Bronze knife money circulated in China from the seventh to the second century b.c. The blade and the handle constituted one piece of metal of even thickness that was shaped into a ring at the end of the handle.
The history of knife money is a bit murky, but knife money might have gotten its start as a measure to placate discontented troops. Prince Hwan, running short of funds, allowed his restless troops to use their knives to barter with the people. The knives were a popular item with the population and became a generally accepted medium of exchange. According to another story, Prince Hwan launched knife money when his government began accepting knives as payment for small fines in place of the legal ring currency. Perhaps history can be sifted from legend between these stories, which are not mutually exclusive.
Credit for the introduction of knife money may belong to sea traders from the Indian Ocean who established a colony in Shantung around 670 b.c. These traders brought large bronze knives inscribed with a distinctive mark or emblem. The knives were of a regular weight and were used as money. The practice of inscribing an emblem may have been borrowed from the recently developed coinage of western Asia. A Chinese word, tao, originally meaning “knife,” came to denote a unit of currency instead.
The bronze knife money of China experienced its own form of debasement, gradually shrinking in size. At first the blades were shortened but the weight of the knife was maintained. The knives gradually shrank, however, until only the ring of the handle was left as symbol of the knife that it represented.
Practical agricultural implements such as hoes have surfaced as money in several societies and weapons such as arrows and guns have commanded the characteristics of money in some societies. Knives perhaps fit into either one of these categories and rank among those eminently useful items that have made their way into lists of monetary commodities.