Episode 43. What the Han Dynasty teaches us about monopolies, money, and the uneasy balance between state power and private enterprise

Wealth surges, currency crises, and monopolies on life’s essentials—Han China’s economic story feels startlingly current. We dig into the early Western Han’s laissez-faire push that unleashed private enterprise and inequality, then follow Emperor Wu’s decisive swing to state control: salt, iron, and liquor monopolies; centralized minting; and grain “ever-normal” granaries that smoothed prices to prevent famine. The gains were real—stronger coffers, military capacity, and national security—but so were the tradeoffs: stifled innovation, bloated bureaucracy, and simmering public resentment. The debate captured in the 81 BCE “Discourses on Salt and Iron” sounds like today’s hearings on semiconductors, green energy, and AI.

The heart of the episode explores money as a trust machine. We unpack how coin debasement, private minting, and Wang Mang’s sprawling 28-currency experiment triggered counterfeiting, hoarding, in-kind payments, and an urban retreat—a monetary dark age. Then the counter-swing: Emperor Guangwu’s political reset and Emperor Ming’s canal, dike, and waterwork rebuilds that rekindled agriculture and trade. We clarify Silk Road myths, tracing complex land-sea networks, the Kushan Empire’s lucrative middleman role, and why precious-metal Roman coins traveled farther than Han bronze. Along the way, we highlight how Chinese ironmaking outpaced Europe by centuries and how paper’s invention transformed administration and paved the way for later financial innovations.

By the time Emperor Zhang consolidated the Eastern Han’s second golden age, silk functioned as currency across Central Asia, standards cut fraud, and safer routes unlocked scale for merchants. The throughline is pragmatic balance: markets drive efficiency and invention; the state safeguards stability, public goods, and strategic industries. When trust in money cracks, everything else falters. When control smothers enterprise, growth thins. We connect those lessons to modern antitrust, central banking, and industrial policy, showing why the pendulum keeps swinging—and why smart policy accepts the need to adjust.

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Chapters

• 0:00 Early Han laissez-faire rise
• 1:19 Emperor Wu’s monopolies and reforms
• 3:10 Ancient policy debates echo today
• 5:00 Monetary instability and Wang Mang
• 8:20 Currency collapse and depression
• 11:13 Rebuilding under Guangwu and Ming
• 12:50 Trade myths vs complex routes
• 15:45 Kushan crossroads and coin flows
• 18:00 Zhang’s expansion and safeguards
• 21:00 Iron, paper, and technology leap
• 24:00 Paper vs papyrus and finance
• 26:30 Golden age and future swing
• 27:50 Series context and support info

Transcript

SPEAKER_00: 0:00

The early Han period, which was from around 180 to 141 BCE, saw a rise of private enterprise and a proto-capitalist system. This came on the heels of the harsh centralized rule of the Qin dynasty. Consequently, the early Han Emperors swung the pendulum from state control and adopted a laissez-faire approach based on Taoist non-intervention principles. The state allowed for industry to flourish by lowering taxes while it reduced its control over key industries like iron and salt, and therefore allowed private merchants and entrepreneurs to thrive. As a result, Han China saw massive economic growth, a booming international trade along the Silk Road, thus it saw a rise of incredibly wealthy merchant families. However, the Han Chinese saw the same issue that modern economies see in that when the economy booms, this will often lead to vast wealth inequality. Subsequently, this inevitably leads to the consolidation of economic power in the hands of a few, and these powerful private interests often challenge the authority of the central governments. This all changed under the reign of Emperor Wu, who ruled from 141 to 87 BCE, as he swung the economy to state control. Much of this was driven by the fact that Emperor Wu faced constant threats from the Xiangnu nomads, and therefore he needed vast resources for military expenses, but the previous regime of lower tax meant that the Treasury didn't have adequate resources to fund expeditions to present-day Mongolia and surrounding regions of northern China and Central Asia. Furthermore, Emperor Wu saw the wealthy merchant class as a threat and as a source of untapped revenue. Under Emperor Wu's minister Song Hong Yang, he implemented sweeping reforms that would be considered radical even today. The state nationalized key industries as it created monopolies on the production and distribution of essential goods like iron, salt, and liquor. This guaranteed the state a steady massive income. He also implemented price stabilization through price smoothing techniques by buying grain cheaply in times of plenty when the prices were low, thus pushing the prices up for the farmer, and then he sold it more affordably in the times of scarcity, smoothing out price volatility and preventing famine. Sang Hong Yang then centralized the currency as the state took firm control over minting of coins to standardize currency and prevent debasement. The result was the state became exceedingly powerful and wealthy, able to fund its ambitions. However, the undertened consequence was it stifled innovation, created a bloated bureaucracy, and was often criticized for producing inferior goods compared to the private sector. In fact, this debate between salt and iron monopolies or state control and private enterprise was most notably recorded in the discourse on salt and iron in 81 BCE, a text that reads like a modern economic policy debate. The fact is, economic policy swings in Han China are not unlike the modern economic tensions we see today. So, for example, when Emperor Wu nationalized iron for weapons and tool making, he also nationalized salt, which was vital for food preservation. These were done for reasons of state security and revenue. The modern debate over state support for semiconductors, green energy, and AI is driven by similar concerns. National security, economic sovereignty, and capturing the value of future growth industries. The U.S. Chips Act and China's state-led industrial policy are direct descendants of this ancient logic. The Han states struggled with merchant families so powerful that they could host a thousand guests, own vast lands, and influence politics. Essentially the ancient equivalent of tech giants or too big to fail banks. Now we see antitrust lawsuits against companies like Google and Amazon and the debate for breaking up large financial institutions. They echo Han's suspicion of concentrated private power that can eclipse public interest through monopolistic behavior. Emperor Wu's struggle to maintain a stable state control currency and prevent private minting is a primitive form of central banking. This compares to the role of the Federal Reserve or the European Central Bank in controlling the money supply, setting interest rates, and ensuring financial stability in a sophisticated evolution of the same principle. Seng Hong Yang's ever normal granary was a form of price smoothing that allowed for price control and social safety nets designed to ensure the stability of the population. Nowadays, we have debates in nearly every country over price caps on pharmaceuticals, energy, and agricultural subsidies, and strategic petroleum reserves all operate on the same core idea that the state has a role in mitigating market failures to ensure social and economic stability. The Western Han Dynasty, which was from around 206 BCE to 9 CE, didn't provide a final answer because there isn't one. The pendulum continues to swing because both forces are essential. Private enterprise drives innovation, efficiency, and growth. State control or regulation ensures safety, stability, funds public goods, and protects national interests. The genius of the Western Han system and modern systems has often been in its pragmatism, meaning its willingness to swing the pendulum towards whichever approach is deemed necessary for the times. This is in large part why understanding and knowing history is so important, because these ancient debates are key to understanding not only Han China's economic history, but also the fundamental tensions that continue to shape the global economy today. What makes China's story particularly fascinating is how these developments occurred largely in isolation. Separated from other ancient civilizations by vast natural barriers, China cultivated revolutionary innovations without external influence. Their metallurgists created steel 1700 years before Europe. Their mathematicians embraced negative numbers and correctly calculated pi as 3.14, while Western counterparts dismissed such concepts. Their engineers pioneered deep borehole drilling, reaching depths of 600 meters during the Han dynasty, and became the world's first society to develop a fossil fuel market. Perhaps most relevant to our contemporary challenges is Wang Meng's cautionary tale of economic reform. His well-intentioned efforts to address wealth inequality through land redistribution and currency reforms created chaos when poorly implemented. His introduction of 28 different currencies simultaneously destroyed market confidence and triggered disastrous inflation. A sobering lesson for modern monetary policy experiments. The wealth gap in Late Han China bears an uncanny resemblance to modern America. Records show farming households barely earned enough to cover basic subsistence and taxes, while officials earn six times more, remarkably similar to the income disparities today, where 60% of American households struggle with essential cost of living. In fact, in modern America, the wealthiest country in the world, it's not uncommon for households to have to decide between paying for prescriptions or groceries. This deep dive into China's financial history is the sixth of seven episodes. This series is designed to offer more than historical curiosity, but instead to look at how we navigate our own economic crossroads by looking into the past. I am Mike D. If you like what you hear, please subscribe and follow to continue this journey through the fascinating evolution of money, banking, and trade across various civilizations. The absence of formal credit institutions in the Han dynasty, coupled with the prevalence of debt bondage, strongly suggests that private money lending was a fundamental but informal part of the economy. There were no banks or state credit, unlike later imperial eras, the Han lacked institutional credit systems. Loans were arranged privately, often between wealthy landowners and merchants and the peasants or small artisans. However, on occasion, especially under Wang Meng, the government tried to regulate lending by imposing maximums on interest, but enforcement was somewhat limited. In other words, they had regulations, but no way to enforce those regulations. The business of agriculture med farmers experienced certain cycles. Therefore, they needed loans to bridge the gaps between planting and harvest, especially after bad years when they faced extremes of too much water from floods or not enough water from droughts. Grain loans were particularly more common than loans in coin. Poor harvest or trade disruptions could trigger waves of defaults, destabilizing entire communities or even regions. Commercial growth was typically associated with urban artisans and merchants who often relied on credit to buy materials or stock of goods, especially in long distance trade. Examples being the silk trade or even lacquer. The Han government taxed commerce and profited from stable production such as textiles and salt, but for the most part, except for Wang Meng, they didn't regulate private lending, which would allow the elites to fill certain gaps. The late Western Han Dynasty was ultimately a critical period of monetary instability and economic decline. This was a prolonged economic slump which spanned the late Western Han and the Xin Dynasty under Wang Meng, who were ruled from 9 to 23 CE, with lasting repercussions into the Eastern Han Dynasty, the Eastern Han Dynasty being from 25 CE to 220 CE. In fact, probably the last time China as a whole would be completely stable was when Emperor Xiun was in control as he probably was the last effective ruler of the Western Han Dynasty. He ruled from 74 to 49 BCE. Ultimately, the problems faced by the Eastern Han could be traced back to Emperor Wu of Han, whose policies disrupted private commerce. Like I said, Emperor Wu ruled from 141 to 87 BCE. His state monopolies in salt, iron, and coinage were centralized to fund wars against the steppe tribes. Thereby he squeezed out private merchants. Then he introduced his currency reforms as Emperor Wu introduced multiple coinages, but these were often debased or even rejected, and caused mass confusion among the buyers and sellers. The end result was private coin circulation came to a crawl because there was no trust in the coinage, and the state's heavy-handed control disrupted markets, often leading to shortages. But then Wang Meng's rule was marked by even more monetary chaos. He introduced 28 new currency types, including the archaic forms like the spade and knife money. He ultimately attempted to revert to pre-Chin systems. Additionally, his other reforms were overly complex, poorly executed, and therefore they lacked public trust. Counterfeiting exploded, and the economy regressed to a system of credit and in-kind payments due to the lack of coinage in transactions. The reliable Wuju coins introduced by Emperor Wu were withdrawn entirely. This disrupted decades, if not centuries, of monetary stability. Gold, which was previously used for large transactions, vanished from circulation entirely and was possibly melted down and hoarded. You add all this up, and it's a recipe for disaster for the Eastern Han, of which they never fully recovered from these disruptions. There were too many debased and counterfeit coins. With no trusted official currency, private mints produced inferior coins leading to Gresham's law, which means bad money drives out good money. People hoarded sound coins, which were the Wuju coins, if any remained, while the debased and counterfeit coins flooded the markets. The lack of coins meant the government had to resort to taxation in kind as the state shifted from coin taxes to grain and silk. This reflected the decline of monetization, which resulted in a continued ancient depression as urban commerce shrank as the currency systems failed. Anytime you disrupt overall currency and circulation, you are almost certain to create an economic depression. In Han China, this meant people fled the previously prosperous cities and moved back to the countryside. We saw the same thing with the collapse of the Western Roman Empire. Therefore, as expected, just like in the post-Roman Empire, power shifted back to the landed elites who collected rents and grain, thus weakening the central state's financial base even more. Western Han's commercial growth had basically reversed course as it took major steps backwards. The Han experience underscores how currency stability underpins commerce. Once lost, recovery is slow. Modern depressions or deep recessions can be traced back to some sort of liquidity crisis, whether it was during the Great Depression when banks failed in the US, but also gold disappeared from the international market as it was hoarded primarily in the United States and France. Therefore, the British Empire was flailing and Eastern Europe was in crisis and ready to fall into the newly formed Soviet hands as they were trying to create a moneyless state. Like so many places, the leaders thought it was best to enact state overreach and not rely on the invisible hand of the market. Both Emperor Wu and Wang Meng prioritized state control over practicality. Thus, they were probably directly responsible for the destabilization of the macro level economy. The stress in the economy meant that the Eastern Han started out in severe stagnation. It was only enhanced when the Eastern Han failed to restore sound coinage, contributing to its long-term fiscal weakness, culminating in a collapse in 220 CE. In addition, much of what happened was probably more comparable to the Western Roman Empire. There was a similar debasement known as the third century crisis, which led to inflation and a partial return to credit, instead of taking payments through coin, though Rome retained gold as the standard unlike China, which used cheap bronze or copper coins. In reality, the late Western Han to Eastern Han transition ended up in a deep depression, so much so that it could be more accurately viewed as a monetary dark age. Wang Meng's reforms, while well intended, were poorly executed. Thus, this accelerated the collapse of the once flourishing coin-based economy, pushing China towards ruralization. As people fled the once prosperous cities and then the double whammy of a demonetized system that endured for centuries. This period serves as a cautionary tau about the dangers of monetary experimentation without institutional safeguards. The Eastern Hans' early years were anything but stable. Peasants bearing the brunt of the turmoil grew increasingly disillusioned with the government's mismanagement. Compounding their grievance was the presence of imperial troops roaming their heartland, a constant reminder of the fractured authority. Meanwhile, no fewer than eleven rival claimants vied for the throne, plunging the empire into a prolonged conflict. Emperor Gong Wu, the dynasty's founder, spent over a decade battling these challenges before he finally secured his reign in 36 CE and restored a fragile peace. He restored the administrative divisions and commandries and small kingdoms, which he gave to his family members. Despite granting leniency by relaxing harsh inherited laws, Emperor Gong Wu still faced persistent challenges. For one, he had to deal with the Xiangnu incursions along the northern frontier from Mongolia, to a full scale rebellion in the southern territories in modern day northern Vietnam. Yet, through his reign until 57 CE, he managed to impose an era of stability that the fractured empire desperately needed. Emperor Ming, Gongwu's successor, ruled with an iron fist. He brutally suppressed any suspected plots against him, including one instance where thousands were slaughtered to root out conspirators. Yet, history remembers his reign favorably, largely due to ambitious public works projects that revitalized the economy. Most critically, he restored canals, dikes, and water systems devastated by the Yellow River's catastrophic floods earlier in the century. The repaired infrastructure boosted agricultural outputs, cementing the Eastern Han's recovery. He died in 75 CE, succeeded peacefully by his son, Emperor Zhang. What's particularly striking during the early part of the Eastern Han period is the persistent mismatch between external perceptions of China and its internal economic realities. Pliny the Elder, who was living around 23 CE to about 80 CE, famously complained about the Roman Empire's gold drainage eastward to pay Chinese silk, suggesting a robust trade. But the idea of the Silk Road during the Han Dynasty is more myth than reality. Most of the Chinese goods would have come to Europe through other means. In fact, most goods from China traveled through a combination of land and sea routes that weren't solely reliant on the Silk Road. While the Overland Silk Road was a vital network connecting China to Central Asia and the West, it was particularly known for luxury items like Sil. And according to the Council on Foreign Relations, there were several factors that would have led to alternative trade routes being more prevalent for many goods. First off, the term Silk Road itself was coined much later and is misleading because a wide variety of goods beyond just silk were traded along these routes. And for many of the products and destinations, other routes would have been more practical. Spices from Southeast Asia and China were primarily transported along a maritime silk road, which linked port cities across the Indian Ocean through India and the Arabian Peninsula. These sea routes were particularly effective for transporting bulky and heavy goods, which often made their way into Rome. Additionally, the southwestern route existed connecting parts of China like Sichuan and Yunnan to India and Southeast Asia, traversing through Burma and Bangladesh. In essence, trade around 50 CE was a complex web of interconnected routes, land and sea, adapting to geography, the nature of the goods being traded, and the specific markets involved. Consequently, Roman merchants who were primarily from Egypt and Syria, and not Rome specifically, did reach India to purchase Chinese silk, along with cotton spices and gems. Yet there is scant evidence that Roman goods flowed back into Han China in any meaningful quantity. Chinese imports largely consisted of luxury items from Western Asia and India. These items would have included things like coral, pearls, and gemstones, not Roman exports. Structured large scale trading caravans did not fully emerge until the 3rd century CE, after the fall of the Han dynasty. Before then, the spread of Han luxury goods, such as silk, lacquerware, and bronze mirrors was moved across Central Asia and was driven less by commerce and more by tribute exchanges, diplomatic gift giving, and the occasional plunder. This disconnect between foreign perceptions of a silk dominated trade network and the actual fragmented nature of exchanges underscores how state driven and irregular long distance economic interactions were in Han times. During the Age of Exploration, the Spanish extracted vast quantities of silver from the potassi mines in Bolivia. Much of that silver bypassed Europe entirely, flowing straight to China, whose exports, such as ceramics, silk, and other fine goods, remained in high demand in Europe. Yet China had little interest in European products. The Chinese could produce comparable goods more cheaply and at better quality themselves. We see the same thing today comparing the US and China trade. Ships enter the port of Los Angeles and the port of Long Beach full of shipping containers, but leave nearly empty when they go back to China. In that sense, today's trade imbalances with China aren't new. They are a continuation of a pattern that is thousands of years old. Emperor Jiang, who ruled from about 75 to 88 CE, continued his predecessor's legacy by prioritizing competent and honorable officials in his administration. He actively promoted commerce through the expansion of trade routes. Emperor Jang accelerated the overall expansion of the economy. True to his Confucian principles, he maintained an ethos of humility throughout his reign until his death in 80 ACE. Together with his father, Emperor Ming, Zhang presided over what historians regard as Han China's second golden age, an era defined by sustained peace, technological innovation, economic growth, and widespread prosperity. Emperor Jiang expanded trade through a combination of infrastructure investments and developments, diplomatic outreach, and institutional reforms. He was able to accomplish much of this because he was able to build on the stability of the Eastern Han Second Golden Age. Zhang reaffirmed Han's control over the Terran Basin, which is modern-day Xinjiang. This control meant that he was able to secure critical segments of the early Silk Road. In order to make trade safer, he maintained garrison outposts similar to those of the protectorate of the Western Han regions to protect merchants from the Xiang Nu raids. This safety reduced long-distance trade risk, meaning traders could scale up their operations without excessive fears of being wiped out by bandits. The end result was trade expanded greatly. Consequently, the Han had established exchanges with Parthia, India, and Central Asian states, ensuring silk, jade, and spices flowed westward. The Silk Road ultimately made its way to the Kushan Kingdom, which was centered in modern Afghanistan. The Kushan became the crossroad of trade routes that extended eastward to China and southward to India and across the Arabian Sea to the Roman world. The Kushan Empire controlled key sections of the Silk Road, which connected the Roman Empire to the west with the Han Empire of China to the east. This gave them control over vital segments of the trade routes between these two powerful empires. The Cushans became essential intermediaries as they ensured the safe passage of goods and they also imposed taxes on passing caravans. This generated substantial revenue for the empire. While silk was a highly sought-after commodity, especially in the Roman Empire, the Cushans were involved in trade of a wide array of goods from various regions. Chinese goods came from the east, and these would have included silk and spices. The Roman Empire sent goods through this region of Afghanistan from the west. These would have included items such as gold, silver, painted glass, and bronze. From the south in India, spices, gems, timber, cotton, carved ivory, and lapis lazuli, which was a bright rock that was used for decoration in jewelry. In addition, horses were sent to India from Central Asia, along with various metals that passed through the Cushion Empire. The thing about trade is it's not just the physical goods that are exchanged, the exchange of ideas, beliefs, art, and sciences and mathematics are also shared between cultures. Maybe one of the biggest ideas that was exchanged was the spread of Buddhism from India to Central Asia and China. In essence, the Cushion Kingdom's prosperity stemmed from a strategic geographic position, its ability to manage and protect the trade routes, and its involvement in the exchange of a diverse range of goods, with Chinese silk being a prominent and highly valued commodity in this extensive network. The Kushans also minted a prodigious amount of gold coin, the first coins in the Indic world perhaps. And these were often reminted from Roman coins, but merchants in Central Asia preferred Chinese silks rather than coins as their preferred medium of exchange. Additionally, no cushion coins have been found in Han territories. The Han shipped large quantities of coin to its frontier regions to pay its soldiers, but these coins did not circulate beyond the garrison towns. It is most likely due to the fact that the coins used in Han China were low-quality coins. They were made of bronze and copper alloys, and not generally from precious metals like gold or silver. Therefore, they had little use outside of the empire. If it were gold or silver coins, there is a decent possibility that Han coins would have been. Found as far away as Britain as high value coins would have traveled far and wide. Roman coins included gold and silver, have been found in China and are linked to trade along the Silk Road, indicating that higher value coins traveled well internationally. The Han also expanded south through improved land and river routes into modern Yunnan and Vietnam, connecting with the Southeast Asian maritime trade networks. From this region, the Han imported pearl spices and tropical hardwoods. But it is important to note that the southern maritime routes were underdeveloped compared to later Tang Song periods. The Eastern Han used the Confucian framework of tribute to formalize trade with nomadic groups, which would have included the Yuhan and the Chang, and they would have exchanged silk for horses and furs. They even sent envoys to Central Asia to negotiate safe passage for merchants, thus reducing bad entry risks. Despite goods flowing to the Roman Empire from Han China, the misconception is goods were carried all the way from China directly to Rome. The fact is the Han did not have any direct trade with the Roman Empire. However, the trade was more in direct trade with Rome during Emperor Jang's era as Roman coins reached China through Parthian and Indian intermediaries. In other words, the Silk Road that we think of had remained a chain of middlemen until at least the second century CE. Emperor Zheng's institutional reforms also made trade more efficient, such as he helped standardize certain weights and measures, and then he lowered taxes on certain goods to reduce fraud and encourage commerce. He also established official markets in Guoyang and Chan'an, with designated trade quarters for foreign merchants. In addition, he repaired roads and canals inherited from Emperor Ming. Most notably, he repaired the Hangol Canal, which ultimately allowed for increased grain and commodity transport. By 88 CE, Chinese silk had become a de facto currency in Central Asia. It would have been traded for horses, which were obviously critical for its cavalry. In addition, it was also traded for jade. Jade is a generic term for two types of gemstones. They were both known for its toughness, durability, and vibrant colors, particularly green. Jade has been valued for centuries in various cultures for ornamental and ritualistic purposes, especially in China. While trade was expanding, the Chinese had developed advanced iron tools such as plowshares, which spread along trade routes. These tools, along with other iron farming tools like spades, shovels, picks, and hose, allowed for Chinese farmers to work the land more effectively. They could till deeper, control weeds and pests more efficiently, and manage soil moisture better, leading to improved yields. The development of sophisticated techniques like deep tilling further enhanced productivity. This allowed them to increase their output by boosting economies of scale. Thereby they were able to increase agricultural output at lower costs. In addition, foreign luxuries, such as Indian ivory, also appeared in Lee Han tombs, confirming its trade's reach. Ultimately, Emperor Jang's policies laid the groundwork for the peak silk trade route under his successors, blending state oversight with private merchant networks, which would become the hallmark of the Han political economy. What this all meant was wealth was flowing through the Eastern Han. In fact, the great estate owners of the Eastern Han were so wealthy that their assets were measured in the billions of coins. However, these estate owners were hamstrung by the fact that they didn't have the ability to invest their excess savings into third-party investments because China hadn't developed sophisticated partnerships that were common in Mesopotamia even a millennia prior. Despite that, by the time Eastern Han had stabilized, one of the biggest sectors in the Chinese economy was their iron making. During the Western Han, iron was monopolized by the state. Therefore, the smaller bloomery furnaces appeared to have disappeared entirely as they were consolidated into much larger state-run furnaces. Even after the Eastern Han government had rescinded its iron monopoly and privatized iron production in 88 CE, iron manufacturing remained confined to large-scale blast furnaces and foundries. The blast furnace technology and the economies of scale achieved by state ironworks in the Han apparently rendered the Bloomery technology economically obsolete. This technology was so far ahead of its time that Europeans didn't adapt to this large-scale iron smelting until the 12th century CE. So China was essentially a thousand years ahead of the Europeans when it came to iron. One notable contribution of the state workshops during the Han Dynasty was the development of paper making. Needless to say, paper revolutionized record keeping, literature, and communication. It would have replaced cumbersome bamboo slips and expensive silk. Unlike earlier writing materials, paper was lightweight, durable, and relatively easy to produce, which would have enabled the spread of knowledge across the empire. From bureaucratic documents to Buddhist scriptures, poetry, and printed books, which was another Chinese innovation, paper became the foundation of global literacy and administration. Its technology traveled westward via the Silk Road, eventually reaching the Islamic world by the 8th century, and by Europe by the 12th century, fueling the Renaissance and the Scientific Revolution. Early Egyptian papyrus and Eastern Han Chinese paper differed significantly in their creation and characteristics. Egyptian papyrus was made by slicing the inner stem of the papyrus plant into thin strips, then layering and pressing them together, sometimes with adhesive, to create a sheet. Eastern Han Chinese paper was produced by processing fibrous materials such as bark, hemp waste, and even old fishing nets into a pulp where it was suspended in water, then screened and pressed to form a sheet. Egyptian papyrus had flaws as it was relatively fragile and tended to crack when folded. Eastern Han Chinese paper had a more consistent structure and was more flexible and durable than papyrus. The invention of paper in Han China was important because it modernized communication, education, and therefore the spread of knowledge. It provided a readily available, inexpensive, and portable writing material that surpassed previous options like bamboo, wood, or silk. This led to wider literacy and mass production of books. Furthermore, the earliest documented use of paper money by the Chinese occurred during the Tang Dynasty, which was from 618 to 907 CE, when foreign merchants were likely required to deposit coins or other valuable assets to use the flying cash system, just as domestic merchants were already required to do. The system was not specific to Chinese citizens, but was a tool for anyone to engage in long distance trade. So while productivity increased, new innovations and re-engineered products made its way through the economy and state infrastructure projects. This generated new wealth for the dynasty, and therefore the Eastern Han were experiencing a new golden age. But China is old, and old societies inevitably experienced numerous pendulum swings throughout their long histories. Times were good, but that meant sooner or later the pendulum would swing in the other direction. I want to thank you for taking your time to listen or watch this episode, and hopefully the episodes prior. I have one more episode left about China. The next episode will be the last in this ancient Chinese series as we will go into the collapse of the Han Empire. If you like what you hear and want to donate to the show, you can visit us at patreon.comslash history of money banking trade. Or you can visit our website at money bankingtrade.com. Thank you very much. Talk to you soon.