Eurasia consists of inner and outer zones that contain two different environments. Civilizations in these different environments traded goods along the Silk Roads that they could not produce within their climate zones.

Outer Eurasia (Eastern China, India, the Middle East, and the Mediterranean) has warm enough climates and enough annual rainfall to make agriculture possible. Large trading civilizations like the Song dynasty in China and the Abbasid Caliphate in the Middle East were in this region.

Inner Eurasia (Central Asia) is dry and experiences cold winters, making agriculture difficult. As a result, many societies in the region became pastoralists and were nomadic or semi-nomadic. People within this region obtained needed goods by trading with or raiding their agricultural neighbors in outer Eurasia. Products exchanged for agricultural goods by pastoral people included hides, furs, livestock, and wool. The Mongols arose from this region.

Trade along the Silk Roads flourished when powerful states provided stable and safe environments for merchants to do business. Trade flourished in the 8th -11th centuries under the mighty Byzantine Empire, Abbasid Empire, and China’s Tang and Song dynasties. In the 13th and 14th centuries, the Mongol Empire again secured trade routes across Asia.

As empires expanded, elite classes with surplus wealth grew larger. These privileged classes desired luxury goods such as Chinese silks and porcelains and diversified food items as status symbols that set them apart from non-elite people.

As states developed, their economies increasingly commercialized, leading to an increased surplus of goods. Long-distance trade proved the opportunity to eliminate excess goods that societies created by selling them to others. By the 13th century, highly commercialized economies had developed in China, India, and the Middle East.

New commercial practices and technologies helped facilitate trade by making it easier for merchants and traders to move and sell their products.

Caravanserai

Caravanserais were roadside inns traveling merchants could stop, rest, relax, and resupply before moving further down the trading network. The buildings were usually four-sided and built around a courtyard lined with stalls to hold merchants, animals, and goods. Caravanserais developed throughout Afro-Eurasia.

Bills of exchange/credit

Bills of exchange and credit were documents that allowed merchants to deposit money in one place, receive a piece of paper verifying the deposit, and then use that piece of paper to pay for goods or withdraw the money in another location. China was one of the earliest adopters of this practice. In the 9th century, China developed a cash transfer system known as flying cash. Flying cash became an early paper currency when merchants began exchanging their deposit papers for goods. The merchant who obtained the flying cash paper would swap the deposit paper for physical money. Early versions of bills of exchange also existed in India and the Islamic world.

Paper money

For much of history, trade and exchange happened through barter. Early currencies were made of many items, including metals and shells. In the 11th century, the Chinese created the first known paper money, Jiaozi. Paper money was simpler and cheaper to produce, increasing the availability of money in the economy. More currency in circulation made commercial transactions easier to process, increasing the number of business transactions that could take place.

Banking houses

Different forms of proto-banking services have been around for thousands of years. However, it was not until around the 11th century that banking services began to take on a recognizable format.

• During the Song dynasty period in China, Chinese financial institutions took deposits, issued bills of exchange and credit, made loans, exchanged money, and issued currency.
• By the height of Abbasid power in the 12th and 13th centuries, early banking and banking services began to develop in the Islamic world.
• Modern banking began developing in Southern Europe in the Italian kingdoms during the 13th century. In Italy, banking started by providing loans to farmers and merchants that they paid back after selling their crops or products. Within a few hundred years, banks moved from just making loans to taking cash deposits and closing out transactions by transferring money between merchant accounts at their bank or other banks.
• By the 15th and 16th centuries, as Europe commercialized banking services in Italy had become some of the most advanced worldwide. European global conquests that started in the late 15th century would not have been possible without the wealth created by Europe’s emerging banking systems.