History in money
FROM OCTOBER 2010 to June 2011, I was on an Asian Public Intellectual Fellowship that allowed me to live in four wonderful cities—Kyoto, Bangkok, Jakarta and Kuala Lumpur—to study money. Friends presumed that my eight-month sabbatical would be spent following Rizal’s footsteps in Asia and were surprised to learn I was studying paper money or banknotes.
My research project seemed simple at the outset: I would study the designs of paper money and find out what elements were in it. First, I would identify the portraits on the notes and figure out why they are important enough to be picked from so many other historical persons. Then I would find out who was not included in banknotes and why.
Banknotes also have scenes from history or culture as well as birds, animals, reptiles and artifacts. What do all these mean? Do these express identity?
Unfortunately one cannot study banknotes in a vacuum. One has to trace paper money all the way back to the beginning, only to be led to coins that have a longer more complex history than banknotes. The designs on the banknotes has to be placed in proper historical context. So I left my late 19th-century Philippines comfort zone to read up on the histories of Japan, Thailand, Indonesia and Malaysia. Fortunately, API fellows are taken away from their countries and their routine, thus, with the exception of this column which was written abroad, I had the opportunity to focus, to read, to reflect.
In its earliest form, money began as barter of goods, often food, or the exchange of physical objects with a given value. Before the use of gold and silver, value was reckoned in a staple like rice in China or Japan, grain in Eygpt and Mesopotamia. We see evidence of this because an early coin, the drachma, was based on the weight of grain, and one of the earliest money in Japan, the koku, was based on rice in storage or expected yield. Later on, certain objects or products were given value: pearls from the sea, cowrie shells, metals like gold, copper or bronze.
In the Philippines, the earliest form of exchange was barter. Neighboring countries used shells, rice, gold and tin formed into animal shapes, etc. Some even used heavy stones! Eventually people traded using precious metals like gold and silver, and sometimes not so precious metals like iron or copper.
Early paper money was a promise to pay in metal. The earliest banknote on record was one issued in Ming China in 1375 A.D. When I tell people it was the size of an A4 sheet (almost bond paper size), they laugh being used to modern banknotes that fit snugly into wallets. This banknote made from mulberry paper was revolutionary because it was issued in exchange for 1,000 coins drawn on the banknote. A single piece of paper was worth three kilos of coins!
What is also significant is that the banknote carries a warning that counterfeiters would be severely punished. So I guess forgers were born almost at the same time as paper money.
A piece of paper changed the whole way people thought of, and dealt with, money. Paper was almost worthless but a banknote, depending on what is written or printed on it, is worth much more, depending on the trust one has on the person or institution that issued it.
The earliest banknotes in the West were issued in Sweden in 1660, and by the Bank of England in 1694. In the beginning all banknotes were convertible to gold or silver, or if they were not, they were worth the precious metal value that was kept by the issuer. In abstract terms, paper money is important because it is based on trust or confidence in the issuer. Early money was convertible, at least in principle, into gold or silver, but when that was changed, our money became just paper with a given value printed on them.
This should make us ask, when did paper transform into money itself. For people like myself who rely on “plastic” with a magnetic strip or a computer chip, a credit card is good as cash. For people who trust the bank website and transact business on the Internet, I wonder how all this is possible when there is no physical exchange of banknotes anymore.
Money is more complex than we think. Its designs are not just the product of so much work, not only to make them beautiful but should make the bills hard to forge.
Portraits are on money because illiterate people cannot read the text or numbers on the banknote but know the value based on the face. When a hungry traffic enforcer flags you down and asks for the name of your lawyer, you know what Quezon, Osmeña, Roxas, Macapagal and Ninoy are worth. Nobody I know pays off with Escoda, Lim and Abad Santos. These portraits are on money because they are hard to copy: everything down to the last strand of hair is finely drawn and engraved.
But have we asked ourselves why these figures are on our banknotes instead of others? Why have Quezon and Roxas been on our notes for over half a century when the 19th century heroes have been first relegated to coins and finally disappeared?
Banknotes tell a story but we often take these everyday objects for granted.
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