Paper Money

In September 1294, with the treasury of the Ilkhanate — the Mongol-ruled Persian state that controlled much of modern Iran and Iraq — running dangerously low, Gaykhatu Khan tried a radical solution: print the money. It did not go well. The notes he issued in Tabriz, called chao, were copied almost exactly from Chinese banknotes then in use under the Yuan dynasty. They bore Chinese characters alongside the shahāda, the Islamic declaration of faith. Merchants refused to accept them, the Tabriz bazaar shut down within days, and the edict was withdrawn almost immediately. Gaykhatu was overthrown and strangled in March 1295. His fiscal disasters weakened him, but the contemporary chroniclers Rashid al-Din and Wassaf both attribute his end to factional revolt among the Mongol nobility rather than to the chao experiment itself. Modern writers have called the episode an early technofinancial panic: a reminder of what happens when a new abstraction of value collides with entrenched trust in specie, meaning actual coins of gold and silver whose worth you can feel in your hand. That pattern has repeated every time a new form of money — the gold standard, government-issued paper that promises nothing but itself, cryptocurrency — has asked the public to trust an abstraction.