Arnold Toynbee in his famous work, A Study of History, which spans 11 volumes, relates an interesting episode in China’s monetary history in which leather money temporarily supplemented coinage.
Under the emperor Hsiao Wen (r. 180–157 b.c.), China struggled with a shortage of coinage, probably because coinage of precious metals was still of relatively recent origin. The imperial government held an exclusive monopoly on the privilege to coin money but was not purposely keeping tight reins on the afflux of coinage into the economy. To ease the dearth of coinage, the imperial government gave up its monopoly and began to grant local governors and princes licenses to mint copper coins. Soon a flood of coinage inundated the economic landscape, and the monetary pendulum swung to inflation. In 119 b.c. the emperor Wuti put into action a plan to help restore the soundness of the currency and supply the government money. Toynbee quotes a fascinating passage from C. P. Fitzgerald’s China, A Short Cultural History that explains this enter taining episode in monetary history. According to Fitzgerald:
In the imperial park at Ch’ang Ngan the Emperor had a white stag, a very rare beast, which had no fellow in the empire. On the advice of a minister the Emperor had this animal killed, and made a kind of treasury note out of its skin, which, he believed could not be copied. These pieces of skin were a foot square, and were made with a fringed border and decorated with a pattern. Each piece was assigned the arbitrary value of 400,000 copper coins. The princes, when they came to pay their respects to the Throne, were compelled to buy one of these pieces of skin for cash, and present their gifts to the Emperor upon it. This precaution ensured the circulation of the “White Stag Notes.” The skin of the white stag was, however, a limited quantity, and the time soon came when this device ceased to supply the Treasury with much needed money.
Inflation continued to ravage the Chinese economy and in 113 b.c. the government demonetized all coinage, and returned to an imperial monopoly on coinage. The issuance of a new imperial currency minted exclusively by imperial officials cured the inflation.
Nine hundred years after this short-lived experiment with leather money, China introduced the world’s first paper money. Although vague evidence suggests that China may have preceded Lydia in the invention of coinage, there is no doubt that China pioneered the development of paper money. Historians of money cite China’s leather money episode as the beginning of the type of monetary thinking that led to paper money.
Skins would continue to play a monetary role in other parts of the world. Russian laws of the eleventh and twelfth centuries make numerous references to the use of skins, often squirrel skins, as money. Settlers in colonial America used deerskins as money. Each skin was known as a buck, a word that still signifies a dollar in the United States.