The gentleman who said “Veritas prevalebit” was careful to put his verb in the future tense and to affix no date to his prophecy. Truth sticks her nose out of the water-butt at rare intervals and then ducks beneath the shower of butt-lids hurled upon her. There is enough theological sense in Rabelais to blast all the bloated bishops and bell-clanging vicars in England to reduce them to fine malodorous powder, yet, as no multitude. is paid annually to spread Rabelais or Bayle or Voltaire, the obscurity of the populace is undiminished, the same wheezes work age in and age out; Chaucer’s pardoner, the party who plays with peas and shells at the country fair, and the makers of currency are still with us.

Apropos of Prof. Pigou and his salary we turn to Yule's edition of “The Travels of Marco Polo” (Vol I, pp. 423 and following):

The Emperor's Mint then is in this same City of Cambaluc, and the way it is wrought is such that you might say he hath the Secret of Alchemy in perfection, and you would be right! For he makes his money after this fashion.

He makes them take the bark of a certain tree, in fact the Mulberry tree, the leaves of which are the food of the silkworms-these trees being so numerous that whole districts are full of them. What they take is a certain fine white bast or skin which lies between the wood of the tree and the thick outer bark, and this they make into something resembling sheets of paper, but black. When these sheets have been prepared they are cut up into pieces of different sizes. The smallest of these is worth half a tornesel; the next, a little larger, one tornesel; one, a little larger still, is worth half a silver groat of Venice; another, a whole groat; others yet two groats, five groats, and ten groats. 'l'here is also a kind worth one Bezant of gold, etc.

All these pieces of paper are issued with as much solemnity as if they were of pure gold or silver; and on every piece a variety of officials … have to write their names and to put their seals, etc.

Forgery was punished; every year “the Khan causes to be made such a vast quantity of this money which costs him nothing that it must equal in amount all the treasure in the world.” All the Khan's debts were paid in paper, which he made current legal tender throughout his dominions. Merchants arriving from foreign countries were not allowed to sell gold, silver or gems to anyone but the Emperor. Twelve experts did the buying. The Emperor paid a “liberal price” in paper, which the merchants took, knowing they could not get so good a price from anyone else (i.e., anyone who did not have a printing press). Proclamations were also issued several times a year inviting anyone who had gold, pearls, etc., to bring them to the Mint and receive paper for them.

Old and worn notes were redeemed at 97 per cent face value.

And if any Baron, or any one else soever, hath need of gold or silver or gems or pearls, in order to make plate, or girdles, or the like (i.e., luxury products), he goes to the Mint and buys as much as he list, paying in this paper money.

Now you have heard the ways and means whereby the Great Khan may have, and, in fact, has, more treasure than all the Kings in the World; and you know all about it and the reason why.

The learned notes on this passage tell us that the issue of paper money began in China in the ninth century; that by 116o the country was flooded with paper, to the nominal value of 43,6oo,000 ounces of silver, exclusive of local notes. The Kin dynasty issued notes which were current for seven years and then redeemable in new notes at 15 per cent. loss. Kublai began his issue in 126o. By 1287 he had to issue a new currency, redeeming the old with one new note against five of the preceding issues.

The annotations to Polo continue with various details concerning successful and unsuccessful attempts to impose paper in Persia, China, and India.

We must in fairness admit that when the Khan finally allowed Polo to return to Venice he redeemed a good deal of Polo's paper, and that the Venetians returned to their native city with a more universal medium of exchange; but then, Polo had been quite useful to the Khan, and may certainly be regarded as an insider.

Kublai was indubitably an able administrator; and democratic notions had not penetrated the best circles of Cambaluc. Polo's account of him was greeted as the accounts of other explorers, though Columbus read him with interest.

What we see on closer examination of the text is that Polo regarded the issue of paper money as a sort of clever hoax, backed up by tyrannic power. The real tyranny resided, of course, in the Khan's control of credit. The parallels are fairly obvious.

Paper money in Europe, as in the Orient, seems to have been regarded either as a perquisite of tyrants or as an expedient. Frederic II “honourably redeemed” the leather coinage issued during the siege of Faenza. Paper and even leather coinage were certainly a convenience on the ground of portability. We have ceased to regard the issue of paper as a hoax, yet Polo smelled a rat, and a real rat; but when he says, “Now you know all about it,” he over-estimated the intelligence of his readers. After six centuries the number of readers who “know all about it” on a single reading of Polo's paragraphs is still exceedingly few.

It was not the bureaucratic solemnity of the officials “whose duty it was” to write their names on the paper and affix the imperial seals; it was in credit control. The unification of the function with the other functions of tyranny is very simple. It is so simple indeed that chairs of economics have to be founded. with increasing frequency to keep the fact from becoming apparent.

As for administrative efficiency, the ages have gained little. Kublai's post-riders with their coats buttoned behind and sealed with official seals so that there should be no question of their having dallied by the way-side or reclined upon alien couches, are sufficient memorial to his insight into man's character.



Pound, Ezra. "Kublai Khan and His Currency." (The New Age 20 May 1920). SP 204-206. P&P IV: 57-58.



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