Leather money should perhaps be regarded as the most immediate precursor of paper money. It was usually issued as an emergency measure under the stress of war.
The extinct city of ancient Carthage issued a leather-wrapped money before the wars with Rome. The leather wrapping was sealed and the substance inside the wrapping remained a mystery.
Better documentation exists for the use of leather money in France and Italy as an emergency measure. In Normandy Philippe I (1060–1108) used as money pieces of leather with a small silver nail in the middle. Leather currencies also appeared under Louis IX (1266–1270), John the Good (1350–1364), and Charles the Wise (1364–1380). It is not clear whether these leather currencies bore an official stamp. Foreign ransoms had impoverished France of its metallic currencies, necessitating the development of an inferior substitute.
In 1122 Doge Domenico Michaele, ruler of Venice, financed a crusade by paying his troops and fleets in money made of leather with an official stamp. In 1237 the emperor Frederick II of Sicily, one of the first European monarchs to reestablish gold coinage after the long hiatus of the Middle Ages, paid his troops in stamped leather money during the sieges of Milan and Faventia. In 1248 at the siege of Parma he again paid troops in leather money. Frederick’s money was converted into silver at a later date.
Leather money bearing an official stamp bore a close kinship to modern paper money. English history furnishes a few references to leather money. In a speech to Parliament in 1523 Thomas Cromwell commented in referring to the expenses of sending an expedition to France:
Thus we should soon be made incapable of hurting anyone, and be compelled, as we once did to coin leather. This, for my part, I could be content with; but if the King will go over in person and should happen to fall into the hands of the enemy—which God forbid—how should we be able to redeem him? If they will naught for their wine but gold they would think great scorn to take leather for our Prince.
Reports exist of leather money on the Isle of Man during the sixteenth and maybe seventeenth centuries. A description of the Isle of Man published in 1726 states that leather currency had a history on the Island of Man, and that men of substance were allowed to make their own money up to a limit.