was killed a few months later. As for the Ming dynasty, it would disappear forever. Silver and the upheavals it caused played a key part in the fall of the reigning emperor. Of course, the Chinese monetary and financial systems changed. And this caused a massive upheaval in the entire structure of society. And all of that silver was responsible for that problem. By the mid-17th century, China had lost much of its monetary independence. Its bronze coinage, the keystone of its traditional system, continued to circulate. But only as small change. China had integrated the global economy. For better or for worse.