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Thanks to relative peace, far-ranging trade and cultural openness, Hangzhou prospered and produced many accomplishments, including inventions that we still use today.

Centers of Progress, Pt. 12: Hangzhou (Paper Money)

By Chelsea Follett @Chellivia

Today marks the twelfth installment in a series of articles by HumanProgress.org called Centers of Progress. Where does progress happen? The story of civilization is in many ways the story of the city. It is the city that has helped to create and define the modern world. This bi-weekly column will give a short overview of urban centers that were the sites of pivotal advances in culture, economics, politics, technology, etc.

Our twelfth Center of Progress is Hangzhou in 12th century CE China, during the late Song Dynasty’s so-called premodern “economic revolution” or period of proto-industrialization. With its innovations in printing and manufacturing, it has been said that the “Song came closer to initiating an industrial revolution than any other premodern state.” The Song dynasty, which spanned from 969 to 1276 CE, was a time of dynamism and invention. Through trade and industry, the Song empire became the richest on Earth. The dynastic capital, Hangzhou, was the wealthiest and most populous city in the world. Song-era China became the first country to print paper money, which is far easier to carry in large amounts than metal coins. Hangzhou served as a money-printing center and a hub of innovation and creativity.

During the Song era, the average Chinese person experienced extraordinary growth in their income level as the economy expanded. The economy grew due to new technological and agricultural advances and efficient trade routes that produced a genuinely nationwide market. The era also witnessed a significant increase in international exchange, as Chinese merchants expanded their trade networks as far as East Africa. Growing wealth helped motivate the adoption of paper money, as people found themselves dealing with larger transactions than in the past.

Today, Hangzhou is one of China’s top commercial bases. It is also the southern terminus of the Grand Canal, which is the world’s longest artificial river and a UNESCO World Heritage Site. True to its rich history of innovation, Hangzhou continues to serve as a hub of enterprise. Hangzhou houses the headquarters of various Internet industry enterprises such as e-commerce giant Alibaba and is a growing technology center. Hangzhou is the heart of the “Hangzhou metropolitan area,” China’s fourth-largest metropolitan area by population, and is home to some 20 million people. Hangzhou is also a popular tourist destination within China. Hangzhou maintains many well-preserved cultural sites showcasing the city’s history. It even has a large history-based theme park—”Song Dynasty Town” or Songchen—filled with costumed reenactors portraying residents from the city’s golden age.

The Italian explorer Marco Polo famously described Hangzhou as “the most beautiful and magnificent city in the world” and called it the “City of Heaven” during a visit in the 13th century CE. While that was after the Song dynasty ended, much of the architecture and wealth of the city that Marco Polo observed was nonetheless a legacy of that era. (A statue of Marco Polo stands prominently in a lakeside park in the city, admiring Hangzhou’s beauty to this day). A common Chinese saying echoes Marco Polo’s sentiment: “Above, there is Heaven; below, there are Hangzhou and Suzhou”—the latter being another beautiful city just to Hangzhou’s north.

Hangzhou has been an important city since the 7th century CE when its Grand Canal was first built to connect the urban center to Beijing. Today, the canal remains the main north-south waterway in China. But the city’s golden age began when the Song dynasty made it their capital. The Song era saw the rapid adoption of woodblock printing, a technology that supercharged intellectual life in the Song dynasty. Hangzhou ranked first in China when it came to both volume and quality of woodblock printing. The technique, which consisted of carving text and pictures into wooden blocks, covering them with ink, and pressing the blocks against  paper, provided a way to mass-produce books, documents, and banknotes.

Woodblock printing developed in Buddhist monasteries to reproduce spiritual texts, with examples dating as far back as 200 CE, and the method was well-established by the 9th century CE. However, it was the Song era that first widely adopted woodblock printing for non-religious purposes. In the 11th century CE, the artisan and inventor Bi Sheng (990–1051 CE) devised movable type. The adoption of printing technology dramatically lowered the cost of books and encouraged the spread of literacy. Not only did widespread printing lead to a veritable tidal wave of artistic output such as poetry and dramatic texts, but it also sped up scientific progress—for example, by aiding the dissemination and advancement of pharmacological and medical knowledge.

If you could visit Hangzhou during its golden age, you would enter a gorgeous metropolis bursting with art, commerce, innovation, and a spirit of openness. The crowds would have been formidable; by the end of the Song era in 1276 CE, Hangzhou was home to around 1.75 million residents according to some estimates. That is slightly more than the current population of Phoenix, Arizona, but it represented an unprecedented urban concentration of people. While poor by modern standards, the city’s people were then the richest on Earth. Looking out onto the harbor, you would have seen large multi-sectioned ships with up to four decks and a dozen sails at a time when Europeans still traveled in tiny galleys powered chiefly by the muscle of rowers.

Thanks to advances in dyeing and weaving and textile industry developments, the city’s people would have worn a wide variety of beautiful and luxurious robes. You would not have seen many high-ranking women walking around. Despite the era’s many advances, it was also the beginning of “foot-binding” among China’s elite. That cruel practice consisted of repeatedly breaking the bones in women’s feet, starting in early childhood, to contort feet into an unnatural shape that was considered beautiful but made walking physically painful.

In the marketplace, you would see a food culture emerging that has since come to define Chinese cuisine. During the earlier Tang dynasty (the golden age of our tenth Center of Progress, Chang’an), China’s dominant grains were wheat and millet, and the most common drink was wine. During the Song dynasty, rice and tea became the country’s staple food and beverage and have remained so to this day.

You would have been mesmerized by the city’s elaborate architecture. (China’s traditional upturned roofs originated in the Song dynasty). Hangzhou’s striking temples, many of which still stand today, were a testament to the era’s philosophical and spiritual diversity. As writer Eric Weiner put it, “The blending of Buddhist and Confucian thought yielded a remarkably tolerant atmosphere.” Different thought-systems coexisted and thrived. Conversation rose to an art form, and as the city became wealthier, art of all kinds became an important part of everyday life. While in previous eras, poetry was limited to religious subjects, in the Song era, poetry expanded to deal with every topic imaginable, and poetry competitions were frequent.

Hangzhou was the site of great creativity. In the 11th century CE, the polymath Shen Kuo (1031–1095 CE) invented the magnetic compass. He also drew the world’s first topographical map and was the first person to record the process of sedimentation. Shen’s surviving notebooks have garnered comparisons to Leonardo da Vinci’s for their breadth. Shen’s work spanned topics such as mathematics, astronomy, meteorology, geology, zoology, botany, pharmacology, agronomy, archeology, ethnography, cartography, diplomacy, hydraulic engineering, and finance. Shen was also a prolific poet.

Another intellectual of the Song era was Su Tung-Po (1037–1101 CE). He was once a governor of Hangzhou but is better known for his art, work as an engineer, and insightful poetry. Tung-Po’s poetry reveals a self-effacingly unflattering view of government officials:

Families when a child is born
Hope it will turn out intelligent.
I … [o]nly hope that the baby will prove
Ignorant and stupid.
Then he’ll be happy all his days
And grow into a cabinet minister.

Given that many of the city’s advances came from the private sector, Tung-Po’s attitude was understandable. Even paper money was arguably a private sector invention. As early as the Tang dynasty (618–907 CE), the impracticality of transporting strings of heavy coins inspired Silk Road merchants to use paper promissory notes instead to make purchases. (Chinese coins had square holes in the middle to allow for stringing). Private agents originally produced those notes. At the beginning of the Song dynasty, the government recognized the value of that innovation and licensed deposit shops where people could exchange coins for such promissory notes, thus somewhat standardizing the system. Then, in the 12th century, the government gave still greater recognition to the concept of paper money by issuing the first official paper currency, called Jiaozi. Those banknotes often featured intricate illustrations of commerce.

During the golden age of Hangzhou’s “economic revolution,” the Song leaders managed to largely avoid international conflict by defusing tensions with trade agreements and tributary offers. Thus, Hangzhou was mostly at peace during its peak years, leaving its residents free to engage in enterprises that further enriched the city. “Between … 960 and … 1127 [CE], China passed through a phase of economic growth that was unprecedented in earlier Chinese history, perhaps in world history up to this time. It depended on a combination of commercialization, urbanization, and industrialization that has led some authorities to compare this period in Chinese history with the development of early modern Europe six centuries later,” according to the American historian Philip D. Curtin.

Factories situated in Hangzhou and the other major Song-era cities of Chengdu, Huizhou, and Anqi printed paper money with a uniform design using woodblocks and six different ink colors. Each city used multiple banknote seal stamps and different fiber mixes in the paper currency they produced to make counterfeiting difficult. In 1175 CE, as many as a thousand employees may have worked in Hangzhou’s paper money factory each day. The earliest money notes expired after just three years, and their use was limited to certain regions of the Song empire. Then, in 1265 CE, Hangzhou’s factories printed the first truly national currency. That currency exhibited a unified design, was accepted across the empire, and its value was backed by silver or gold. The paper money notes were available in various denominations. Unfortunately, that national currency was only used for nine years before a Mongol invasion ended the Song dynasty.

The concept of paper currency proved more lasting than the Song dynasty that created it. The subsequent Mongol Yuan dynasty issued their own paper currency, known as the Chao. However, the Mongols did not tie their currency’s value to anything and printed more and more banknotes until runaway inflation degraded the currency’s worth. Paper money can be susceptible to hyperinflation without sound monetary policy. Paper currency has nonetheless proved to be a lasting and practical invention that is now used worldwide.

For being a hothouse of invention and creativity and the site of an early economic revolution that gave the world paper money, 12th century CE Hangzhou is deservedly our twelfth Center of Progress. Bolstered by printing technology and paper currency’s efficiency, the Song era saw a steady stream of technological breakthroughs. Those included the compass, the first mechanical clocks, and the invention of forensic science. The economic and technological advancements of the Song era translated into improving living conditions for the average person. By practically every measure of human wellbeing, ranging from sanitation to literacy to average income, China was superior to Europe in the twelfth century. Thanks to relative peace, far-ranging trade, and cultural openness, Hangzhou prospered and produced many accomplishments, including inventions that we still use today.

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