Historically, credit instruments evolved into different formats and circulated widely amongst merchant communities to alleviate the need for carrying specie. Most modern historical forms that we know of, have typically taken some sort of paper format. They recorded the credits and debits of a given transaction, and allowed for greater flexibility and circulation in a variety of situations, and particularly in response to perceived risk. The hastily scribbled IOU, was quite simply, the rudimentary progenitor of more evolved forms of promissory notes. Later, this IOU was worded as a promise to pay a specific sum, and was witnessed by others to seal the promise, as shown by this 1774 English promissory note.
In time, the promissory note became even more sophisticated. They conformed to set templates, carried official stamps to cover stamp duty, incurred interest, and were issued by formal institutions such as banks. The example below shows a 1926 promissory note drawn by a prominent South Indian
merchant community known as the Chettiyars to formalise a debt to the Rangoon branch of the Imperial Bank of India.
merchant community known as the Chettiyars to formalise a debt to the Rangoon branch of the Imperial Bank of India.
