feiqian 飛錢, bills of exchange

Feiqian 飛錢 "flying money", also called bianhuan 便換 "easy exchange" was the oldest type of paper currency. It was used in the mode of bills of exchange and was the precursor of real paper money, jiaozi 交子, which were created during the 9th century in Sichuan.

During the reign of Emperor Xianzong 唐憲宗 (r. 805-820) of the Tang dynasty 唐 (618-907), there were not enough copper coins on the markets to ensure smooth transactions in daily business. The creation of paper bills just followed the reform of the tax system to the so-called twice-taxation method (liangshui fa 兩稅法), by which at least part of the tax could be delivered in money. Accordingly, the need for money had increased. The central government therefore strictly forbade that merchants "deprived" the capital city of its coins and scattered them in the various circuits (dao 道, a kind of proto-province) of the empire. Instead, local markets were ordered to use various types of silk (ling 綾, luo 羅, juan 絹) or other fabric and ordinary items for market transactions, in a kind of barter trade. Concurrently, the prefects were to see to it that coins circulating in the region were not brought to other places. Such rules of course harmed long-distance trade critically and were an impediment to the development of the "national" economy. The private use of copper utensils was likewise prohibited because often enough, people melted down coins and cast them to bronze or brass objects like Buddha statues.

It was mainly tea merchants (see tea monopoly) who profited from the introduction of the bills of exchange. They helped traders of Chang'an 長安 (today's Xi'an 西安, Shaanxi) to buy tea in Sichuan and the southwest, and traders from these regions to buy merchandise in the capital. The exchange took place in the circuits' Capital Liaison Offices (jinzouyuan 進奏院) in Chang'an, and in the houses of specialized merchants in the circuits. In exchange for money, merchants were handed over bills (piaoquan 票券) issued with the respective sum of money, and in the destination were paid out the sum due. As a proof for the authenticity of the bill, the counter-institution in the circuits received one side of each talley bill, while the merchant retained the other. The two parts were compared, and thus originality proven. In this way, business in the capital was carried out with local money, and business in the various circuits likewise just with "local" money to make sure that no coins had to leave their place of origin.

The central government was not quite happy with the bills of exchange and repeatedly banned their use. Only in 812 they were officially declared a valid means of payment, and the central government began issuing its own bills of exchange. The Ministry of Revenue (hubu 戶部), the Tax Bureau (duzhisi 度支司), and the Salt Monopoly Bureau (yantiesi 鹽錢司) were entrusted with the supervision of this business. In the beginning, there was a fee of 100 wen 文 (100 coins) per 1,000 wen of bill value, but most merchants complained about this exploitative fee. Feiqian remained in use until the early years of the Song period 宋 (960-1279).