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Entry 116 of 240Invention

Song China's Paper Money

c. 1024 CE/East Asia/Song China
Today Song China (capital Kaifeng, later Hangzhou)Span Song dynasty · 960–1279 CE

Song China was the most advanced society on Earth — it gave the world movable-type printing, the magnetic compass, and, most fatefully, the first government paper money. Freed from the weight of metal coins, commerce boomed; but later rulers, discovering they could simply print more, eventually inflated the paper into worthlessness. It was the original demonstration of a lesson every age since has relearned: paper money is only ever as sound as the discipline of those who issue it.

◆ Worth knowingSong China had paper money, printed books, gunpowder, and the compass some 400 years before Europe — a near-miss with the modern world, centuries early, that historians still puzzle over.
◆ The mechanismMonetary debasement

A money's intrinsic or backed value is diluted to fund obligations; confidence in it erodes, often into inflation.

Also: Information-medium revolution · Trade-route shift

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