Quote from the Ta Chuan a traditional (500-220 BCE) commentary on the I Ching on the use of knotted cords in Chinese antiquity

Ta Chuan Section II - 13

"In the highest antiquity, government was carried on successfully by the use of knotted cords to preserve the memory of things. In subsequent ages, for these the sages substituted written characters and bonds. By means of these the doings of all the officers could be regulated, and the affairs of all people accurately examined. The idea of this was taken, probably, from the hexagram Kuai"

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More about the Ta Chuan at: http://www.wisdom-books.com/ProductDetail.asp?PID=10619