originated in two forms: drafts, that is receipts for value held on account, and "bills", which were issued with a promise to convert at a later date.
is based on the coming to pre-eminence of some commodity as payment. The oldest monetary basis was for agricultural capital: cattle and grain. In Ancient Mesopotamia, drafts were issued against stored grain as a unit of account. A "drachma" was a weight of grain. Japan's feudal system was based on rice per year – koku. At the same time, legal codes enforced the payment for injury in a standardized form, usually in precious metals. The development of money then comes from the role of agricultural capital and precious metals having a privileged place in the economy.Such drafts were used for giro systems of banking as early as Ptolemaic Egypt in the first century BC.However the use of paper money as a circulating medium is intimately related to shortages of metal for coins. In the 600s there were local issues of paper currency in China and by 960 the Song Dynasty, short of copper for striking coins, issued the first generally circulating notes. A note is a promise to redeem later for some other object of value, usually specie. The issue of credit notes is often for a limited duration, and at some discount to the promised amount later. The original notes were restricted in area and duration, but the Yuan Dynasty, facing massive shortages of specie to fund their occupation of China, began printing paper money without restrictions on duration. By 1455, in an effort to rein in economic expansion and end hyperinflation, the new Ming Dynasty ended paper money, and closed much of Chinese trade.In Europe the first banknotes were issued by Stockholms Banco, a predecessor of the Bank of Sweden, in 1660, although the bank ran out of coins to redeem its notes in 1664 and ceased operating in that year. It was 1694 when the Bank of England issued the first permanently circulating banknotes. The use of fixed denominations and printed banknotes came into use in the 18th century.Money is based on the coming to pre-eminence of some commodity as payment. The oldest monetary basis was for agricultural capital: cattle and grain. In Ancient Mesopotamia, drafts were issued against stored grain as a unit of account. A "drachma" was a weight of grain. Japan's feudal system was based on rice per year – koku. At the same time, legal codes enforced the payment for injury in a standardized form, usually in precious metals. The development of money then comes from the role of agricultural capital and precious metals having a privileged place in the economy.In 1988, Australia produced the first polymer banknote, made from biaxially-oriented polypropylene (plastic), and in 1996 became the first country to have a full set of circulating polymer banknotes. Since then, other countries to adopt polymer banknotes include New Zealand, Romania and Mexico, with many others issuing commemorative polymer notes. Polymer banknotes were developed to improve durability and prevent counterfeiting through incorporated security features, such as optically variable devices that are extremely difficult to reproduce.In 1988, Austria produced the 5000 Schilling banknote (Mozart), which is the first foil application (Kinegram®) to a paper bank note in the history of bank note printing. The application of optical features is now in common use throughout the world.
Paper Money Collecting as a Hobby in the U.S.
Since American culture supports the idea of "collecting" as much - if not more - than other cultures, it is not surprising to learn this fact applies to banknotes. Although generally not as widespread as coin and stamp collecting, the hobby is growing. Prior to the 1990s currency collecting was a relatively small adjunct to coin collecting, but the practice of currency auctions, combined with larger public awareness of paper money (owing to the redesigning of larger denominations in the U.S.) have caused a boom in interest and values of rare banknotes.In the 1950s Robert Friedberg published the landmark book "Paper Money of the United States". Friedberg devised an organizing number system of all types of U.S. banknotes, the system is widely accepted among collectors and dealers to this day and the volume has been regularly updated.For years the mode of collecting banknotes was through a handful of mail order dealers who issued price lists and catalogs. In the early 1990s it became more common for rare notes to be sold at various coin and currency shows via auction. The illustrated catalogs and 'event nature' of the auction practice seemed to fuel a sharp rise in overall awareness of paper money in the numismatic community. Entire advanced collections are often sold at one time and to this day single auctions can generate well in excess of $1 million dollars in gross sales. However, as of 2005 rare banknotes still sell for much less than comparable rare coins. There is wide consensus in the paper money collecting arena that this disparity is diminishing as paper money prices continue to rise at a rapid rate.
Fractional Currency notes were issued in the United States from August 21, 1862 through February 15, 1876. Secretary of the Treasury Salmon Chase proposed to authorize postage stamps of some type as a new currency. Much of the public were using stamps because of a severe shortage of coins caused by the Civil War. Originally, fractional notes were issued in perforated sheets like stamps, but heavy demands forced them to be made imperforated. The post office did not like selling stamps for currency and they did not provide refunds for soiled stamps. Congress and President Lincoln approved the Postage Currency Act on July 17, 1862, which authorized an issue of five, ten, twenty five, and fifty cent notes. The 1st Issues became known as Postage Stamp Currency because they bore facsimiles of the then current five and ten cent postage stamps. Postage Currency (1st Issue) were never legal tender but could be exchanged for United States Notes in $5 lots and receivable in payment of all dues to the United States, up to $5. In the first few months of production, the sheets were perforated like stamps. These sheets were sold to banks and the public in sheets and you could tear off the notes needed with ease. The perforating machine could not keep up with the heavy demand so the banknote company started producing plain sheets that were cut with scissors. In 1863, Secretary Chase asked for a new Fractional Currency that was harder to counterfeit than the Postage Currency. The new Fractional Currency notes were different from the 1862 Postage Currency issues. They were more colorful with printing on the reverse.
A large-sized note is a bill of any denomination of U.S. currency printed between 1863 and 1929. This is in contrast with small-sized notes, which were printed starting in 1928. Large-sized notes exist in denominations of $1 through $10000. The most common large-sized notes are the Federal Reserve Notes of Series 1914 and 1918. These are detailed below, but are only a subset of all large-sized notes made by the Bureau of Engraving and Printing (BEP).
Military Payment Certificates (MPC) evolved from Allied Military Currency as a response to the large amounts of US Dollars circulating in post-WWII Europe due to American servicemen. The local citizens did not trust local currencies as the fate of their governments was unclear. Therefore preferring a stable currency, dollars, they often accepted payment in dollars for less than the accepted conversion rates. Obviously dollars became more favorable, inflating the local currencies and thwarting plans to stabilize the economies. Contributing to this problem was the fact that though troops were being paid in the local currency they could convert an unlimited amount to dollars at the government set conversion rate, which was much more favorable to the GIs than the market rate. From this a black market developed where the servicemen could utilize the favorable exchange rate. To combat this the US military devised the MPC program. MPC's were paper money denominated in US Dollars in amounts of 5 cents, 10 cents, 25 cents, 50 cents, 1 dollar, 5 dollars, 10 dollars, and starting in 1968 20 dollars. MPC's were fully convertible to US dollars upon leaving combat (or more specifically a designated MPC zone) and convertible to local currencies (but not vice-versa), and were illegal for unauthorized personnel to possess, thus, in theory, eliminating US dollars from local economies. Although actual greenbacks were not circulating, many local merchants accepted MPC on par with US dollars, as they knew they could use them on the black market. This was especially evident during the Vietnam War when the MPC program was at its height. There was however a provision meant to combat this. Many veterans can recount conversion days, when one series of MPC was made invalid and replaced by another, where locals (who were not authorized to convert) would be desperately trying to change their MPC as it soon be worthless. There were 13 series of MPC issued between 1946 and 1973, with varied designs often compared to Monopoly money due to their colors. After the Vietnam War MPC was never again issued, and lay dormant until the late 90's when it was replaced by a Stored Value Card system.
A banknote (more commonly known as bill in the United States and Canada) is a kind of currency, and under many jurisdictions is used as legal tender. With coins, banknotes make up the cash forms of all modern money. With the exception of non-circulating high-value or precious metal commemorative issues, coins are generally used for lower valued monetary units, while banknotes are utilised for higher values.Originally, the value of money was determined by the intrinsic value of the material the money was made of, such as silver or gold. However, carrying around a lot of precious metal was cumbersome and often dangerous. As an alternative, banknotes would be issued. In financial terms, a note is a promise to pay someone money. Banknotes were originally a promise to pay the bearer an amount of precious metal stored in a vault somewhere. In this way the stored value (usually in gold or silver coins) backing the banknote could transfer ownership in exchange for goods or services.