Month: November 2009

early history of paper money

The first generally circulating paper money is thought to have appeared in China in the tenth century. In his travels through China in the thirteenth century, Marco Polo reported that the Chinese used paper money.  Paper money that closely imitated Chinese models is known to have been briefly used in Ikhanid Iran in 1294.[1]

But there’s more to the early history of paper money.  Paper money apparently was used in western Asia or Mesopotamia in the tenth century or earlier.  The Lives of the Prophets, compiled by the eleventh-century Baghdad-based Islamic scholar al-Thalabi, includes texts on the Companions of the Cave / Seven Sleepers of Ephesus.[2] One of these accounts states:

Then he [Tamlikha] took papers from the money that they had, which were stamped with the seal of Duqyanus [the Roman Emperor Decius], and they were like the light quarter (dirham). … He approached those who sold food and took out the paper he had with him and said to a man among them, “O servant of Allah, sell me some food for this.”  The man took it and looked at the imprint on the paper and its inscription and wondered at it, then he threw it to one of his companions, and he looked at it.  Then they passed it among themselves, from man to man, wondering at it, and took counsel and said to one another, “This man has come across a treasure in the ground from long ago.”

The text in English translation subsequently shows some confusion between paper money and coins:

He was brought before the two pious men, Armus and Astiyus, and when Tamlikha learned that he was not going to Duqyanus, he recovered and his feelings became calm.  Armus and Astiyus took the papers and looked at them, and were perplexed by them.  Then one of them said, “Where is the treasure that you found, young man?”  He replied, “I did not find treasure.  These coins are my parents’ coins, with the engraving of this city and its minting.” …  [one of the two pious men said]  “Do you think that we will send you away and believe you that this money is your father’s?  For the minting of these coins and their engraving is more than three hundred years old….The treasuries of this land are in our hands but we do not have a dirham or a dinar of this minting.”[3]

In English, coins are minted, while engravings suggest images block-printed on paper.  The first quoted section suggests that the paper money was unusual, but the novelty has a historical twist.  Taken literally, it implies paper money was used about 250 GC.  The confusion between paper money and coins in the second quoted passage suggests that terminology for it had not yet solidified.[4]  That in turn implies that experience of paper money was relatively recent.  Al-Thalabi’s text is compiled from earlier historical sources.  The dating of the source for these passages isn’t clear.  These passages provide evidence that paper money was used outside of China at least some time before al-Tha’labi’s death in 1036 GC.[5]

The use of paper money may provide insight into political structure. The intellectually inimitable and indomitable winterspeak insists, “The strength of fiat money depends on the strength of the Government’s ability to demand and collect taxes.” The failed introduction of paper money in Persia in 1294 occurred in a period of poor government administration and intense political rivalries.[6]  Earlier use of paper money in western Asia or Mesopotamia may indicate that some political entity there had a powerful, stable administrative structure.

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Notes:

[1]  Additional discussion of China’s first experiences with paper money, and image from British Museum. Here’s Marco Polo’s book in English translation.  On paper money in Persia in 1294, see note [6] and associated text above,

[2]  A sixteenth-century Persian painting of a scene from the Companions of the Cave story appears in the Sackler Gallery’s exhibition Falnama: Book of Omens.  Here’s some additional discussion of the evolution of texts and images representing the story.

[3]  Quotations from Brinner, William, trans.  2002. ʻArāʻis al-majālis fī qiṣaṣ al-anbiyā, or, Lives of the prophets as recounted by Abū Isḥāq Aḥmad ibn Muḥammad ibn Ibrāhīm al-Thaʻlabī.  Leiden: Brill, pp. 708, 709, 711.  Fischel, Walter J.  1939. “On the Iranian Paper Currency of the Mongol Period,” Journal of the Royal Asiatic Society of Great Britain and Ireland, No. 4, pp. 601-4, provides a text (p. 604) that indicates that paper currency existed for a quarter of a dirham, which normally was a silver coin.  A dinar was a gold coin.

[4] Brinner is a leading historian of lives of the prophets.  His translation represents a recent, scholarly effort.

[5]  The quoted passages are well-integrated into the text and not likely to be later interpolations.  Much commerce flowed across the empires of central Asia in the tenth century and earlier.  See Beckwith, Christopher I. 2009. Empires of the Silk Road: a history of Central Eurasia from the Bronze Age to the present. Princeton: Princeton University Press.  The use of paper money in tenth-century China almost surely would have been known in tenth-century Baghdad.

[6] It was the reign of Geikhatu (also spelled Gaykhatu or Gaikhatu).  For a brief history of Geikhatu’s reign, see Browne, Edward Granville. 1920. A history of Persian literature under Tartar dominion (A.D. 1265-1502). Cambridge [England]: University Press, pp. 37-9.

trends in categories of fixed-line telephone service

Plain-old, fixed-line telephone service is shrinking rapidly.  Consider US West, which became Qwest in 2000. It is a large local exchange telephone company (a former regional Bell Operating Company) serving the northwestern and mid-western U.S.  US West – Qwest’s fixed-line residential and business switched-access telephone lines grew 3.3% and 6.0% per year, respectively, from 1991 to 1999. In contrast, residential and business telephone lines fell 5.7% and 4.6% per year, respectively, from 1999 to 2008.[1]  A  major reversal like this is probably typical of incumbent wireline telephone companies across the world.  It implies serious business difficulties.

Trends in sub-categories of telephone lines point to effects of technological innovation.  Because using a telephone line for dial-up Internet access doesn’t permit simultaneously using that line for telephone service, dial-up Internet access was an important driver of growth in non-primary residential telephone lines in the late 1990s and early 2000s.  Non-primary residential telephone lines grew 9.9% per year from 1997 to 2001, compared to -0.4% growth in primary residential lines. Home dial-up Internet access peaked at 40% of U.S. adults in 2001 and fell to about 8% of U.S. adults in 2008.[2] From 2001 to 2008, non-primary lines fell 13.9% per year, while primary lines fell 6.2% per year.  A large share of the greater fall in non-primary lines comes from the shift from dial-up to broadband Internet access.

That non-primary telephone lines are more vulnerable to mobile-telephone (wireless) substitution probably also contributed to the more rapid fall in non-primary residential lines.  In 2008, non-primary residential lines accounted for only about 10% of residential telephone lines.  In multi-person households, wireline telephone lines are not personal telephone lines.  Mobile phones, in contrast, are almost exclusively personal telephones.  That’s a valuable feature of a mobile phone.

Centrex lines feature in competition between an early cloud service (telephone company network service) and a local service (local private telephone system, called a PBX).  U.S. West – Qwest Centrex line counts fell 13.2% per year from 1999 to 2008.  These data do not mean that cloud services are losing in this field.  Incumbent telephone companies have fostered the development of “IP Centrex“. The fall in Centrex lines may reflect Qwest moving Centrex lines to Centrex-like services not subject to the regulations of traditional Centrex lines.

Centrex service, like telephone service more generally, now have a wide range of technical and business possibilities for service provision.  Bill Michael’s 2001 article, “The New Centrex,” describes the early jockeying for positions among a broad array of companies interested in Centrex-like services. Now  Google Voice provides something like a personal PBX, while Amazon and a variety of other companies are offering cloud services.  While the future is uncertain, telephone companies that survive will surely become something other than traditional telephone companies.

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Data: US West – Qwest telephone lines, 1991-2008 (Excel version); US West – Qwest common-line basket rate detail, with relevant line codes and some state-by-state figures; ARMIS switched-access telephone line counts for US West – Qwest by state; US West Price and Demand Dataset, 1992-2009.

Notes:

[1] All the discussion and data in this post concerned switched-access telephone lines. Among traditional telephone company services, switched-access lines are distinguished from “special access” lines. Network configurations like a “leaky PBX” exploit that distinction.  The residential and business lines of concern here are lines that allow an end-user to make telephone calls on the public switched telephone network through use of their local telephone company’s end-office switch.

[2] For figures for adult dial-up shares are from the Pew Internet’s survey figures for trends in home internet access: broadband vs. dialup.  The Center for the Digital Future’s Digital Future reports show 88% of U.S. internet users accessing the Internet via dial-up in mid-2000, compared to 16% accessing via dial-up early in 2009.