What Is Flying Money? China’s Ancient Bill of Exchange

Flying money (Feiqian) represents an ancient financial innovation from China, serving as a precursor to modern financial instruments. This system emerged as a practical solution to economic challenges, facilitating the transfer of value across distances without the need for physical currency.

Defining Flying Money

Flying money (Feiqian) was a form of transferable credit or a bill of exchange, utilized during China’s Tang Dynasty. This instrument allowed for the movement of funds between distant locations without physically transporting heavy coinage, and was not a physical currency itself, but rather a written certificate or note representing a sum of money deposited elsewhere. The name “flying money” literally translates to “flying cash,” reflecting its function as value could “fly” across vast distances. This system served as an early form of a promissory note, enabling merchants to deposit cash at one point and withdraw an equivalent amount at another. It predated true banknotes, which would later emerge during the Song Dynasty, but established the concept of paper-based financial transactions.

Its Historical Context and Purpose

The emergence of flying money was driven by the practical difficulties of commerce during the Tang Dynasty. Transporting large quantities of copper coinage over long distances presented significant risks, including banditry, the sheer weight of the coins, and logistical complexities. A shortage of copper coins further hindered daily business transactions, increasing the demand for alternative payment methods.

Flying money provided a solution to these challenges, facilitating long-distance trade and remittances. Merchants could avoid carrying heavy physical currency, reducing the risk of theft and simplifying travel. The system initially developed among merchants, but the government later adopted it to manage tax collection and payments, particularly after tax reforms allowed for monetary tax payments. Government offices, wealthy merchant houses, and provincial authorities were key entities involved in its issuance and acceptance.

The Mechanics of Its Use

A merchant would deposit a sum of money, typically copper coins, with a designated entity such as a government office, a merchant’s agent, or a provincial authority. In exchange for the deposit, the merchant received a written certificate or bill, known as Feiqian, for the equivalent amount. This certificate served as proof of deposit and a claim to the funds.

The merchant could then travel to a different city or region and present this certificate at a designated office or agent to withdraw the equivalent funds. A fee or commission was typically charged for this service, often around 100 wen per 1,000 wen of the bill’s value. Security measures, such as specific seals, signatures, or coded messages, were likely employed to prevent fraud and ensure the authenticity of the certificates, similar to later paper money.

Significance as a Financial Instrument

Flying money holds significant importance as an early financial innovation, streamlining transactions and reducing risks for merchants. It conceptually paved the way for modern financial instruments by introducing the transfer of credit and abstracting value from physical money. This system allowed for a more efficient flow of capital, beneficial for long-distance trade and the overall economy.

The system served as a precursor to promissory notes, bills of exchange, and even early forms of paper currency, demonstrating an evolving understanding of financial mechanisms. Its development marked a step toward credit-based transactions, where trust in the issuing entity replaced the need for immediate physical exchange of goods or coinage. By enabling value to be transferred without the physical movement of money, flying money contributed to the evolution of financial systems and the abstraction of monetary value.