Académique Documents
Professionnel Documents
Culture Documents
in China
1845-1895
• 19 ·
Frank Η. H. King
1965
Preparation of this volume was aided by a grant from the Carnegie Corporation. The Cor-
poration is not, however, the author, owner, publisher, or proprietor of this publication and
is not to be understood as approving by virtue of its grant any of the statements made or
views expressed therein.
Frank Η. H. King
Lawrence, Kansas
September 1964
Introduction
The Chinese Economy, 1845-1895 4
The traditional economy, 4. Role of the state, 8. Foreign impact on the econ-
omy, 12
Economic Change Prior to 1895 14
Shanghai, other treaty ports, and Hong Kong, 15. Other changes, 18
P A R T II. STUDIES I N M O N E T A R Y H I S T O R Y
Notes 249
Bibliography 287
Index 321
Page
1. The ideal model of the Chinese monetary system 27
2. The chung-ch'ien system: ideal model 59
3. The hsiao-ch'ien system: ideal model 60
4. The three cash systems: ideal model 61
5. Accounting tael and dollar units 89
6. The Peking monetary system, 1861 159
7. The Peking monetary system, c. 1853 161
8. The Shanghai silver sector 173
This is a study in the monetary history of China in the fifty years prior
to her defeat in the First Sino-Japanese War. "Monetary history" is perhaps
too general a term for a study more specifically designed. We are concerned
here both with the nature of the monetary system per se and with the ability
of the government to adapt monetary policy to changing conditions within
a traditional context. This much is suggested by the title Money and Mone-
tary Policy. But a greater understanding of our purpose may result from a
more detailed statement and from a more lengthy introduction than so
specialized a study might normally warrant.
The economy of China in the nineteenth century provides an example of
failure to modernize. Many noneconomic factors, especially institutional ones,
have been offered in explanation for this. China was neither primitive nor
was its economy simple; rather it was vital, changing, developing. But it
did not modernize. It did not accept the challenge of the industrial West and
develop in this special sense of the term. To explain this satisfactorily it is
not enough to state that Chinese institutions were unfriendly to development.
That might surely be said of the institutions of any undeveloped society.
The real question is why the economic forces tending to change were in-
sufficiently powerful to overthrow the forces inimical to change. The answer
to this question, which is central, need not be entirely economic, but as an
initial step the economic factors can be isolated and the problem posed in
economic terms.
So sweeping an undertaking must, however, rest upon more restricted
monographs. This is one such study. Here we seek to understand the nature
of the Chinese monetary system and its adaptability to changing circum-
stances. And, based on this understanding, we seek to discover the attitudes
and capabilities of the traditional officials — from Emperor to magistrate —
in monetary administration and policy. Economic historians may subse-
quently weave this material into a more comprehensive monetary history
and, eventually, into a thorough account of recent Chinese economic history.
Nevertheless, tentative conclusions based on the findings of the present study
* This generalization may appear harsh, but we must remember that little work has been
done in this field by economists. One important exception is a joint survey by Professors John
K. Fairbank, Alexander Eckstein (the economist), and Lien-sheng Yang, but the value of this
contribution was minimized by attempting to force Chinese economic history into a Rostowian
stages framework. Important groundwork has now been laid by Albert Feuerwerker, a historian,
in, for example, "Materials for the Study of the Economic History of Modern China," and by
Chi-ming Hou, one of the few economists in the field, in "Some Reflections on the Economic
History of Modern China ( 1 8 4 0 - 1 9 4 9 ) " and other articles. Indeed, advance publication notices
suggest that longer and more comprehensive economic studies are about to appear; these publi-
cations should eventually replace our summary. Nevertheless, as of the present date, our sum-
mary is still required to perform a specific function for readers of this essay. (For full refer-
ences, see the bibliography.)
Home weaving industry was the highest for subsidiary occupations, with 112
of 389 listings; then skilled labor, hired farm labor, peddler, miscellaneous
home industry, unskilled labor, and others. 7 These figures for the early
twentieth century can be taken as representative of the situation in 1895.
Beyond the limitations of the village, the salt trade, the tea and silk trades,
and the transport of ore from the mines (many of which were located in
Yunnan in the extreme southwest of China) required a commercial organi-
zation which in a limited sense did give some national economic character-
istics to an economy that was mainly local. In the larger towns the artisans
were organized in guilds, forming a potentially important sector of the
economy which to this day has been little studied. T h e imperial factories
for silks and porcelains fostered the luxury crafts for the imperial family
and court in Peking, as to a lesser extent the requirements of other officials
encouraged production in the principal seats of government.
Despite the extent of trade, especially in the retail sector, production re-
mained small scale. Attempts are now being made to discover inherent in
pre-nineteenth-century China an industrial awakening checked only by the
distortion given the economy by the foreigner, but the evidence cited is
usually confined to single and sometimes ambiguous instances. 8 That na-
tional markets existed at all is remarkable, considering the primitive state
of transport in nineteenth-century China. T h e vast river network of the
Yangtze valley and the long coast line of China should have provided cheap
if not rapid transportation, but the slowness of river transport and the
dangers of the sea trade more than offset their potential advantages. In most
of China not even wheelbarrows were used; goods were transported by men,
or in some cases by animals. On the north China plain itself there were
roads suitable for wheeled carts, but they appear to have been few. T h e
national market was confined to those luxury goods the costs of transport
of which were borne by rich court officials, and primary products which
could be produced only in certain limited areas. Rice was a special problem
and will be considered below in the context of the state's role in the economy.
The economic policies of provincial authorities too often supplemented
the natural barriers, accentuating the local character of the economy by
prohibiting interregional trade in key commodities at critical times.9 But
in densely populated China the potential size of even local markets might
have suggested the economic feasibility of larger scale production. This is a
reasonable supposition, and it will be considered in greater detail elsewhere.
Role of the state. Upon this traditional economy there were imposed the
imperial and the provincial governments. Simply stated, their economic
purpose was to ensure the people's livelihood — the purpose of a paternalistic
government concerned with promoting the economic welfare of the people.
Certainly the economic activities of the government were explained by offi-
cials in such terms, and certainly the more honest attempted to govern in this
spirit.
Paternalism is not usually a dynamic force, and the Chinese version was
no exception. Responsibility for the people's livelihood appears to have been
understood in the sense of encouraging the traditional occupations and
avoiding disaster by conforming to tried examples and activities. The state
therefore encouraged agriculture, and the Emperor as well as local officials
throughout the country plowed symbolic fields in evidence of this. Officials
gave moral encouragement to producers and supported public works projects.
Their duty was to keep the economy going: to promote production, to main-
tain public works, to keep law and order, to act as referees in guild disputes
(in fact, in any economic problem likely to cause disorder). With few ex-
ceptions these activities were not positive; except in crises officials did not
often take the initiative.
But the state itself created the major economic problem which officials had
to solve. The court, the officials, and the military had to be supported; the
state had to tax. The basis of the taxation system was the land tax, which
before 1850 furnished probably more than 75 per cent of total imperial
revenue.10 The land tax was usually collected in legal tender in an amount
fixed in 1723 by the K'ang-hsi Emperor. Thus the most important source of
revenue appeared inflexible, although the amount actually collected exceeded
the specified amount more than threefold by the end of the nineteenth cen-
tury. Such excess sums went to collectors, local and provincial authorities,
but not directly to the imperial treasury in Peking. In 1853 the revenue re-
quirements of the governments were so great that the li\in tax, a tax on
goods in transit, was first levied, accounting by 1900 for 18 per cent of the
total revenue.11 With the growth of foreign trade and the efficient adminis-
tration of the customs under the foreign-staffed Imperial Maritime Customs,
import and export duties on general cargo and foreign opium accounted for
26 per cent of the national revenue, and the native customs, for duties on
trade carried in native-type craft, accounted for another 2 per cent.
In bad years taxes were remitted in part or in whole. In periods of re-
bellion they could not be collected. The most important tax in an agricul-
tural community, the land tax, had been "fixed." The finances of the Chi-
nese Empire were not on a sound basis, but reform proved impossible.
National revenue could, however, be supplemented. This was done not
only through the li\in and the customs, but also through various devices,
to be considered below, which were uncertain in effect and tended to have
undesirable consequences. Likjn could not be increased indefinitely, not only
for purely economic considerations relative to the disruption of trade, but
also due to the complications involved with foreign goods which under the
treaties had paid their full duty. And foreigners objected to the tax in princi-
ple. The import and export duties were fixed by treaty and could not be
increased unilaterally. As they were based on an ad valorem intent but
actually set down as specific duties denominated in a silver unit of account,
the revenues suffered from a decrease in the gold price of silver, although
the full effects of this were not felt until after 1895 when the external gold
debt of China was significant.
The imperial government had to depend from time to time on such devices
as the sale of rank and even office, on thinly veiled forced levies from rich
officials and merchants, and on exploitation of traditional government mo-
nopolies of which the most important was salt. During the Taiping rebellion
the government issued token coins and paper money in an effort to meet
the requirements of the military budget and yet maintain vital public works,
but more extensive use of this obvious fiscal device was impossible due to
the hyperinflation which it produced and the traditional reluctance of the
Chinese, a reluctance well justified by experience, to accept government fiat
money.
The mainly negative aspects of Ch'ing economic policy should not com-
pletely shroud those positive actions which the government either undertook
itself or directly promoted. The government was certainly responsible for
the maintenance of public works, trunk roads, post houses, and the Grand
Canal. In practice, especially in the period being considered, the govern-
ment paid directly for maintenance of the Grand Canal and for flood con-
However promising such developments may have been for the future, their
impact on the Chinese economy before 1895 was quantitatively slight. T h e
foreigners were, after all, mainly traders. They lived in the treaty ports.
Chinese merchants had successfully kept them out of domestic trade. Thus,
however influential leading missionaries, customs officials, or individual engi-
neering advisers might be with those officials with whom they were in im-
mediate contact, their influence beyond a specific problem was generally not
great, and the vast majority of the Chinese — both commoners and gentry-
scholars— knew of foreigners only by reputation, a reputation not good
when judged by traditional standards.
One might well argue that it need not have been this way. Chinese, espe-
cially the compradores, who lived in the treaty ports and who daily observed
the foreigners, should have had proof of their superior ways and could them-
selves have begun projects which, when their value was appreciated, would
have been copied throughout China. Some merchants may well have been
impressed with what they saw. Yet we might ask what indeed they did see
in a chiefly mercantile community which could have been relevant to capital
development, which could have directed their attention to the importance
of economic growth defined as a significant increase in per capita gross
domestic product. Undoubtedly, too, some scholars studied and were influ-
enced by Western thought. And again we might ask what aspects of Western
thought impressed them or whether they could have realized the total im-
plication of that thought and its potential effect upon economic progress.
T h e foreigners had influence; they created an impression. But to transform
that influence and impression into action which would be sufficiently effec-
tive to change the nature and course of the Chinese economy in the period
before 1895 — that is something different.
Change was, however, hardly absent from the Chinese economy in the
fifty years preceding the First Sino-Japanese War. This is the subject of the
following section.
quoted in 1890 and 43 per cent in 1895. If the insurance and shipping cate-
gories are added to banks — all of them most intimately connected with
trade — they account for roughly 85 per cent of the market. T h e remaining
15 per cent was divided among public utilities (about 3 per cent), manu-
facturing (important only in 1895 when it reached 7 per cent), and com-
panies operating outside China (12 per cent in 1890 and 5 per cent in
1895). 26 There is nothing really surprising in this; but it does emphasize
again that, in the foreign joint-stock sector at least, there had been little
quantitative breakout from the activities of the China trade itself.
Despite the unsatisfactory scope of the statistics, several further facts
emerge. First, the companies were not conspicuous for success. Of the 90
companies listed, 72 either failed or at some time showed the market value
of their shares below paid-up capital. This is consistent with the existence
of speculative periods followed by failures of many more concerns than were
listed on the stock exchange. 27 These fluctuations were caused by many fac-
tors — China's relations with the Powers, the speculative move of funds from
the interior and the resulting land speculation during periods of refugee
movements to the treaty ports, the course of the exchanges and other specula-
tive aspects of foreign trade which affected the native money market, and
business fluctuations in the United Kingdom, especially the collapse of
Baring Brothers and the depression of the early 1890's.
Of the unlisted 74 companies using foreign machinery in Shanghai about
one quarter were Chinese owned and operated. Chinese capital was, in ad-
dition, present in many of the other companies. The significant fact is that
in Shanghai at least 17 wholly Chinese companies were using foreign ma-
chinery before 1895; in the other treaty ports the proportion was about the
same. Almost all the Chinese companies were founded after 1880.
Almost half the Shanghai companies were devoted to some sort of manu-
facturing— flour milling, furniture making, textiles. Another quarter were
in processing — especially silk filatures; and about 15 per cent were in ship-
ping and docking. Some 17 of these companies were listed as having failed,
but this is a minimum. Most of the failures were in shipping and docks,
where over-optimism as to the prospects for expansion of the China trade
would be most felt. These are not impressive figures.28
Employment statistics are not available for every company, but it would
appear that, in general, employment did not average much in excess of 200,
perhaps a modal figure. Nevertheless there are examples of firms employ-
ing over 1000. Yet, of the men employed, only a portion came into contact
with modern machinery and an even smaller proportion actually used it.
Perhaps most important of all, the statistics do not indicate what percentage
of the Chinese firms undertook innovations in management; they may have
restricted themselves to the employment of a few modern machines. Thus
the dissemination effect of Shanghai industry before 1895 was even less
impressive.
If institutional factors were the key to China's slow acceptance of moderni-
zation, Hong Kong, a British crown colony, should have been able to
set the pace. That it failed to do so despite such obvious advantages as the
right of incorporation with limited liability and the protection of a govern-
ment sympathetic to enterprise suggests that Hong Kong was subject to
economic forces similar to those operating in China and that these were
unfavorable. The timing of Hong Kong's industrial revolution, which began
during the trade depression following the Korean War-United Nations
embargo, emphasizes the importance of the economic factors.
The Chinese community in nineteenth-century Hong Kong brought with
them the social organization typical of neighboring Kwangtung. Institu-
tional factors were not absent, but they were minimal. Nor was Hong Kong
as favorably situated as Shanghai; building on her steep slopes was costly
and the price of reclaimed land high. Hong Kong was, however, on the
trade routes and, unlike the situation in Republican times, her manufac-
tures did not suffer from the Chinese import tariff; either this was levied on
goods made by machine in the treaty ports of China itself, or the native-
produced goods were subjected to their own transit taxes. This complex of
factors in Hong Kong's nineteenth-century economic history has yet to be
analyzed.
An 1871 Hong Kong share list shows a pattern similar to that of Shanghai
— banking and insurance, enterprises ancillary to the China trade, hotels,
and a distillery. A rice-cleaning mill had been unsuccessful, unable to com-
pete, so it was said, with native hand labor. There were plants for the re-
fining of sugar and camphor, with the latter particularly successful. The
Indo-Chinese Sugar Company, the most important company then in opera-
tion, found that its supplies were controlled by Chinese merchants and that
the price they set made operation unprofitable.29 The company attempted to
go into planting to break this monopoly but was forced to cease operations
in Hong Kong and move to Siam. 30 The Hongkong and Shanghai Bank,
which was involved in many of these early industrial experiments, began to
take a more conservative attitude towards fixed investments.31
A summary of industrial activity in Hong Kong in 1886 is not impressive:
manufacture of Chinese "hubble-bubble" pipes and brass sheathing; leather
boots and shoes manufactured for export to North and Central America;
tobacco; preserved ginger (still important in Hong Kong today); and the
remelting of old glass.32 Even when these are coupled with the shipyards
and their ancillary activities, the enterprises listed fall short of providing a
basis for an industrial revolution. The early hopes that industry would
flourish in Hong Kong were unrealistic, and investment in speculative land
and mining companies became, as in Shanghai, an important outlet for
excess funds.
Other changes. In the period of self-strengthening following the defeat
of the Chinese in the Second Sino-British War there were ten events which
the Chinese historian Li Chien-nung considered important in the moderniza-
tion process. Not all are directly concerned with the economy, but all had
their indirect effects.
1865 the Kiangnan Arsenal; 1866 shipyard at Foochow; 1870 a machine factory
at Tientsin; 1872 the China Merchants Steam Navigation Company; 1875 prepara-
tions to build steel warships; 1876 the first Chinese students to Europe [1872
first to the United States]; 1878 Kaiping Mining Company; 1880 naval academy
and telegraph; 1882 harbor and shipyard at Port Arthur; 1885 military academy
at Tientsin; 1888 the Peiyang fleet formed.33
In 1872 Tso Tsung-t'ang undertook to build an arsenal in Lanchow, and this
was followed in 1878 by woolen weaving mills and other minor industrial
undertakings.34 The provincial arsenals provided, in fact, the basis for in-
dustrial expansion — they had machinery, foreign advisers, and an increasing
number of qualified workers, but their actual role beyond the immediate
military requirements for which they were originally designed would ap-
pear to have been slight.
The "official supervision and merchant management" company was typical
of a number of Chinese enterprises in the period following the defeat of the
Taipings, in the sense that an official patron protected and sponsored a par-
ticular company, granting it certain privileges and in return supervising
its management. The Kaiping mines, for example, were from the first
pictured as serving China's future industries, supplying coal for her ships,
railroads, and factories. In 1882 the first steam train — after the ill-fated and
premature Woosung railway — ran on the tracks of the Kaiping mines.35
Between 1882 and 1895 the first commercial railways were constructed in
north China, and in 1889 Chang Chih-tung was transferred from Canton
to Wuchang to supervise his project for the building of a Peking-Hankow
line. While governor general of Wuchang, Chang also undertook the con-
struction of an iron foundry, cotton mills, and, in 1894, the development of
The above account purposely omits mention of the monetary system, which
at this stage would result in unwarranted duplication. Nevertheless, our
general survey of the economy suggests two important matters which should
be noted here.
First, the phrase "Chinese economy" may be misleading. The Chinese
economy was to a great extent many economies, paralleling, perhaps, the
partial integration of Italy in early modern times. The unifying features
were principally in the government sector, but even here they tended to be
superficial. This fact, which will be considered more fully below, is espe-
cially important to remember when dealing with Chinese money. Indeed,
it is in the monetary sector that the superficial forms of a national economy
— for example, similar appearance of the coins, similar banking practices,
similar forms of official monetary institutions and philosophy — are most
obvious. A large part of the confusion which contemporaries saw in the
Chinese monetary system arose from the expectation of a national system
as unified as appearances.
Secondly, the nature of economic activities and the tentative steps to
modernization described for the period prior to 1895 suggest that money
must have been in fairly general use, that its forms must have had some
adaptability, and that monetary policy was not dedicated solely to main-
tenance of a status quo. Those students of economic history who feel that
analysis by stage is helpful will perhaps be concerned to know whether China
had passed the natural economy or barter stage; was it in the money barter
or perhaps the money stage? Or even, was there an abortive take-off! But
this approach does not appear useful. The Chinese monetary system proved
sufficiently adaptable to meet the demands placed upon it. Modernization
did not find the monetary system a stumbling block. Whether, if moderniza-
tion had proceeded at a faster pace, the monetary system might have proved
unsuitable and unadaptable is speculation which hardly appears fruitful.
Both these topics will be more fully developed below. In Part I we shall
describe the Chinese monetary system in its principal forms, recognizing that
at any particular time and in any designated place there would be local
variations. This follows from the nature of the "Chinese economy" and
suggests a generalized exposition based on an ideal model with principal
Principal Characteristics
of the Chinese Monetary System
A study of the Chinese monetary system involves the use of new concepts
of some complexity. For this reason the ideal model is introduced immedi-
ately and briefly explained. The Chinese monetary system was bimetallic —
silver and copper. The tael was the unit of account when payment in silver
was expected; the ch'uan, when payment was to be in copper coin, or
"cash." *
A tael could be satisfied by tender of one liang, or Chinese ounce, of mone-
tary silver. The ch'uan was divided into 1000 units referred to as ch'ien, and
one ch'ien unit of account could be satisfied by payment of one cash coin.
A ch'uan could be satisfied by payment of 1000 cash coins, normally tendered
strung together through their center holes and referred to as a "string of
cash." These relationships are combined in Figure 1 to illustrate the ideal
model.
Symbols: = is equal to
= is defined as
! indicates the sum of money which
will satisfy the unit of account
All units of account are italicized.
a This is actually a model of the ch'ang-ch'itn system which is fully described in
the following chapter.
The relationships established in Figure 1 are ideal in the sense that, first,
they abstract from the imperfections of the coinage and the specific problems
of the market place and, second, they are consistent with the weight implica-
tions of the names assigned the monies. Only the latter characteristic re-
quires explanation here.
The ideal nature of one tael being satisfied by one liang of monetary silver
is based on the fact that "liang" in Chinese was used both for the unit of
* In this study units of account are italicized, regardless of other considerations — thus,
tael, dollar, ch'uan. Names or weights of monies are not italicized — thus, liang, dollar.
and a barter transaction. Barter may be defined as the exchange of one com-
modity directly for another, neither being valued in terms of a unit of ac-
count and neither being utilized as money. The purpose of this money-
barter-transaction distinction is to facilitate a decision as to the extent of the
monetary sector of the economy, although such a determination is subjec-
tive and qualitative and does not depend upon acceptance of any "stage" ex-
planation of economic development.12
Coins — their ments and demerits. In a metallic currency system the means
of payment may or may not be especially prepared for its monetary role,
that is, it may be either coin or bullion. There is, moreover, no sharp dividing
line between the two. In China, for example, although silver coins were not
legally minted in significant quantities until late in the nineteenth cen-
tury, silver bullion was formed into traditional shapes — shoes of sycee —
assayed and weighed, the results being certified on the shoe. These pro-
cedures differentiated silver in general from silver commonly used as a means
of payment; shoes of sycee possessed, therefore, many of the essential charac-
teristics of coins, and many economists would define them as such. The
purpose now is to examine the roles and relative merits of bullion and coin
in a metallic monetary system.
The problems and possible demerits of coins stem from the fact that they
have demand and supply characteristics which are to some degree independ-
ent of those for the precious metal of which they are manufactured. As coins
differ from bullion, they will have a demand independent of that for bullion;
for example, many are willing to pay a premium for the convenience of using
coins, but the extent of the premium assigned to this convenience may change
over time. The supply of coins will be independent of the supply of bullion
to the extent that the minting of coins or the securing of coins which will
pass current in the economy presents problems different from those which
arise from placing a supply of suitable bullion in the market. Coins may
only be bits of bullion weighed, assayed, and shaped in a standard fashion;
but the result is something different from bullion, and coins have a role of
their own in a metallic monetary system.
But the problems which might arise from such factors appeared insig-
nificant to the disadvantages of using bullion, and contemporary observers of
the China scene deplored, with few exceptions, the lack of a Chinese silver
coin. The skeptics had, however, more on their side than cynicism. Bullion,
critics stated, is clumsy and inconvenient, it must be weighed and assayed
before each payment, a process requiring cutting off excess bits of the metal
and involving all concerned in protracted negotiation. The use of full-bodied
A refusal of the bank to issue more notes would affect the exchanges without
relation to metallic import or export points; the monetary system is effec-
tively off a metallic standard while maintaining all the de jure symbols. But
it is still a metallic system because the basis of the monetary system is precious
metal even if the bullion all rests quietly in the vaults of the bank. A second
way in which a metallic system can go off standard is through the imperfec-
tion of the coinage, the problem with which this section is mainly concerned.
But in either case an understanding of the process is essential if the status of
the monetary system and the explanation of its relation to other systems is
to be fully understood.
The purpose of a coinage is to eliminate the need for constant assaying of
bullion, and yet to pass coins with complete disregard for their dimensions
is not possible in a system in which intrinsic worth is the basis of money's
value. In a well-policed country coins may be expected to be up to standard;
then it will be possible to pay them by count only. Premodern states were
not, however, noted for the efficiency of such police activities, and the prob-
lem of maintaining the standard of the coinage was a real one. There is a
customary question as to whether coins were accepted by tale (that is, by
count) or by weight. As stated the question misses the point. Coins were ac-
cepted by count because of the supposed intrinsic value of the metal in the
coin. How this worked out in practice would determine whether the mone-
tary system remained on a metallic standard.
If coins are accepted by count, then the holder has no reason to care about
the content. As with a public assay of bullion, a practice especially popular
in China, it is not the accuracy of the assay — or the content of the coin —
which matters, but what people are willing to accept as its content. Since in
a metallic system coins were accepted because of the weight of bullion they
contained or were thought to contain, coins would be accepted by count only
when it appeared unlikely that the weight would be challenged by the person
to whom the coin would next be paid. Coins were accepted or refused on
the basis of expectations as to the reaction of the person to be paid. The less
likely was a coin to be challenged or tested, the less difference its actual con-
tent made. If, for example, there were a mutual agreement among merchants
in a particular market that underweight coins must be accepted at par, a
step which might be forced upon the merchants by lack of standard coin,
people would be willing to hold and use such coins. The unit of account
was then satisfied by a lesser amount of metal than its official definition re-
quired.
Unless this agreement to accept inferior coins is without limit, there will
come a time in the life of every coin when its weight will be challenged, that
is, it will no longer be accepted by count. The timing of this challenge is
dependent upon the effectiveness of currency law enforcement, the willing-
ness of the monetary authority to maintain the coinage, and the use to which
the coin is to be put. The tendency to demand standard weight coins and so
to challenge those appearing inferior will be especially strong during a period
of bullion export.
A debased currency circulates by mutual agreement. Its poor condition in-
vites a worsening of that condition, for with the legal standards once ren-
dered ineffective there is no objective basis for the test of the coin's intrinsic
worth. Coins will be counterfeited, sweated, and clipped. The metallic con-
tent of current coins will vary considerably; they may or may not pass at
different rates; they may or may not pass at par with the unit of account. As
the coinage deteriorates, the average coin will probably maintain its relation-
ship with the unit of account; an unusually bad coin will pass at a discount
and a coin of legal standard may command a premium. Obviously the unit
of account no longer values a fixed quantity of bullion.
Especially in systems with identical names for unit of account and coin
the unique monetary relationship is between coin and the unit of account
and not between the unit of account and bullion. Upon the initiation of the
coinage, the relationship is both with coin and bullion, but as the coins de-
teriorate unchecked, coins and not bullion usually maintain their par rela-
tionship. For example, if a unit of account χ can be satisfied by payment of
coin x, and if coin χ is by law to contain у grains of pure silver, then it will
often be said that unit of account χ "is" or "values" у grains of silver. After
deterioration, unit χ can still be satisfied with the payment of coin x, although
this coin now contains less than у grains of silver. The unit of account has
become associated with the coin, and changes of its relative value in the
exchanges depend not on changes in the relative value of bullion but on that
of coins now divorced therefrom. The independence of the coins is accentu-
ated by the fact that under such deteriorated conditions the mint must either
have ceased issuing coins, thus making their supply infinitely inelastic —
except through counterfeiting — or, if the mint is still issuing, the new coins
must either be held in inactive balances or be melted; they are not affecting
the supply of coins available in the market. Such a situation is not consistent
with the usual conception of a silver standard.
Unless the currency laws can be enforced, there is little incentive for the
mint to issue new coins meeting the legal standard on the sole initiative of
the monetary authority. And with a deteriorated coinage passing at par, it
the nominal mint price but lower than the effective price of bullion for
private coinage, the minting of new standard coins by the monetary authority
will have the effect of offering bullion in the market at the mint prices plus
the charge of melting, plus, if necessary, bribing the officials involved. The
introduction of a few standard coins would be insufficient to force private
minters to improve the quality of their coin; to be successful the government
must introduce within a reasonable period of time sufficient standard coins
to meet the full requirements of the monetary system. If the deterioration of
the coinage had been caused by a shortage of metal, the government's reform
would be doomed unless it was able to encourage at the same time the use
of representative money. If the problems originally arose from the exporting
of bullion, recoinage would have to be coordinated with other measures de-
signed to correct the outflow of bullion.
Even within a metallic monetary system based upon a single precious
metal, the monetary authority is faced with the necessity of constant vigilance
and for the enforcement of a coordinated economic reform to save the coin-
age. Even then the faulty assay of foreign exchange dealers or the dis-
equilibrating decision of another monetary authority can threaten the coin-
age. The governments involved were not, however, always well-informed or
well-intentioned, with the result that metallic currency systems were subject
to economically interesting changes and complexities. A brief study of bi-
metallic systems will reinforce this conclusion.
Bimetallic systems. Any commodity is eligible as money providing it is
generally acceptable as a means of payment. In practice only a few com-
modities qualified, and undoubtedly convenience and appropriateness were
important criteria. The precious metals were by these standards destined to
be selected as money. The selection of a single metal as money either in
bullion or coined form would appear to be but the logical conclusion to the
process. Two principal factors led to multimetallism and to bimetallism in
particular. The relation between the monetary requirements of an economy
and the supply of a precious metal is in great part an independent one; the
ability to draw on supplies of two metals would provide greater flexibility.
Secondly, the metals varied in value per unit of account, and one convenient
for the retail trade because of its low value would for that reason be incon-
venient for the wholesale trade. These two factors — adequate supply and
relative convenience — are quite different in their nature; the characteristics
of any particular bimetallic system reflect the relative importance of the
factors. This section is a study of the nature of these characteristics.
The classic form of the bimetallic system — and, by extension, of a multi-
coins and are accepted at face value in the metallic currency system. The
temptation to profit from the uncontrolled issue of coins the face value of
which was greater than the intrinsic value proved too great for some govern-
ments, and the subsidiary coins came to be accepted only on the basis of their
intrinsic value, that is, only to the extent that they were full-bodied coins
passing therefore at a discount over their face value.
The technical characteristics of a metallic monetary system not only create
problems which require constant attention but they also both limit and
characterize the measures which the government may wish to take for rea-
sons not directly concerned with the technical problems of a metallic system.
These are the subjects of monetary policy in a premodern state and they
strain the administrative abilities of such a state. Certain examples of this
will be presented in Part II of this book. The immediate task, however, is
to develop the ideal Chinese model, keeping in mind the points raised in
this brief consideration of metallic monetary systems.
The liang was given the European equivalent of 583.3 grains troy in the
treaties, but (as with the European pound) its weight in China varied ac-
cording to the place and the market. 28 Like the European pound the liang
was also a unit of account payable ideally with one liang weight of monetary
silver. (Liang has usually been translated as tael, qualified as "monetary
tael" [like pound sterling] when the unit of account is being referred to.
In this study the word will be left untranslated as "liang" when it refers to
a unit of weight and translated as tael when it refers to a unit of account.)
Ch'ien referred both to a unit of weight and a unit of account. It was also
T h e ideal relationship between the tael and the ch'uan can change, other
relationships remaining the same, because of a change in the market ratios
of copper and silver. T h i s can be caused either by a change in the supply
situation, as for example when the Y u n n a n mines were opened or Japanese
copper supplies cut off, 3 1 or by a change in demand, as for example if
transactions in that sector of the economy using silver as the customary
means of payment increase relative to those in the copper sector. T h e ideal
relationship can be maintained by controlling the sources of supply, by
consciously attempting to increase the use of one of the metals, or by using
The cash sector has been described with such mysterious comments as,
"one was equal to two," and "a debt of 100 cash could be settled by 98
cash." Some considered the cash system a source of vast waste, a drain on
the economy of the country; others thought it reflected the Oriental con-
fusion of China itself. The British-owned North-China Herald expressed its
opinion with usual directness: "The cash system is typical of China and
highly suggestive of the improvements that need to be made before her
commerce can be delivered from the system of strangulation which now
affects it." 1
Certainly the cash system was not the simplest payment scheme which
man has devised, yet it operated on principles common to a metallic mone-
tary system which, once understood, go far to explain its apparently un-
reasonable aspects. So that these principles can be understood in their Chi-
nese context, however, the first step must be to describe the cash coin itself
and the methods and problems of its employment. Although there were
three basic cash systems in China, a preliminary description can, for the
most part, deal with those aspects common to all; where this is not practical
the ch'ang-ch'ien system will be assumed — the system common to almost
all China south of Chihli and the capital, in which one cash coin was in-
tended to satisfy a debt of one ch'ien unit of account. This was the system
assumed in the ideal model of the previous chapter.
Basic Characteristics
In the following three sections, three characteristics of the cash coins them-
selves and the consequences of these characteristics will be discussed. The
condition of the cash, their relatively low purchasing power, and the failure
of the Chinese to consider them a subsidiary coin were factors which, taken
together with the general principles of the Chinese monetary system, deter-
mined the development of the unique payments system applicable in the
cash sector.
Symbols: = is equal to
= is defined as
J. is satisfied by
Figure 2 is an ideal model in the sense that the number of cash coins
which would pay a debt of one tael is still in agreement with the weight
and value relationships established by the terms themselves. In the chung-
ch'ien model the number of cash coins required to satisfy a debt of one tael
remains the same as in the ch'ang-ch'ien model, but since each coin satisfies
twice as many ch'ien units of account, the model has had to be changed by
doubling the units of account equal to one tael. Note also that as a string
of cash was 500 (the number of cash required to settle a debt of one ch'uan),
if the actual exchange rate were, for example, such that 1 tael was satisfied
by 1500 cash, settlement would be with three strings of cash worth 3000
ch'ien or three ch'uan.
In the hsiao-ch'ien system, 1000 ch'ien can be satisfied by payment of but
160 cash coins; therefore 1000 cash coins would pay a debt of 6250 ch'ien.
But this would introduce the complications of payments of less than a full
The three systems will now be considered in detail, but reference should
be made to these models. A model combining the three systems may be
found at the conclusion to this section.
The ch'ang-ch'ien system, which was typical of all China Proper, except
Chihli, Shantung, and Kansu, had two units of account, the ch'uan and
the ch'ien or ch'ang-ch'ien?1 One thousand ch'ien were equal in value to
one ch'uan. A debt of one ch'ien could be satisfied by payment of a single
standard cash coin; a ch'uan by 1000 such coins or by a lesser number as
customary in the particular market. In some localities the ch'uan was known
as the min, or tiao, or, as in Shanghai and Fukien, simply as i-ch'ien (one
thousand), but this was a matter of local custom. 28
The chung-ch'ien system, which was typical of Chihli, Shantung, Kansu,
and Kirin, also had two units of account, the ch'uan or tiao and the ch'ien or
chung-ch'ien. As before there were 1000 ch'ien in one tiao, but a single cash
coin could satisfy a debt of two chung-ch'ien, and 500 or some lesser num-
ber as customary in the market could satisfy a debt of one tiao. Thus if
the price were three tiao, 1500 standard cash or some slightly lesser num-
ber would be paid in settlement. The origin of this system, often confusingly
described as the system in which one equals two, 29 probably dates to the
existence of small cash coins cast in the K'ang-hsi period (1662-1723) which
were current at 2:1 in terms of standard cash.30 This explanation assumes
that in the capital and surrounding provinces the unit of account remained
tied to the smaller coin, which may have been relatively more common there,
but that in the rest of China Proper the ch'ien unit of account continued
to value the standard coin. In the chung-ch'ien system tiao, min, and \uan
all appear as alternative names of the unit of account payable by "a string
of cash," and ch'uan would appear to be a term usually reserved for use with
the ch'ang-ch'ien system.
The chung-ch'ien system was in use in the Peking commercial markets,
starting points in any discussion of the cash sector. Already the Peking and
Heilungchiang exceptions have been noted. The figures below provide some
indication of the variation in the number of cash coins per tiao or ch'uan,
although each figure may be said to be a variation of one of the three systems
— ch'ang, chung, or hsiao 35
Such a tabulation is, however, of only limited use. First, the number of
cash per string is only one factor in the payments system; unless it is known
whether the strings were "full" or "empty" it is difficult to assess relative
differences. Secondly, quality of the coins to be strung might be responsible
for differences. And thirdly, the sources do not give dates for the informa-
tion, although it would appear to be based on surveys made during the fifty
years covered by this study. But during this period there were, of course,
Case Studies
A complete account of the cash sector and its variations would require a
hsien by hsien survey for each of the fifty years covered by this study. But
there are already available contemporary reports on the monetary systems
of the treaty ports and of the provinces in which they were located.41 Any
description of the cash sector found in customs reports and treaty-port news-
papers and journals, however, refers to the system at that moment of time
only. Nor is it possible to accept uncritically the explanations given for the
peculiarities observed; they may be nothing but the attempt of some Chinese
informant, perhaps a merchant, to rationalize the system for the foreigner or
to agree politely with him that confusion prevailed. Nevertheless, these re-
ports do provide the basis for understanding local monetary systems.
Nanking. The Rev. Ε. T. Williams' report on the cash system of Nanking
covers the ground necessary for interpreting price and exchange data: an
exchange rate of 1500:1 between cash and the principal tael unit of account,
the nature of the cash coins circulating, the composition of the various strings
and sub-strings and their acceptability in given markets, and the description
of an imaginary money apparently unique to Nanking. 42
The low worth of China's only traditional coin, the cash, made its use in
larger retail and wholesale transactions impractical. Instead silver bullion
was current. A student of medieval coinage, aware of the complexities coins
add to the monetary system, wrote, "The most perfect instrument of pay-
ment would have been a system of account based only upon the weight of
fine metal." 1 A study of the bullion payments system of China will force
a reassessment of this judgment. Even in a simple bullion system, the unit
of account may fail to maintain a fixed value relationship with the weight
of metal after which it is named. The consequences of this variation and
other related problems are the subjects of the first part of this chapter.
In the eighteenth century European trading companies imported sufficient
dollars into China to make them a significant part of the money supply of
the Canton region. As more coins were imported their area of circulation
expanded, and they came to supplement and modify the traditional bullion
system. With a few exceptions dollars were not minted in China before
1889 and their supply and type were therefore beyond the control of the
Chinese authorities.2 Since their importance varied from town to town, de-
pending upon the trade these centers did with the port cities, the role of
the dollar in the local monetary systems also varied. The importance of the
dollar in certain south China cities was sufficient to cause the use of a
dollar unit of account, monetary bullion being quoted in terms of dollars of
account. Elsewhere prices were in taels, defined in terms of the weight and
fineness of silver bullion, dollars being accepted in payment at rates which
varied with the supply of and demand for the coin.
The second part of this chapter describes these problems and outlines the
role of the dollar in the monetary system of China. In both parts examples
are given which provide a model for further case studies. The more com-
plex systems in which the banks performed a contributory task are reserved
for the following chapter.
Tael, which is said to derive from the Hindu tola, is the standard trans-
lation for "liang," both when that term refers to a unit of account and to
a unit of weight.3 In the former case, to avoid confusion such terms as
"monetary tael" or "tael of account" may also be used, similar to the term
pound sterling. In this study, however, the term tael (italicized) always re-
fers to a unit of account, to the monetary tael; "liang" (not italicized) as a
unit of weight is not translated. But both tael and "liang" are the same
Chinese character; and, as with pound, the unit of account originally re-
ferred to the weight of monetary silver implied by its name, that is, a liang.
Thus an article priced at 50 taels would be exchanged in the ideal model for
50 liang of monetary silver. If this solved the payments problem, then bul-
lion would surely be the "perfect instrument" some have supposed it to be.
The inconvenience of dealing with bullion, however, suggests the use of
a special monetary form of bullion, which, while not as precise in form as
a coin, nevertheless creates some of the same problems. Then, too, in an
economy as localized as the Chinese, changes in the monetary demand for
silver would place a temporary strain on the monetary system which was
eased in ways not compatible with a simple silver standard. Finally, the
lack of standard weights and the primitive system of assay created their own
special problems. The use of bullion in the monetary system of Britain in
the latter part of the nineteenth century did not create problems of this
kind, but the essential difference would appear to be that in China bullion
was used for everyday business, both retail and wholesale; in the United
Kingdom bullion was usually reserved for use in the largest transactions, in
adjusting balances, and in international trade.
The monetary tael. The tael was, then, a unit of account. There were
many kinds of taels, each appropriate for a particular locality or market
within that locality. To quote prices, therefore, was to quote in a particular
tael which had its own name, even though customary usage might make it
unnecessary to state it. Thus tael prices in Shanghai were in Shanghai taels,
foreign customs duties were paid in Haikwan taels, taxes to the imperial
treasury in Kuping taels. Taels with the same name might not be payable
in the same quantity of silver, however, for even here the Chinese mone-
tary system remained a collection of differing systems. This complex pic-
ture may be simplified, however. The most important tael was that used in
the quoting of interregional or international rates of exchange. Foreigners
Dollars
was customary to quote a price in the dollar unit of account. In such cases
the dollar-tael exchange rates would reflect the same forces which a quota-
tion of a premium or discount on sycee would have done had sycee been
in circulation.
Dollar systems. From this rather straightforward type of situation, more
complex models must be considered. The role of dollar coins provides a
complicating factor, especially so since the Chinese depended on the im-
personal forces of international trade to provide foreign dollar coins during
most of our period. For although dollars were minted from time to time in
nineteenth-century China and, indeed, the origins of China's national dollar
system are found in the first dragon dollars of 1889, until after 1895 the
supply of domestically produced dollars was insignificant. The minting
and taxation policies of silver-producing countries, changing Chinese public
attitudes to the dollar (for example, the method of handling the coin), and,
finally, the coexistence of the tael system, all had their effects. Lack of con-
trol of the source of supply and the minting policies were not factors pe-
culiar to China, but the various combinations of these factors produced vary-
ing and sometimes unique systems which will now be discussed in the
abstract.
There were many kinds of dollars in circulation in China, and this was
an additional complication. However, in the period to the mid-fifties the
Carolus dollar of Spain and thereafter the Mexican dollar may be con-
sidered standard coins; other dollars were related to these.
Since China could not control the supply of dollars, there was no question
of a stable price for dollars in terms of the tael unit of account, but the re-
lationship between the dollar coin and the tael unit of account was not
necessarily a direct one. If there were a dollar unit of account, it might keep
its relationship with the tael unit of account stable, while the price of
dollar coins would then vary in terms of the dollar rather than the tael unit
of account. That this should be logically possible is apparent not only from
the much discussed separation of the unit of account from money itself but
also from the fact that the dollar unit of account was defined by a particu-
lar dollar, the supply of which relative to other dollars would vary and
might even cease. Long before the supply of the standard dollar — the one
supposed to be defined by the dollar unit of account — had disappeared from
the community, it might have ceased being money and might even be
better thought of as jewelry. In a model system in which sycee and dollars
both circulate, the existence of two units of account tied to each other may
mean, therefore, that variations in exchange are stated in terms of a type
adding dissimilar units of account by noting the changes that have taken
place.
There is nothing to force this change in the standard coin. In Canton it
was done; in Shanghai it was not, and reform there turned to the tael as the
unit for trade; at Amoy the dollar remained an imaginary money and the
new dollar coins passed at varying discounts in relation to it.
Attitudes to dollar coins. Coins other than the standard coin suffered vary-
ing fates. If they were of intrinsic value greater than the standard, as was the
American trade dollar, their existence would depend upon their being given
a premium in the market over the standard coin. Otherwise they would be,
as the American trade dollar was, melted.36 If they were of less value, they
would be quoted at a discount — if indeed they passed current at all. These
statements assume, of course, that the Chinese accepted coins solely on the
basis of their intrinsic value. This was not always the case and, to the extent
that it was not, the above statements require modification. For, as has been
said, one of the factors complicating the role of the dollar coin in the mone-
tary systems of China was the varying attitude of the Chinese towards them.
The attitude of the imperial government — one at first endorsed by the
treaty powers, at least for duty payments — was that coins were to be priced
solely on the basis of their silver content. The imperial government expressed
its view that prices ought to be quoted in taels and payment made in dollars
on the basis of equivalent silver content.
Basically the Chinese did regard the dollar coins as so much bullion. But
coins take on a market value of their own, a premium based on their con-
venience. Convenience is, however, influenced by the degree of familiarity
with the coin, and thus the old may retain a special value in the market, even
an increasing one, when challenged by the new. Paradoxically, the desire to
have coins for their intrinsic value can turn into regard for the coin as a thing
in itself. If a certain coin is known to be reliable, this very reliability will give
it an additional worth. If a coin is regarded for its metallic content, an un-
blemished coin in a community where most coins are damaged may take on
a premium or carry the unit of account with it, until the relationship between
its intrinsic and its actual market value is broken. Since opinions as to re-
liability were subject to change, such market value of a coin might vary
from person to person or from time to time. And since the dollar perhaps
had to be sent into the interior to make payments, familiarity was not to be
limited to the relatively sophisticated populace of the treaty ports, but ex-
tended to those at the margin on whose acceptance the actual market price
of the dollar might eventually depend.37
pirically ascertained that the silver content of 100 dollar coins is equal to the
silver content of 72 liang of that dollar silver in circulation. Accounts are
kept in which the exchange is made between dollars and taels at this pro-
portion. In the case of bullion, we have seen that actual payments may be
weighed at differing proportions, and thus the dollar unit of account is an
imaginary money tied to the tael at 100:72. However, if there is still a stand-
ard dollar in circulation and if it is quoted at a premium in relation to
sycee but takes its own unit of account with it, there will then be two dollar
units of account: one with which 100 dollars = 72 taels, the other fluctuating
according to the market value of the standard coin. If then the standard coin
goes out of existence, this second dollar unit of account becomes an imaginary
money, the value of which in terms of the tael unit may vary with the foreign
or interregional exchanges. Other dollar coins may be quoted in terms of
this fluctuating dollar unit of account in discounts or premiums; they will not
be quoted in terms of the tied dollar unit. This is illustrated in Figure 5.
χ dollars к, 72 taels
J, J, J,
у other dollars « χ standard dollars (e.g., 71.7 liang of dollar silver)
On the right side of the diagram 100 dollars or 72 taels have the same
relationship to the liang of dollar silver. But if the relationship between the
tael and the number of liang varies, a proportionate change takes place in the
relationship between the dollar unit of account and the number of liang. To
avoid confusion, this tied dollar unit of account is referred to in this study
as the accounting dollar when it is necessary to distinguish it from other
dollar units of account.
On the left side of the diagram, the center of attention is the dollar unit
of account which is in varying relationship with the previously considered
tael unit of account. The relationship between this unit and an unblemished
standard dollar, if any, is fixed by definition, but there are varying relation-
ships with other dollar coins. Now if accounts are kept in this dollar unit
of account and are then changed into tael units at the standard 100:72 ratio,
an entirely new tael unit of account is in fact being used. This is a tael unit
In the previous two chapters the description of the Chinese monetary sys-
tem has been confined to its metallic forms — copper coins, silver coins, and
bullion. These formed the basis of the currency system but were inadequate
for the growing requirements of China's economy, especially in those areas
affected by foreign trade. Native and foreign banks provided two forms of
bank money — notes and current accounts — which gave a certain flexibility
to the money supply and, equally important, made monetary payments more
convenient by minimizing the complexities of the coinage system.* But the
banks did more than this; they also provided a credit system, made it pos-
sible to remit funds to other major commercial centers in China, performed
certain financial tasks for the government, and linked China with the inter-
national money markets of New York, London, and Paris.
This chapter will describe first the banking system and secondly its con-
tribution to the money supply. T h e description of China's monetary system
will then be complete and the remainder of the chapter will comment on its
operation and summarize its forms.
T h e Banking System
* I n the years immediately following the 1842 treaty, the larger foreign mercantile establish-
ments offered some measure of banking services. Jardine Matheson, for example, issued dollar
notes which circulated locally; even more common were deposit and remittance facilities.
Such activities were limited, however, and ceased to be available to the general foreign com-
munity with the coming of the exchange banks.
larger and more important, and they more closely corresponded to the Euro-
pean concept of a bank. They, together with the Shansi banks, were referred
to by foreigners as "native banks." The money-changers varied from indi-
viduals with no fixed place of business stringing cash at a table set up by the
side of the street to more substantial enterprises which might accumulate
sufficient capital to make small loans or even accept deposits and eventually
become indistinguishable from a money-lender. In the more important com-
mercial centers, Shanghai for example, money-lenders might be classified by
the size of their capital, by their operations, and by their membership or non-
membership in the local bankers' guild.19 Although the money-changers per-
formed an essential role in the Chinese monetary system, the primary con-
cern of this section of the chapter is with the money-lenders.
The earliest reports from the newly opened treaty ports indicate the exist-
ence of banking institutions, but the impetus given by foreign trade and
the need to finance merchandise from and to the interior increased both
their number and size.20 This growth was furthered by cooperation among
the local merchants, the foreign compradores, and the foreign merchant
houses themselves, some of which were interested in native banks — Jardine
Matheson and Company being the principal partners in the Ewo bank.21
The compradores, many of whom came from Canton, gave support to local
merchants who turned to banking. They were assisted in finding funds by
foreign merchants.22 Other native banks made connections with the local
magistrates and minor officials as the Shansi banks tended to concentrate
on imperial government business.
The evolution of the banking system in China is a local story, with vari-
ations in each commercial center. The following description is an attempt to
generalize by characterizing the most important features. The pattern con-
sisted of a multiplicity of small banks, the larger of which were joined in a
bankers' guild. In Shanghai there were 120 native banks in the foreign settle-
ment as early as 1858.23 Of these some eight to ten were "large" banks with
a nominal capital of 30,000 to 50,000 taels; fifty were "small" banks with a
capital of only 500 to 1,000 taels; the remainder were in the 5,000 to 10,000
tael category. The money-lenders of Shantung were reported as having a
capital of 2,000 to 3,000 taels, whereas in Foochow there were sixty banks
with a capital of 20,000 to 50,000 taels?* Obviously the number of banks and
their capital were directly related to the importance of the trade of the treaty
port. The smaller ports were served only by banking agencies or even by
merchants performing some of the functions of bankers,
own exchange operations.32 Under the 1842 treaty system the leading mer-
chant houses at first maintained their importance not only in the exchange
business but also as private bankers, thus providing a formidable barrier to
entry by smaller houses into the China trade. A prominent American mer-
chant, Edward Cunningham, described the situation as follows:
Twenty to twenty-five years ago the prominent houses, including one American,
did a flourishing exchange business — they acted as intermediaries between less-
known houses and British capital by buying drafts on the former on London and
giving them currency by their endorsement and then selling them to the holders
of British hard currency. One English bank had less business than some one of
the mercantile houses. As more banks came into the picture, commissions fell
until mercantile houses found it no longer paid to do business unless they had
tremendous volume — which they didn't.33
But as early as 1845 the Oriental Bank had a branch in Hong Kong and
was issuing bank notes denominated in Spanish dollars. The growth of the
exchange banks not only rationalized the banking business in the foreign
settlements, it revolutionized business methods and was, in the opinion of
a leading American merchant, the main cause for the failure of the older
established houses. "In the early days," he said, "every house was its own
bank, and it sought no facilities outside of its own resources. Consequently,
the old houses with large capital had a practical monopoly of the business."
But banks lent to everyone, and that, together with the substitution of steam
for sail, the coming in 1872 of the telegraph, the passing of local trade into
the hands of the Chinese, and the large expenses involved in maintaining
the grand style, forced retrenchment and more conservative methods of
business.34
Although the East India Company lost its trading monopoly in China, it
continued in the remittance business as a rival of the merchant houses, a
competition which was severely criticized by those advocating the complete
withdrawal of the company from mercantile activities. The merchants were
soon to have other rivals, however, for between 1845 and I860 branches of
Anglo-Indian or Presidency banks were established in Canton, Hong Kong,
and Shanghai. In 1840 an attempt was made by certain China merchants, of
whom Jardine was the chairman, to establish a Bank of Asia as an exchange
bank in India and China. By 1843 the project had failed to win the approval
of either the Indian government or the British parliament, but the issues
involved were neither simple nor clearly defined. Doubt was expressed as to
whether remittance between two countries was a legitimate banking opera-
tion, but the main objection was political and stemmed from the attempt of
Bank Money
Ban\ notes. Paper money has a long history in China. The country which
invented printing suffered the first hyperinflation, and the story of govern-
ment note issues is not a happy one.55 With the exception of a small issue
in the Shun-chih period (1644-1661) and the unfortunate experiments during
the Hsien-feng period (1851-1861), the Ch'ing government did not issue
paper money until after the establishment of imperial banks in the last
decade of the dynasty.56 In this section the issues of the native and foreign
banks only will be considered.
In their physical appearance foreign bank notes presented nothing unusual,
except that they included a Chinese translation of the name of the bank,
place of issue, and value of the note. Chinese bank notes were, however,
usually signed in ink at the time of issue and so marked that the stamp over-
lapped the counterfoil, from which the note was then detached.57
The inconvenience of coin and bullion as a means of payment in the
Chinese system and the shortage of cash which a continued illegal debase-
ment could hardly correct were two strong factors leading to the use of
native bank notes in China, but they were also factors preventing the com-
plete success of bank notes. The use of bank notes to avoid the inconvenience
of cash or string of cash only postponed the day of reckoning. In what quality
cash and in what type of string would the notes be redeemed? The uncer-
tainty of the encashment affected the facility with which the notes passed
current, although in cities such as Kirin or Foochow, where bank notes were
for a period the normal tender, the problem was less acute until a banking
crisis threatened to undermine the entire credit system. The shortage of
coin manifested itself in two ways: first, the banks were reluctant to redeem
their notes in coin or bullion to the entire value of the note, but instead
tendered part payment in the notes of other banks; 58 secondly, the insolvency
of a single bank might threaten the entire local monetary system by pre-
cipitating a run on the banks at a time when coin or bullion was not avail-
able.59
Miscellaneous Problems
Gold. The Chinese monetary system was bimetallic, using both silver and
copper. Although gold has been highly valued throughout Chinese history,
it failed to qualify as money in the nineteenth century because it was not
generally tendered as a means of payment. It served as a convenient method
of storing wealth and of transferring funds, 85 and it was tendered in pay-
ment of imported goods, but in this last case its acceptance depended upon
its status as money in the exporting country rather than in China. 86 The
gold exported from Shanghai was in the form of Soochow or Peking bars
and was traced to its source either in the stores of wealthy families who were
taking advantage of the appreciation of gold against silver or in the smug-
gling trade between China and Russia, Manchuria, and Korea.87 Gold was
also sold in the shape of a small boat or as leaf, but even these forms were
not used for monetary payments.88 Until about the middle of the century,
sycee was found to contain 3 to 4 per cent gold and was valued accordingly.80
Specific references to the use of gold are found in the presentation of gold
medallions as gifts of Ch'ing emperors to high officials, in the gold coin of
the Taiping rebels cast in Nanking, and in the gold coin issued by Yakub
Beg between 1873 and 1877 modeled after Turkish coins.90 But a description
of the monetary system of China can safely limit its reference to gold to
these brief remarks. In the early twentieth century it was to play an im-
portant role in the international monetary speculations based on Shanghai,
but in the period of this study its role was confined to that of an expensive
commodity which was useful for limited non-monetary purposes.
Taxes and the monetary system. As early as 1869 Robert Hart (1835-1911),
the Inspector General of the Imperial Maritime Customs, saw clearly where
China's principal economic weakness lay. He wrote, "The first thing to be
government to prevent this.®5 But for the complexities of the tax on their
Honan railway land, they were unprepared.
In Hsun-hsien, it was relatively straightforward. The land tax proper was
0.0368355 taels per той on 1,585,623 той. The tax on this land (0.0368355 X
1,585,623) totaled 58.407 taels. To this was added an amount equal to 44
per cent of the land tax proper to cover inferior touch of the sycee tendered
plus meltage fees.96 A final addition was made to cover expenses at the rate
of 300 ch'ien per tael of land tax. The total tax payable was, therefore, 58.407
taels plus 25.699 taels plus 17,520 ch'ien or 15.587 taels, for a total of 99.693
taels or just over 170 per cent of the original sum. The report states that
the 44 per cent for inferior touch and meltage was quite arbitrary, and it is
known that monetary sycee of such low quality as such a payment would
represent did not circulate in China. The grain tribute was 0.005468 shih
per той on 1,493.75 той or 8.168 shih or piculs commuted at the rate of
6,400 ch'ien per picul or 52,275 ch'ien, the equivalent of 46.316 taels. The
ch'ien was payable in full-dimension or "good" cash coins. The market price
of grain was reported to be between one third and one fourth of the price
set for the grain tax.97
The situation in Hsin-hsien was complicated by the fact that the land
was held under two different forms of tenure to which different rates ap-
plied: the land tax proper on 1,203.512 т о й of common land at 0.0548392
taels per той was 65.9996 taels; on 105,845 той of military land at 0.044
taels per той it was 4.6572 taels. The total land tax proper was then 70.657
taels. This was changed into ch'ien at an arbitrary rate of 2,600 ch'ien per
tael or 183,710 ch'ien. But the land tax was payable not in cash coins but in
sycee and so this sum was converted back into taels at the market rate, giving,
for the year of the report, 166.2 taels. To this were added the expenses of
collection at 30 ch'ien per той of common land and 25 ch'ien per той
of military land, or 38,752 ch'ien equal to 35.06 taels. The total tax now
payable was 201.26 taels, which was 283 per cent of the land tax proper.
Grain tax at 0.01255 piculs was payable only on the common land and so
the total was 15.1075 piculs commuted at 6,000 ch'ien per picul, giving 82.02
Kuping taels. The total of tax and tribute came then to 293.82 local taels.
In this hsien there were evidently no meltage fees or unreasonable conver-
sion between local and Kuping standards, the excess tax being calculated
through false silver-cash conversion rates.98
This report read against the background of the Chinese monetary system
already furnished suggests caution in the handling of Chinese tax figures
and calls into question the neat accounts of the imperial revenue with which
contemporary writing abounds.
Subsidiary coinage. Except at the treaty ports China had no subsidiary
coins in any significant amount until the opening of the modern-style
Chinese mints after 1889. The people used cash, a full-bodied coin, the
changing exchanges between cash and silver providing an additional risk
to trade. Foreign merchants wrote to remind one another that changes in
the gold price of silver might be negated or reversed by changes in the
silver price of copper, and it was in cash that the laborers were paid." The
shortage of cash led the Chinese to seek substitutes in cash notes and
tokens;100 the inconvenience of cash led foreigners wherever possible to
avoid its use.* This section deals with foreigners' attempts to find a simple
means of payment, other than cash, especially for sums less than five dollars
(the value of the lowest denomination bank note in adequate supply).
As one Shanghai writer put it, "We have cash for our dealings with
poorer natives, dollars in our social and retail dealings, and taels for our
higher commercial affairs." 101 This may have been so, but few foreigners
understood the cash system, a comment typified by the custom of offering
a "handful of cash" to an outraged farmer on whose lands the foreigners
had been trespassing.102 The objection to the cash toll on the Soochow Creek
bridge in Shanghai was based on the statement that foreigners didn't carry
cash.103 Dollars also were objected to because of their fluctuating rates and
also the tendency of shroffs to make seemingly arbitrary decisions as to
their currency. The limited one-dollar note issue of the Hongkong and
Shanghai Bank was quite inadequate to provide a subsidiary coinage for the
treaty ports.
Two solutions were attempted, neither of which was entirely satisfactory.
First, the "chit system" eliminated the handling of coin and bank notes.
The salary of foreign employees was paid by check drawn on the Chinese
compradore, who then held the funds against which the employee wrote
"chits" — memoranda acknowledging debts for retail transactions. These
were accepted by the shopkeeper and passed for collection to the firm's
compradore. It often happened that the employee, keeping no record of his
* Tokens of wood, bamboo, or even copper were issued by merchants and performed
either a general or a specific function. Tokens with a general function had a very limited
range of circulation and might bear such a legend as, "Because of a shortage of cash, tokens
are temporarily used as a substitute." Tokens having a specific function, like our streetcar
tokens, were obviously receipts for payment and entitled the bearer to certain specified goods
or services, e.g., a pail of water.
Chinese monetary systems may have been of infinite variety, but they can
be classified under major categories which describe the principal features
of the silver and the copper sectors, the contribution of the banking system
being included under one or both headings. An elementary classification
might be "a tael-chung-ch'ien system." Each section could be elaborated;
for example, the chung-ch'ien might be expanded to include the phrase
The categories are again not mutually exclusive, and they changed over the
period of this study. For example, if the money of exchange is represented
by bank notes, the monetary system may be classified as having the charac-
teristics of both A ( l ) and C, each having relevance in its own sector. A ( l )
describes the interregional relationship of the unit; С describes the domestic
characteristic. Bullion may also be accepted by weight, and further combi-
nations are possible.
Contemporary foreign judgments on the Chinese monetary system were
harsh. To treaty-port observers it was costly, confusing, corrupting, and in
China was a Confucian state, but this must be understood in the sense
that Confucianism was primarily an attitude of government, which, al-
though discarded in operation, was the spirit behind the constitution and
dictated its verbal expression though not necessarily the actualities of gov-
ernment action. Confucius condemned government by statute, by imposi-
tion of pains and penalties; he advocated government according to the
principles of virtue, that is, the reduction of the common people to order
through observance of the Rules of Propriety. 1 The government of China
was then but a reserve against the decline of virtue; its function was to act
only when inaction had been unsuccessful. The duty of officials, from the
Emperor down, was to set an example of virtuous conduct and by this ex-
ample to rule. Should they fail, the natural order would be disturbed. If
the people failed to respond, disaster might follow. T o prevent disturbance
from whichever cause was the function of government.
T o supplement the example of virtue, therefore, the Emperor defined
right conduct, and this took tangible form in the edicts and the administra-
tive orders based on them. Should example alone fail to control the people,
these regulations stood in reserve. The Chinese government was a nerve
center, reacting to stimuli which were essentially deviations from a norm.
A deviation might be settled at the local level; if not, a memorial would
eventually reach the Dragon Throne, and the Emperor would authorize the
action required.
For an economy which was subject to many diverse local forces such a
government would long be adequate. A drought first had its effects in a
specific area, causing officials there to act. If they failed, the Emperor might
eventually be called to redress the balance — to remit taxes, to send relief
from other areas, that is, to restore the natural harmony. A contemporary
student of Ch'ing government wrote:
To assist His Majesty in his duty of providing for the myriads, the ministers and
vice-ministers shall control the land; keep a record of the territories of the Em-
pire and the boundaries of the provinces; and take a census of the population.
In all collections of taxes and excises, payments of nobles and government em-
ployees, auditing of accounts of the provincial and central treasuries and granaries,
transportation of taxes and tributes, officials shall submit their accounts and plans
to this department: its ministers and vice-ministers together with their staff shall
decide on the cases and enact their decisions except in very important cases which
shall be reserved for the decision of the Emperor.4
* For a complete account of the Board of Revenue, especially its economic activities, see
the recent article by Ε-tu Zen Sun, " T h e Board of Revenue in Nineteenth-Century China,"
Harvard Journal of Asiatic Studies, 24:175-228 (1962-1963).
One minor office prepares lists of all the Manchu girls fit to be introduced into the
palace for selection as inmates of the harem, a duty which is enjoined on it
because the allowances, outfits and positions of these women come within its
control.5
The Board of Revenue was then the board responsible for economic ad-
ministration. Its Chinese name, Hu-pu, suggests that it was originally estab-
lished to register households {hu); from this it may logically be assumed
to have derived the fiscal duties, control of the currency following as a
consequence of its tax collecting functions. The Board of Revenue was
potentially of the utmost importance, but a full study of all its manifold
duties and activities would be beyond the scope of this study, which must
now confine itself to monetary affairs.6
As with the other boards, the Board of Revenue had two presidents —
shang-shu — one Manchu and one Chinese, and four vice-presidents — shih-
lang— two senior and two junior, designated "left" and "right" respectively.
One senior and one junior vice-president were Manchu, the other two
Chinese. Chinese bannermen might be appointed to either Manchu or
Chinese offices, but usually to the former; 7 Mongols could be appointed to
Manchu positions. These six persons constituted "the Board" in the sense
of the board of direction of the departments and offices under it and within
the wider definition of "the Board of Revenue." Senior to the presidents
and listed under the Board of Revenue section of the personnel lists was the
Supervisor, whose duties, \uan tsung-li hu-pu shih-wu, implied a general
responsibility for the affairs of the Board, although the Board itself retained
executive or administrative control over any mint other than the Peking
pao-ch'üan-chü. The junior vice-presidents of the Board of Revenue were
thus not national currency officers but supervisors of a local mint, for the
Peking mints coined primarily for the purposes of the capital and Shun-t'ien
prefectures; even neighboring Chihli Province had its own mints.
The Statutes state that the two junior vice-presidents were mutually re-
sponsible to the Board for the management of the pao-ch'üan-chü and for
supervising the casting of cash according to the regulations. The government
shipments of copper and lead were directly delivered to the Office of the
Mint according to a fixed amount, which might be varied by official decision
memorialized to the Emperor and approved by him. The fineness of the
copper was to be 10 parts in 10, but copper over 95 per cent pure was to be
accepted as pure; over 90 per cent at 95 per cent, 85 per cent at 90 per cent,
and 80 per cent at 85 per cent. The lack of purity was to be made up by
increased weight, and copper with a purity of less than 80 per cent was
not accepted. These shipments were checked by the junior vice-presidents
and certified; they took steps to notify the provincial authorities of deficien-
cies, for this would be a routine matter covered by existing regulations.14
The number of coins cast monthly, the method of paying, and the amount
to be paid the workers varied according to the economic situation, but they
are recorded in the Statutes with the more minor details added as com-
mentary and supplemented in the Statutes — Precedents,15 There are details
as to the method of casting, polishing, and checking on the workmanship
involved; on saving the waste metal from each casting; and on drawing up
an annual report to be memorialized by the junior vice-presidents. But
again, these provisions relate only to the pao-ch'üan-chü and, where specific
reference is made, to the pao-yüan-chü; they are not regulations for Chinese
government mints in general. However, these detailed instructions might
be accepted as examples for other mints, which then would be expected to
conform in general to the Peking regulations, specific problems and ex-
ceptions being dealt with on the basis of memorials received from the pro-
vincial authorities by the Emperor and perhaps referred to the Board of
Revenue for their opinion.
The statutory provisions for the pao-yüan-chü were similar although less
detailed. There is an additional provision that the production of the mint
when officially checked and approved should be turned over to the Board
of Revenue in its fiscal, rather than its monetary, capacity. The supervision
of the pao-yüan-chü was the mutual responsibility of the two junior vice-
presidents of the Board of Works — not, of course, of the Board of Revenue.16
often brought directly to the attention of the Emperor by the central and
provincial officials." 2 1 Of the two statements, the latter is more in the spirit
of Chinese tradition, marred significantly by the use of "but" instead of
"and." T h e initiative of central and provincial officials was quite compatible
with the role of the Board of Revenue as guardian of legal correctness in
the economic sphere; the confusion arises if the role of the Board is sup-
posed similar to that of a financial or economic ministry.
T h e presidents of the Board of Revenue were not the economic ministers
of the Chinese Empire; they were the chief administrators of those matters
referred to the Board. In Capital, Marx quotes a reference to a Chinese fi-
nance minister, but there was no finance minister. 22 As officials dealing
daily with economic affairs, the presidents might be inspired to memorialize
on economic problems; they might be required to do so at the express re-
quest of the Emperor, but they had no monopoly position as the sole eco-
nomic advisers, and even in matters relating to the coinage they might not
be consulted.
T h e following hypothetical monetary policy problem illustrates the work-
ing of the Ch'ing government; later, historical cases will be cited.
If the supply of copper failed in a certain province so that it was impossible
for the copper content of the cash to be maintained, the governor and the
financial commissioner might memorialize the Emperor. In the memorial
they would state the new situation, the impossibility of continuing the old
system, and then would either propose an alternative or state that they had
already effected the change. The Emperor would receive the memorial and
might take one of two general courses. H e might make a noncommittal but
permissive endorsement, the equivalent of "Noted" or "Seen," chih-tao-
liao.23 This was effective approval of a policy already inaugurated, the re-
sponsibility for which remained with the memorialists. Alternatively the
Emperor could refer the memorial for more formal advice than he could
obtain from brief oral comment from his councilors or other private ad-
visers. In the example cited here, he would most likely refer the memorial
to the Board of Revenue with the comment, "Let the Board of Revenue
deliberate and memorialize." But he need not do so; he might refer it to
the grand councilors and the Board in conjunction ("Let the grand council-
lors deliberate and memorialize jointly with the Board in question"), to the
Supervisor of the Board and the Board of Revenue, or, especially in the
Hsien-feng period, to the imperial princes and other close personal ad-
visers. For matters relating to the coinage, both the Board of Revenue and
the Board of Works might be consulted. T h e advice of the selected advisers
The Board of Revenue president can't give orders to the Viceroy. He too must
submit a memorial to the Emperor. Whose advice does the Emperor take? A
strong viceroy can do what he pleases by thwarting all the measures of the minis-
ters . . . so the Board of Revenue, nominally the central organ for finance, be-
comes only a decoration in Peking.27
By 1845 the monetary policy of the Ch'ing dynasty was evident in both
the existing monetary system and in the body of precedents which compilers
considered significant monetary decisions. This system and its "constitution"
are traditional relative to the dynasty; before the Ch'ing there had been
considerable variation, and it would be a serious misconception to suppose
In the monetary sector the Ch'ien-lung period was one of relative stability
in which the system inherited from the founders of the dynasty was carried
on and preserved. There is evidence, of course, that local variation in the
weights of the coinage became apparent in this period, and it is certain that
there were violations of the currency laws — as there had been, indeed, from
the very beginning. This was also a period of active monetary policy,
through which crises were met by central direction and the Ch'ing tradi-
tional monetary system was maintained.
Partial breakdown, 1796-1850. Monetary policy in the Chia-ch'ing period
might still be described as "active" in the sense that measures were taken
to maintain the traditional system, but difficulties encountered in the supply
of the monetary metals and the consequent violation of the currency laws
led to a partial breakdown in the traditional system by 1850. In the first
year of Chia-ch'ing (1796) the market value of cash was reported to be
rising and the quotas of the various mints were increased, that of the Board
of Revenue by 10 mao.50 Shortages of copper and lead caused reductions
in 1804 and 1805, but by the end of the period the quota had been raised
again to 72 mao. There is serious doubt, however, as to whether the quotas
were fulfilled, and the statistics cannot be relied upon. The composition of
the coinage was changed slightly, with both brass and bronze coins cast. By
1800 foreign copper was being used in nine provinces, and provincial
weights and compositions varied from those of the metropolitan mints.
The Tao-kuang period was characterized by increasing supply problems,
by a fall in the market value of cash, and by an increase in counterfeiting
and use of foreign cash, mainly from Annam and Japan. This would ap-
government had set its monetary policy on the basis of stable exchanges. T h e
fall in the market value of cash was a failure of policy. The Ch'ing adminis-
tration failed to organize the mining industry in such a way that production
could be maintained. The system of officially supervised companies forced
to sell at a controlled price to the government did not encourage prospecting,
and the internal disturbances hindered the transport of the metal still being
mined. 57 Having failed here, the Ch'ing administration was unable to take
the drastic action necessary to maintain the coinage or reform the currency
system. It was then that the system of subsidizing the casting of coins from
provincial funds was exposed as a weakness in a time of financial stringency;
but, in any case, had standard coins been issued, they would not have passed
at a sufficient premium to keep them from the melting pot.
The casting of big-cash or cash of greater than one ch'ien denomination
was suggested, but in the Tao-kuang period no official in a responsible posi-
tion favored this as an empire-wide change in the monetary system. 58 It was
to be forced on the government during the financial crises of the Hsien-feng
period, and this is the subject of the following chapter. T h e officials of the
Tao-kuang period had also to rule on the import and use of dollar coins, but
consideration of this modification of the traditional system is reserved for
Chapter V I I , which considers treaty port monetary history.
This, then, was the traditional monetary system of China on the eve of
the Taiping rebellion and of foreign influence: a cash coinage debased
through the dual influence of dishonest officials and the failure of the copper
supply, an undeveloped silver sector dependent for its monetary uses on the
private lu-fang and on other mercantile arrangements, and a monetary policy
which was theoretically capable of dealing with these problems but which
could not be enacted with the frequency the situation required nor enforced
with the rigor the situation demanded. T h e breakdown was only partial in
that some mints may have been open and coins cast, that cash did circulate,
and that the currency laws were periodically enforced. Ch'ing monetary
policy had been effective for over 160 years; it had now to be modified to
meet new requirements.
The fiscal and monetary difficulties which were already apparent in the
Tao-kuang period reached a climax in the third year of the Hsien-feng period
(1853), the year in which the Taiping rebels reached Nanking and there
established a capital. The imperial government met the resultant fiscal prob-
lems with the institution, among other things, of an ambitious monetary
policy within the traditional system. The measures designed to preserve the
traditional system, however, further weakened it, so that later in the century
monetary reform was possible only if some concession were made to foreign
ideas. But the traditional system itself survived to the Boxer Protocol and
to the reforms in the imperial administration which preceded the fall of the
dynasty. This study of the Hsien-feng inflation is a case history of Ch'ing
monetary policy at its most active — at, perhaps, the limits such policy might
reach. It was doomed to failure. The conditions which made the policy neces-
sary made unlikely the concurrent execution of an adequate fiscal reform.
Total breakdown of the currency was prevented at the expense of loss of uni-
formity, loss of faith in the imperial credit, and the inevitable local search
for a substitute to traditional solutions. Since, however, the primary crisis
was fiscal, the cost may have been worthwhile — may even have saved the
dynasty.
The traditional system was already in a period of partial breakdown when
the Hsien-feng Emperor ascended the throne in 1850. The debasement of
the coinage had upset the stability of the exchanges and, except in areas of
local cash shortage, the silver price of copper cash had fallen. The diversion
of copper from the government to counterfeiters and exporters had forced
the closing of certain provincial mints, and it is unlikely that any mint had
been casting its official quota at the official weights for several years. The
fiscal system was threatened by corruption, by the increase in salt smuggling,
and by a fall in the total legal collection of the land tax at a time when in-
creased defense expenditures were necessary. Of the 1500 hsien in China some
398 delayed payment of land taxes in 1846, 101 were authorized to forego
Copper supply. During most of the Ch'ing dynasty the problem of the
copper supply was complex, involving the method of production, the supply
routes, mint prices, the availability of foreign copper, and the capital available
for exploitation of the mining industry. The shortage of supply in the Tao-
kuang period must be explained in terms of all these factors; that in the
Hsien-feng period by the mere fact that the supply route had been severed.
In the first year of Hsien-feng it might make sense for the Emperor to com-
plain of delays in delivery,3 but by the third year the total loss of Yunnan
copper was recognized. Two policies only were available to the imperial gov-
ernment. The first was to encourage other sources of supply to be used by
the provinces exploiting them. The second was to use the copper already
available in a more economical way.
As for the lead and copper mines in the vicinity of Nan-shan, the people are
authorized to mine, but this does not authorize the congregating of tramps and
wanderers. As for traitors and treacherous villains they are to be sought out.
LET Wang Ch'ing-yün carefully determine the rules and regulations and take
part with his subordinates in the conduct of a judicial investigation in order that
cash may be cast and yet corruption avoided.4
500 or
Province 1 5 10 20 30 40 50 100 200 1000
Peking XX X XX — • — — X X X X
Chihli XX X XX — — — X X — —
Shantung X — X — - — X — — —
Kiangsu X XX XX X X — X X — —
Chekiang X — X — — X — — — —
Kiangsi X — X — — — X — — —
Fukien XX X X X — — X X — —
Hunan X XX XX — — — X — — —
Honan XX — X — — — X X — —
Shansi X — X
Shensi X — X — — — X X — —
Kansu — X X — — — X X — X
Szechuan X — X — — — X — — —
Yunnan X — X
Kweichow X — X — — — X — — —
Hupei X — X — — — X X — —
Hunan X
Kwangtung X
* Wang Mao-yin, the only Chinese mentioned in Marx's Capital, was so obscure a figure
that much research was done simply to discover his identity. Quite independently of this
reference, however, Wang's career is not without relevance to this study. Born in Anhui in
1798, he became a junior vice-president of the Board of Revenue for less than a year, from
December 1853 to April 1854. He had, however, considerable interest in monetary affairs, as
his numerous memorials on the subject bear witness. From 1832 to the death of his father
in 1849 Wang was an official in the Yunnan and Kweichow bureaus of the Board of
Revenue; in 1851 he was appointed to the Kiangsi bureau and later in the year was made
censor in Kiangsi province. His memorials urging a conservative monetary policy led in 1854
to his transfer to the Board of War. He died in 1865.
If the state decides a cash coin has a denomination of 100, then it is 100; 1000,
then it is 1000. W h o would dare to disobey? T h e measure is successful. Yet al-
though the official is able to determine the price of cash, he is not able to limit
the price of commodities. As for the 1000-cash, people would not dare to use it
as a 100-cash. But as for goods valued at 100 ch'ien the people would have no
difficulty in considering them worth 1000 ch'ien.2i
This concise and reasonable conclusion parallels that of Adam Smith in sup-
port of the legislation requiring paper money emitted in the American colo-
nies to be assured legal-tender status:
A positive law may render a shilling a legal tender for a guinea; because it may
direct the courts of justice to discharge the debtor who has made that tender. But
n o positive law can oblige a person who sells goods, and who is at liberty to sell
or not to sell, as he pleases, to accept of a shilling as equivalent to a guinea in the
price of them. 25
* Chu Tsun, a Hunanese and chin-shih of 1819, was, like W a n g Mao-yin, interested in
monetary problems despite only a short term on the Board of Revenue — as first vice-president
from November 1855 to November 1856. Chu opposed legalization of opium in 1837, was
degraded in 1846, but was promoted to chief superintendent of the metropolitan grain depots
in 1849. In this position he was ex officio a titular vice-president of the Board of Revenue.
In 1846 he memorialized the Throne on the falling value of cash, correctly ascribing the
trouble to the debased state of the coinage. He died in 1862.
t Ch'i Chiin-tsao (Shansi, 1793-1866) had been junior vice-president of the Board of
Revenue, 1837-1838, senior vice-president 1838-1839, and president 1841-1850. As a grand
councillor he was supervisor of the Board at least through 1855. Ch'i thus remained interested
in monetary affairs after his relinquishment of the post of president, and his name is as-
sociated with those in favor of using government notes and big-cash to meet the financial
difficulties of the period. In this he was assisted by W a n g Ch'ing-yün. His biographers state
that Ch'i was early in conflict with his "Board colleague" Su-shun and that arguments with
him over currency measures led to Ch'i's resignation in 1855. But Su-shun first joined the
Board as senior vice-president on December 29, 1855. That the two did not agree is sug-
gested, however, by the fact that Ch'i was recalled to office following the 1861 coup d'etat.
H e then served as president of the Board of Ceremonies.
Su-shun's heavy-handed policy did not, then, prevent the further deprecia-
tion of paper money in Peking. By early 1861 the rate of exchange was 15
tiao or 15,000 ching-ch'ien to the dollar?5 Elsewhere the equivalent exchange
rate was 1,500 ch'ien or 3,000 ch'ien to the dollar, depending upon the cash
system in use. Indeed, the course of the depreciation can be explained in
terms of the changing relationship between the standard chung-ch'ien unit
of account, typical of the Peking system prior to the Hsien-feng inflation,
and the ching-ch'ien unit as it actually existed at any given time during the
inflation. The relationship between the two systems hinged on the market
value of the 10-denomination big-cash coin then in general use only in the
metropolitan area and on which the value of the paper money ultimately
depended. The depreciation of the big-cash (ta-ch'ien) relative to standard
cash and the fact that the big-cash carried its unit of account with it explain
the divergence of the chung and the Peking or ching systems. Figure 6, using
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The scope of local policy. The nature of the monetary problems confront-
ing local officials has been suggested in the descriptive chapters of Part I of
this study. Except to the extent that proximity to foreign trade made pos-
sible the export of cash coins from time to time, the cash sector of the treaty
ports differed little from that of interior cities. Even here, movements of cash
from one city to another in China resembled, as far as the local systems were
concerned, movements of coin or bullion in international trade. In the silver
sector, however, the imposition on the traditional Chinese system of the
dollar coin and the need for greater precision in the silver sector as a whole,
since transactions in silver — either bullion or coin — might subsequently be
judged by the more exacting standards of international trade, were unique
features. As for policy, some decisions could be reached on monetary mat-
ters between the Chinese and foreign merchants, and the local Chinese of-
ficials need not necessarily become involved. But the history of the treaty
ports indicates that the officials did become involved, first because they were
at times directly appealed to, secondly because the imperial revenue was in-
volved in certain decisions, and thirdly because arguments were potentially
dangerous to the peace of the community and ought, therefore, to be avoided.
Whatever their scholarly leanings, local officials had to concern themselves
with technical monetary matters.2 To the extent that they made arbitrary
decisions or issued purely exhortatory or repressive proclamations they were
in the long run unsuccessful. Treaty-port monetary policy was the conse-
quence of agreement between official and consul, Chinese merchant and
foreign merchant. When all agreed, success was assured; when they differed,
success went to the view most in accord with economic reality, except in
those cases in which foreign policy was paramount or in which the real solu-
tion lay in national reform. That was beyond the reach of both treaty-port
residents and local officials.
Specifically, the monetary problems which might come to the attention of
consuls, officials, and merchants included those relating to the coinage, the
deterioration of sycee, the activities of the banks, and payments to the gov-
ernment. A contract between foreign merchants might specify the means of
payment, but if a new coin had been introduced into the monetary system
dispute could arise over its tender in payment of the contractual obligations.
In a specific case the consular courts might be appealed to. T h e judicial de-
cision would be binding in that particular case, but it might also set a new
payments pattern by reflecting the changed economic situation. Then a con-
firming proclamation by the local Chinese officials would be of assistance in
establishing the consul's decision. Consul and local official could together in-
fluence the acceptance of a new coin by presiding at an official assay and
publishing the results. Such a proclamation would have increased economic
effect if it were coupled with provisions for payment of government taxes at
rates agreeing with the assay. Full effectiveness depended, however, upon
the compliance of the merchants, both foreign and Chinese, who would, of
course, be influenced by their own requirements. Official proclamations or
court decisions might not be openly or directly flouted, but they could be
avoided, for example, by terming contracts in appropriate ways. T h e official
rates of exchange between English silver coin and dollars were nullified in
H o n g K o n g by drawing contracts specifying payments in Spanish dollars
which, being a foreign coin, gave the transaction the legal characteristics of
barter and thus escaped the terms of the official ordinances. 3 T h e activities
of the banks were also subject to court review, and liquidity crises could be
followed by closer supervision of the Chinese banks by the local officials,
anxious to avoid disturbance, and by merchants convinced temporarily of the
need for such regulations.
Local monetary policy in the treaty ports was centered, therefore, on the
designation of current coin, the setting of the rates at which such coins should
be current, the maintenance of standards, the regulation of banks, and the
maintenance of the cash coinage system of the empire. Decisions in which
the local official was involved might be reported by him to higher authorities
and eventually referred to the Board of Revenue. Imperial monetary policy
touched the treaty ports to the extent that the traditional concepts were
changed by the introduction of the dollar, by the movement of silver, and
by the requirements of the cash coinage.
this coupled with the shortage of standard dollar coin fostered a movement
among the mercantile community to make the Mexican and certain other
dollars current at par. But it was no longer as simple as it had been when
the East India Company and the Hong merchants could reach a private
agreement which would be sufficiently important to secure its success. Now
there were many merchant houses, trading from different countries, and
therefore in differing economic relations with the dollar-producing areas.
Nor was there any single Chinese merchant group sufficiently powerful to
reach an agreement with the foreigners. The process of change was more
complex: in Canton it resulted in a change in the unit of account and its
standard coin; in Shanghai it caused the abandonment of the dollar unit of
account in favor of the Shanghai tael.
The change from the Spanish dollar of account in Canton and Shanghai
is the subject of the following sections, which provide a case study of the
working of the treaty-port monetary system and of the interplay of the vari-
ous economic and political forces. This, read with the descriptions of the
treaty-port monetary system contained in chapters III and IV, should pro-
vide the basis necessary for an understanding of the local systems and their
role in the empire-wide monetary system. T o discuss every phase of monetary
history in every port and city would, as has been said from the beginning, be
an unending task quite unnecessary for the purpose of this study. However,
the peculiarities of the Hong Kong monetary system, complicated by the
measures of the colonial government, are of sufficient importance to warrant
specific examination in the concluding section of this chapter.
* In a system in which money and the unit of account have no necessarily fixed relation-
ship, "demonetization" cannot be understood literally. Thus "demonetizing" the Spanish
dollar coin might not end its role as money. If the coin continued to be generally acceptable,
it would continue to be money. "Demonetization" has here rather a legal significance, indicating
that the courts would no longer enforce the coin's acceptance at par with the unit of account.
But the economic power of the foreign and Chinese mercantile communities
backed by another proclamation f r o m the officials was sufficient to overcome
the resistance of the shroffs and bankers. In October 1853 the Spanish dollar
unit of account was abandoned and the Mexican dollar became the standard
coin. Exactly a year later, H o n g K o n g made de facto a similar decision de-
spite the complications to be discussed below. 15 A combination of forces had
made possible a change similar to that of the simpler days of 1792.
Although dollars were known in the north of China, Shanghai marked the
northern limit of their use as the standard of payment and of the use of a
dollar unit of account. 18 T w o factors complicated the Shanghai problem:
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172 Money and Monetary Policy in China
first, dollars were less firmly established there as a means of payment, and,
second, there was question as to the adequacy of the supply of dollars, whether
Spanish or Mexican. As the North-China Herald expressed it, "Uncle Jona-
than is bound to get Mexico one of these days" — and what then ? 1 7 Although
in the first discussions of change it was assumed that the Mexican dollar was
the goal of any monetary reform, the advantages of a tael unit of account
became increasingly apparent. In 1858 the Shanghai community adopted the
Shanghai tael, and dollars were allowed to fluctuate in terms of this unit of
account.
The dollar system to 1857. The decision made in Canton applied, of course,
only to Canton. Its initial effect was to ease the Carolus dollar supply situa-
tion in Shanghai where that dollar continued to enjoy a premium over
Mexican dollars. The forces which had initially caused a shortage of Carolus
dollars reasserted themselves, however, owing primarily to the insistence of
the silk districts, with which Shanghai had an increasingly unfavorable
balance of trade, that payment should be made in Carolus dollars. As no new
dollars of this type were being minted and as the holders in the silk dis-
tricts are reported to have buried them as a precaution against the disturb-
ances caused by the Taiping rebellion, the exchange on London rose from
five shillings and seven pence (5/7) in 1853 to a record high of seven shillings
and nine pence (7/9) in 1856, while the Hong Kong exchange was within
a few points of five shillings.18 Shanghai had gone off silver, and the ex-
changes reflected the premium on Carolus dollars caused by their increasing
scarcity owing to their export to the interior.
On October 25, 1856, the premium on the Carolus dollar over its silver
content had reached the point at which one such dollar was worth a Shanghai
tael. At the same time Mexican dollars were passing at a 34 per cent discount
relative to the Carolus dollar. So scarce were the Carolus that they were not
used in ordinary transactions but solely for export to the silk districts. The
unit of account, usually referred to in contemporary literature as the Shang-
hai dollar rather than the Spanish dollar, had become in effect an imaginary
money, a unit of account with which the means of payment fluctuated ac-
cording to market forces. A model of the Shanghai dollar system for October
25, 1856, Figure 8A, shows these various relationships.
The Shanghai system in 1857. Although the course of the change from
the dollar to the tael system is of primary interest as a case study in a local
monetary system, the history of the change will be more meaningful if the
extent and nature of the change is understood. The model, Figure 8в, pre-
sents in diagrammatic form the Shanghai monetary system in 1857 and after.
The Shanghai tael was now the standard unit of account against which the
exchanges were quoted, and it was the focal point of the monetary system.
The values selected are representative of rates in 1856.
Figure 8b shows that the premium on the Carolus dollar had been very
much reduced, and that although dollars continued to have the same general
variable relationship to the tael unit of account as before, the fact that the
Shanghai tael was now the standard unit had far-reaching monetary conse-
quences.
Adoption of the tael. As indicated by Figure 8A showing the Shanghai sys-
tem in 1856, there had been a tael unit of account before the abandonment
of the Shanghai dollar. In fact, some markets not involving close contact with
foreigners and their trade continued to base quotations on the tael even after
the introduction of the dollar unit with the opening of the port. The objec-
tions which foreigners had to adoption of the Mexican dollar and the diffi-
culties in adjusting accounts to prevent losses both suggested universal
adoption of this tael unit of account. That the state had the right to "cry
down" a coin might be theoretically granted, but the concept of the unit of
account representing either a fixed quantity of silver or a particular coin had
become the basis of mercantile operations. A contract payable in Shanghai
dollars was payable only in the Carolus dollar or in other coins at a rate
agreed upon by the creditor.19
* The trade dollar's main problem arose not in China but in the United States. With the
depreciation of silver, although the intrinsic value of the trade dollar was greater than that of
the standard dollar, the trade dollar was worth but $0.86 in 1884, whereas the standard
dollar was legal tender for one dollar unit of account. Thus one silver coin of the United
States was valued less than another silver coin although the former contained more silver.
Domestic holders of the trade dollar — about one fifth of the 35,960,446 minted remained in
the United States — insisted that the Treasury should accept them at par as a moral if not
The historical selections in this chapter are illustrative rather than typical.
Certain aspects of Hong Kong monetary history make it of interest here:
first, there was an unusual political relationship caused by the exclusive
jurisdiction of the Crown; secondly, there was a complication in the mone-
tary system caused by an attempt to make Hong Kong currency conform
to a British colonial pattern. Political power was not necessarily the deciding
factor in the success of monetary policy; the British authorities in Hong
Kong did not have to consult a local Chinese magistrate or receive approval
for their proposals from a Chinese governor general, yet monetary policy
in Hong Kong could not ignore the position of the Chinese government —
if only for economic reasons. The Chinese mercantile community, closely
connected with the trade of neighboring China, could use their economic
power and influence to upset a colonial decision. If the Hong Kong govern-
ment was not in complete economic control, it is certain that the home
authorities, attempting a reform on general theoretical principles, would
meet with even less success. These related problems are considered in the
sections which follow.
Establishment of the currency. The first currency proclamation, issued by
the chief administrator of Hong Kong, Sir Henry Pottinger (governed
1841-1844), in March 1842, was part of a plan to regulate transactions in
the bazaar or native retail market and cannot be considered as a definition
of the Colony's monetary system.54 Mercantile transactions were, in fact,
specifically excepted from its terms. Recognizing the existing trading prac-
tices on the China coast, the proclamation designated as legal tender for
bazaar transactions the Spanish, Mexican, and other dollars of comparable
weight and fineness, the rupee coin of the East India Company, and Chinese
cash, and it provided for fixed rates of exchange between the various coins
a legal obligation, and the Secretary of the Treasury in his 1884 report stated that if given
the right to accept these coins at a dollar, the excess silver they contained over the standard
dollar would pay for reminting them into the standard dollar. T h e American trade dollar
was retired by an Act of Congress, February 19, 1887, which became law without the signa-
ture of the President. Holders were given six months to present them for redemption, and
those coins so presented were to be recoined into standard dollars but not to count against
the legal amount of silver bullion purchased by the Treasury.
This is first of all a case study of an imaginary money from its legal
inception in 1842 to its discard in 1933. Perhaps more important for an
understanding of Chinese nineteenth-century economic history is the fact
that the Hai\wan tael provides a case study of the conflict of foreign and
Chinese concepts of the economic role of the state set against the background
of the provincial nature of the Chinese economy. The Haiku/ati tael was
designed as a unit of account for the payment of customs duties; the for-
eigners intended it primarily as a convenience to themselves, to end the
apparently arbitrary methods of duty assessment, but after the 1860's the
attempt to define the Hai\wan tael in uniform terms in relation to actual
silver payment became representative of those periodic attempts of foreigners
to encourage a national reform. Despite the fact that the foreign customs
administration was in the hands of a unified national service, the Imperial
Maritime Customs, under the direction of a British subject, Sir Robert Hart
(1835-1911), uniformity was not achieved. This is directly relevant to an
understanding of other reform efforts, complicated as they were by non-
economic factors.
Customs duties became an important part of the imperial revenue, and
foreigners and Chinese alike were concerned with the amounts of customs
duties to be paid.1 The duties were denominated in taels, the weight of
which, after the treaties, was specified as 583.3 grains troy 1.000 fine, that is,
chemically pure silver. As no such silver circulated, arrangements had to
be made for payment in terms of bullion which did circulate. These arrange-
ments were made locally, and they came to vary from port to port. The
monetary preconceptions of foreigners forced a fixed relationship between
the Haikwan or customs unit of account and the merchants' unit of account,
but only on a port to port basis. By the time the Imperial Maritime Customs
made its survey in 1878, the Hai\wati tael unit of account denominated not
one but many varying quantities of silver. Yet the concept of the Hai\wan
tael, in the sense that one specific quantity of silver was designated, sur-
Between the first treaties and those which followed the Second Sino-British
War, the local arrangements which were allowed under all the treaties
created a series of disputes which were resolved by establishing different
payments at each port. The British Treaty of Tientsin attempted to prevent
this trend by insisting on acceptance of coins according to the Canton assay;
the French and American treaties took the opposite position, with the
Americans actually stating that the market rate of the day was to prevail.
The American position was a reversal of Minister Robert McLane's de-
mand, made as recently as 1854, that silver — and even gold — be accepted
in duty payments according to its weight and fineness. Sir John Bowring's
Inasmuch as the Custom Houses at the open ports of the two countries have
a fixed standard of weights and measures and of the quality of silver in which
the duty has to be paid, the merchants and subjects of the two countries must
conform themselves in whatever place, to the regulations there established and
not raise discussions of any kind.34
The local characteristics of the customs tael had received treaty approval.
The provisions of the French treaty were in accord with the practice of
those ports where dollars were the unit of account, the American treaty with
those where taels were the unit of account. The British found that their
concept of the relationship between the unit of account and money could
not be applied in an economy that was not integrated and which showed
such determined local characteristics and autonomous features as did the
Chinese. Later treaties were written in terms of the unit of account and not
in terms of a means of payment, for this was recognized as a matter to be
negotiated locally.
The liang of silver weight in Shanghai was the ts'ao-p'ing liang, which had
been standardized by local practice at 565.65 grains troy, thus differing from
the Haikwan tael weight by 17.65 grains. The difference allowed in the
formula is inadequate. If the weight of the ts'ao-p'ing liang is correct,
the weight of the Haikwan tael payment would be 581.49 grains, an amount
within the range of error found in the standard weights sent from Canton
to the treaty ports. Thus the weight error can be explained by inexactness
of measurement, especially when it is recalled that the ts'ao-p'ing liang was
itself subject to error. Standard silver in Shanghai was .935 fine, and the
allowance for difference in touch should, therefore, have been 7.17 ts'ao-p'ing
liang of standard Shanghai silver. As given by the allowance in the formula,
the fineness of silver used to pay debts in Hai\wan taels is .991. The ad-
dition of the meltage charge decreases the error somewhat, but, if the
Haikwan standard of 583.3 grains 1.000 fine is to be met, 110.29 ts'ao-p'ing
(a) (b) CO
Equivalent in
Grains of pure Shanghai currency
silver per taels at market
Port Haikwan tael Fineness exchange rate
exchange are hidden in the rate quoted. That the rates for the Yangtze ports
were low is in part the result of the Shanghai rate being used as the basis.
In fact, some merchants felt that local Haikwan rates should not be more
than the Shanghai rate after taking into consideration the cost of laying
down funds in the particular port. The differing rates for foreigners and for
Chinese in certain of the ports would indicate the additional protection
which the treaty afforded the foreigner, who was better able to resist exac-
tion by the Haikwan banker. Dollars, except in Tientsin, were accepted at
the market rates in terms of the local standard unit of account. In an effort
to end months of disagreement, the Tientsin customs authorities formally
adopted the Canton assay for those coins included in that assay, but in prac-
tice there were still variations. In Newchwang strings of cash were accepted
at market rates in payment of duties; this was the only port reporting such
a practice in the 1878 survey.
The increasing importance after 1895 of China's foreign debt, the greater
proportion of which was in gold, made the customs unit of account of
great importance not only to the imperial government but even more to
the foreign powers. The bulk of the customs revenue had been hypothecated
for repayment of Chinese foreign loans and indemnities. Although only
minor changes were made in the local arrangements established by 1878,
the Hai\wan tael and the payments problem did come under close exami-
nation and certain adjustments were made.
The customs duties set forth in terms of Hai\wan taels in the treaties
were specific, but they had been made with a 5 per cent ad valorem concept
in mind and with the general assumption that in the long run China's re-
ceipts would work out at about this figure. While the expectations of the
negotiators were never fulfilled, the matter did not become of international
importance until China's gold indebtedness grew at the same time that the
gold price of silver fell. In terms of gold China's tariff represented a 3 per
cent or lower ad valorem equivalent. On three separate occasions, the In-
spector General of the Imperial Maritime Customs, Sir Robert Hart, pre-
sented memoranda to the powers recommending that the Hai\wart tael be
considered a gold unit of account and that, in effect, the customs revenue
of China be shielded from fluctuations in the gold price of silver.44 Hart
based his proposals on the spirit of the treaty tariffs, but he made them at
a time of political and military weakness in China — his third proposal was
to the international commission considering the post-Boxer tariff rates —
and the legal position of the foreign powers was unassailable.45 Almost in
mockery of his proposals, the final indemnity was expressed in Haikwan
taels, seemingly making the debt a silver one and thus shielding China from
the burden of silver fluctuations, but a specific clause stated that the debt
was payable in gold. The Hainan tael was serving merely as a common
denominator to enable the claims expressed in the various gold currencies
to be totaled. All that came of Sir Robert's recommendations was the set-
ting of a new tariff schedule which went part of the way in compensating
for the fall in the value of silver.
Rationalization within the treaty limits. The attempt to increase China's
customs revenue by making the customs unit of account denominate a fixed
quantity of gold rather than silver had failed. Attention was then focused
first on protecting the Haikwan tael as it was supposed to be and secondly
on gaining for China tariff autonomy. Tariff autonomy would permit China
to set up a gold unit of account to replace the Haikwan tael.
At the conclusion of the Boxer troubles, foreign powers urged on China
more than an indemnity; they demanded political and economic reform.
Not the least important of these reforms was the proposal for a new uni-
form dollar currency. In the 1902 commercial treaties with the United States
and the United Kingdom, China was insistent that the treaties include the
provision that, whatever the nature of the new currency, duty payments
would continue to be made in terms of the Haikwan tael. The clauses as-
sumed a unique relationship between the unit of account and the money
payments but were equally applicable in the real situation. In the British
treaty the specific provisions relative to the Haikwan tael appear in an annex
upon which the Chinese insisted after the basic treaty had been signed by
the plenipotentiaries.46 It read in part:
It may therefore be laid down as a principle that the Customs can require pay-
ment of duties in sycee and need only accept dollar coins other than those specified
in the Canton Assay at their sycee value. In other words, the Customs can require
payment in all other dollars by weight and are not compelled to accept them by
count. 49
Yet, as stated below, he did not re-examine the question of exactly what
the treaties had intended by going into the historical sources. He relied on
recent empirical investigation. Some experts, for example, Edward Kann
and K. W . Shaw, did give the historical value of the Haikwan tael.50 The
subject continued to arouse considerable controversy among historians, mer-
chants, and officials.
T o his Swatow commissioner Aglen put the test question this way: "Is
the Chinese Government actually receiving at Swatow at present rates the
At least until 1895 none of the proposals for monetary reform was particu-
larly revolutionary. The Chinese government was traditionally responsible
for a sound cash coinage. Silver coins had been cast in China before; the
idea was not tradition shattering. 2 In its physical aspects, monetary reform
was in reality monetary restoration, a task parallel to the "restoration"
being attempted in other sectors of the economy following the destruction
But there is one reform that seems feasible, indeed easy, and that a reform which
would greatly improve trade and would, it seems possible, have an excellent effect
on the national character — I mean a radical reform of the currency. 3
Thirty-six years later that radical reform had been effected: the silver
standard of China had been abandoned in the face of powerful economic
forces. Drastic reform was not necessary in the period 1862-1895; rationaliza-
tion was all that would be required. T h e rationalization process carried
* "Restoration" has a technical meaning in Chinese historiography; it is the name of a
stage in the dynastic cycle model. A declining dynasty has often, the theory states, shaken
itself and attempted to stave off destruction. This is the "restoration," a period marked by
renewed vigor of administration — in the Ch'ing during the T'ung-chih period.
First and unsuccessful measures. The casting of standard cash coins had
practically ceased by the latter part of the Tao-kuang period (1821-1850).
There had been erratic production of big-cash and iron cash in the Hsien-
feng period (1850-1862). By 1861 iron cash were nowhere in circulation
and big-cash had been repudiated except in the metropolitan area. The em-
pire was using a highly debased standard cash currency; there was no
official casting at the legal standard. With the defeat of the Taipings in
1864 the attention of the government could be turned to restoration, and
two approaches to the coinage problem were soon attempted. The first
appears to have had its effective origin with Tso Tsung-t'ang (Hunan,
1812-1885), who, memorializing in favor of the construction of steamships
in China, pointed out that machinery suitable for the minting of cash coins
could also be installed in the shipyard.5 The second and more important
approach originated in Peking, where the needs of a currency to replace
the depreciated big-cash resulted in an 1867 edict requiring the provinces
along the sea coast and Yangtze River to forward standard cash to the
capital.® Although both these approaches failed to restore the currency
during the T'ung-chih period (1862-1874), they were the basis of the sub-
sequent reform of 1887 and the years which followed.
The official weight of the metropolitan big-cash in 1861 was 0.44 liang;
this was changed in 1867 to 0.32 liang and in 1883 to 0.26 liang.7 The big-
There was one key problem which the edict did not and could not solve
— the supply of copper to the provincial mints. Even if transport could
have been arranged into the Yangtze valley, this would not have solved the
problem, since the Yunnan copper mines were not producing. In 1872 a peti-
tion was received urging that the Yunnan mines be reopened, 8 but as late
as 1883 a joint memorial from the Governor General and the Governor
of Yunnan stated that the mines were still suffering from damage done in
the Mohammedan rebellion, that labor was short, the smelters were too
The course of the change in Peking was far from smooth. The news that
tion in 1888.20 The currency of the capital was once more the traditional
copper cash of China.
Provincial reaction. The first record of new cash being cast after the
Hsien-feng period actually precedes the 1887 edict of the Empress Dowager.
In 1885 the Governor of Fukien proposed the casting of a cash coin weigh-
ing 0.085 liang, composed of 50 per cent Japanese copper and 50 per cent
zinc. 21 In the memorial asking imperial approval he stated that standard
cash had not been cast since the Hsien-feng period but implied that bank
money had served the needs of the Foochow business community. A banking
crisis made it imperative that coins be cast, but the cost of production, the
details of which he submitted with the memorial, made it necessary to
reduce the weight. His memorial was referred to the Board of Revenue,
which disapproved the weight and referred to the standard of 0.1 liang
established for the metropolitan mints in 1853.22 The outcome of this dis-
agreement is important because it reflects on the relative power position of
the central government and the provincial authorities on a point of con-
siderable significance. Weight uniformity was a traditional central govern-
ment monetary policy, for the supervision of which the central government
was responsible — though frequently, unsuccessfully. The provincial author-
ity had made a clear case as to the cost situation, and refusal of the Empress
to approve the lower weight could lead to one of three possible actions —
defiance of the imperial will (cloaked, no doubt, to make it palatable in the
capital), compliance with the heavier weight requirement, or abandonment
of the casting project.
The recommendation of the Board of Revenue may have been referred to
the Governor of Fukien for comment, but in any case, in 1886 he decided
to cast the lighter coin and memorialized again for approval of an action
already taken. However, in 1887 the governor memorialized that production
of the light cash had ceased with the floods which destroyed the mint, and
that he was now casting cash weighing 0.1 liang in accordance with detailed
Board of Revenue regulations.23 This, he stated, entailed a loss, but the
increased weight did not make the cash so heavy that melting was en-
couraged. T h e imperial government had proved itself capable of maintain-
ing the traditional monetary policy. The provincial authority had been able
to comply, first, because Japanese copper had been available — and it is
relevant to note that Fukien was the first province to reopen its mints —
and, secondly, because the need in the community had been overwhelming.
The premium placed on cash covered the extra weight, and melting was
not, therefore, a problem.
Foreign advice and Chinese reaction. T o agree, as all foreigners did, that
the Chinese currency system was in need of reform did not necessarily
result in agreement as to what that reform should be nor how it should
be executed. T h e failure of local monetary reform to provide an adequate
We believe that both the government and the people would benefit by the establish-
ment of a fixed currency. This would necessitate the establishment of a
mint . . , " 3 i
Nearly ten years later, in 1876, the Shanghai Chamber of Commerce was
successful in having Sir Thomas Wade, the new British Minister, again
present the case in favor of an imperial mint to Chinese officials in the
capital. 35 A discordant note came from the H o n g Kong Chamber of Com-
merce, which met to consider the problem of reform at the request of the
Shanghai chamber. H o n g Kong opposed a Chinese mint on the ground
that the Chinese government could not be trusted to maintain the correct
standard of the coins. In any case, the H o n g Kong Chamber wisely noted,
the Chinese government would not act on the request of foreigners. 36 An-
other discordant note was struck by the Celestial Empire, a Shanghai news-
paper which advocated a less aggressive China policy than the North-China
Herald. It proposed simply an extension of the \ung-l{u or public assay
The Yamen has to observe that a difference exists between the monetary system
by law established in China and in other countries, and that the nature of the
case is such as to preclude the idea of uniformity . . . it now remains to be stated
that the establishment of a mint on the foreign system for the introduction of a
coinage by the Chinese government — which would be tantamount to inducing
the host to adapt himself to the convenience of his guest — would be productive,
there is serious reason to believe, of abuses so manifold in nature . . . that the
introduction of such a coinage cannot be undertaken. 40
* T h e Chinese position was correct, from an economic point of view. T h e reasons for this
were considered in Chapter I. T h e Chinese fully understood the difficulty of producing and
maintaining a national dollar coinage, given the administrative customs of the empire. The
Western skeptics, too, w e r e closer to reality than the reformers and their demands. T h e "suc-
cess" of the Canton mint, described below, is, paradoxically, evidence in support of the
Chinese traditional objections.
Although the Dragon Dollar was historically the forerunner of a national currency, it did
not gain acceptance in the period of this study and was not responsible for the success of the
mint.
The imperial approval was granted and the Canton mint issued its first
coins in 1889. They were all based on the 0.73 Kuping liang weight and
were unsuccessful. After being called in, the new coins were melted and
reminted on a 0.72 liang basis.58 A report on the operations of the mint by
the editor of the North-China Herald in 1892 was generous in its praises
for the mint's orderliness and efficiency. The mint was reported capable of
producing two million cash per day with an additional capacity for 100,000
silver pieces. But between May 1890 and December 1891 only 43,933 dollars,
the Kwangtung dragon dollars, had been minted: even the lighter dollar
had not, in fact, been a success.59 This may be accounted for by the re-
luctance of the business community to accept any new dollar, especially one
of Chinese origin, by the confusion over the change of weight of the dollar,
and by the reported practice of the mint of taking Treasury silver as 1.000
fine. The survival of the mint depended upon its minting of subsidiary
coins: 50-cent pieces with a fineness of .860, and 20-, 10-, and 5-cent pieces
with a fineness of .820. These were in demand along the China coast,
especially in Fukien where the shortage of cash had necessitated the circu-
lation of paper money of dangerously low denomination. Since these notes
were often issued by money-changers with little capital or reputation, there
were frequent failures and consequent suffering and disruption of trade.
Hong Kong subsidiary coinage had been introduced, but the Canton coins
were now ordered to circulate at par with those from Hong Kong, and
soon replaced them. 60 Thus through the profits to be made from the sub-
sidiary coins, the fineness of which was less than that of the full-bodied
dollar coin of .900, the mint survived until Chinese dollars gained greater
acceptance.
The Canton dollar was declared legal tender for the payment of customs
duties, and from the first it had a limited circulation. In 1890 silver dollars
were struck experimentally at the a senal of Taiyuan in Shansi but were
not circulated. 61 There was a coinage of dollars in Shantung in the same
year. But it was not until the Hupeh mint, another Chang Chih-tung
project, was approved in 1893 that it may be said the leadership of Canton
was being followed elsewhere in China. The Hupeh mint was established
at Wuchang and began operations in 1895.
The parallel founding of the Tientsin mint under the direction of the
Chihli Governor General, Li Hung-chang, was also a product of the 1877
imperial edict and the currency reforms which it inspired. Li enlisted the
aid of a former Fukien provincial treasurer, Ch'en Pao-ching, and in 1887
memorialized detailed plans for a modern mint using British machinery. 62
The establishment of the Canton mint was the climax of a series of re-
forms initiated under imperial instructions and executed within the frame-
work of traditional monetary policy. It was recognized as carrying within it
the seeds of a modern national currency policy, and it marked, in fact, the
beginning of that currency. But although the reforms of 1887 and 1888 can
be explained within the traditional framework, the actual measures were
evidence of the impact of foreign ideas. That such a combination of tradi-
tional policy and foreign ideas, evident, for example, in the use of steam-
ships to transport tribute grain, would eventually have led to a more uni-
fied direction of the modernization process is a supposition for which some
evidence has been presented. Certainly the currency reforms are proof that
the imperial will could be imposed as of old. If the efforts of the so-called
"restoration" government during the T'ung-chih period (1862-1874) failed
to accomplish its reform, whereas the later edicts of the same Empress
Dowager were successful in the Kuang-hsii period, the explanation is to be
found not in such catch phrases as "decline of the dynasty" or "provincial
foci of power," but rather in the changed economic conditions, including
the increased need for a sound subsidiary coinage, which made copper and
silver coinage again a practical proposal. With this conclusion the history
of the British Raj agrees; the Calcutta mint's British dollar postdated the
Canton and Hupeh mints and followed a further depreciation of silver in
world markets.
Foreigners did not approve of the monetary system of China. Its com-
plexities annoyed them and its esoteric nature made them suspicious of it.
To the treaty-port merchant the monetary system embodied the worst fea-
tures of the Chinese character — may even have been responsible for them.
Arguments over petty payments would naturally make a people sly and
shifty. The risks involved in larger transactions would hinder the growth
of trade and would certainly check modernization of the economy. How,
for example, could there be a railway system if there were no currency which
one could use to buy a ticket? Paying in cash coins would create so many
arguments that you'd miss the train! 1
The Chinese monetary system was, however, a highly developed metallic
system of the type familiar to early modern Europe. Its peculiarities can
be systematized, many of its inconveniences guarded against or avoided.
Exchanges could be settled in advance, remittances made, bank money and
bank notes used. There were native banks to provide credit facilities for
domestic trade; there were exchange banks to connect China with New
York, London, and the markets of the world. New industry would find a
banking system adequate for meeting its immediate requirements. Funds
could be borrowed to pay for raw materials and could be borrowed again on
the security of the finished products. If the currency were sufficiently confused
to provide difficulties in meeting the payroll, this was overcome by such
devices as tokens, small notes, merchants' credits — a Chinese entrepreneur
capable of building a factory would, like his Western counterpart before him,
be capable of solving this minor problem!
This is not to suggest that the foreign criticisms were totally without
validity. The costs of the Chinese monetary system were unnecessarily high;
not every village had adequate credit facilities, not every community could
Some failures were due to the uncritical use of Western methods. For
example, Malayan tin mining companies and Borneo plantations with head
offices in Shanghai did poorly.20 Often Chinese, using old methods and min-
ing alongside the modern Shanghai company, were successful. High over-
heads and deliberate dishonesty on the part of managers were two common
factors in company failures.21
The Chinese merchant, considering the possibility of establishing a modern
factory, lacked the technical ability to modernize, and his experience of
foreign attempts was not always encouraging. The typical forms of enter-
prise in the foreign sector of the Chinese economy were the agency house
and the trading company. These sponsored and became managers of the
new joint-stock companies. Except in a limited number of case studies, the
role of the agency houses as managers has not been the subject of research.
It is known that in some cases privately operated enterprises were sold as
The dominance of the Confucian view of society in China did undoubtedly in-
hibit growth and change as did that of the Christians in Europe; but the fact
that the breakthrough occurred in Europe rather than anywhere else is a unique
historical event which must be explained in terms of the peculiar concurrence of
the multiple circumstances that produced it and not solely by generalities about
the supposed inherent characteristics of European feudalism. . . , 29
or, from the point of view of China, the inherent characteristics of Chinese
society. Recognizing that the tendency to compare China and Japan is almost
as inevitable as it is of doubtful purpose, Ε. H. Norman in his important
study, Japans Emergence as a Modern Nation, wrote:
To pass judgment on the failure of China under the Ch'ing to achieve an in-
dustrial society and to contrast this with Japan's successful industrialization, the
student should by all means eschew such touchstones as patriotism and apply him-
self to a rigorous examination of the native characteristics of Chinese society, to
the inter-relationships of merchant-usurer-official-landlord. He should probe into
the reasons why merchant or state capital stopped so far short of developing into
industrial capital; he must study Chinese society as a whole.30
Problems in Translation
counterfeit is provided in the text, for this term can refer to worn coins which
should not be passing current and to foreign cash coins, as well as to actual
counterfeits.
c. Hsiao-ch'ien and ta-ch'ien as units of account. A third use of the term
hsiao-ch'ien is, of course, to refer to the ch'ien unit of account in the hsiao-
ch'ien system of the cash sector. It has been suggested that this term as a unit
of account be left untranslated. Use of the equivalent term tung-ch'ien might
avoid confusion over the meaning of hsiao, but it has the disadvantage of
being relatively obscure. One further word of warning is required. The term
hsiao-ch'ien sometimes rendered in English as "small cash" may refer to the
ch'ien of the chung-ch'ien system, contrasting it with the system under which
one ch'ien rather than two values a cash coin. It is important to know the
cash-sector system in force in the locality being discussed. Similarly, ta-ch'ien,
as in the phrase tiao ta-ch'ien, can mean ch'ang-ch'ien in a locality where the
chung-ch'ien system prevails.
4. Terms relating to silver: a. "Yang-yin" literally means "foreign silver,"
but it usually refers to silver of dollar fineness and, therefore, a more useful
translation when appropriate would be "dollar silver."
b. "Wen-yin" is often translated as "pure silver." Except where it is used
in the treaties, this term would appear, rather, to indicate silver acceptable
for monetary purposes, which may or may not be pure, and usually was not.
Therefore "monetary silver" would seem to be a more accurate translation.
The treaty meaning was under dispute, but it might be translated as "silver
of Haikwan standard" or, if actually specified in a particular treaty, "silver
of Kuping standard."
c. "Pai-yin" should be translated "silver," and not "white metal."
d. Sycee ("hsi-szu") may be left in its treaty-port form or translated as
"monetary silver." "Sycee" is also an acceptable translation for "wen-yin."
5. Terms relating to cash: a. "Ch'ien-ch'ien" should be translated as "zinc
cash" in contrast to "copper cash." The first character, "ch'ien," has been mis-
takenly translated as "lead," which would suggest the Chinese had lead coins.
"Smelter" has also been used and is acceptable. All Chinese coins, except
hung-ch'ien, or red cash, appear to have contained a large percentage of zinc,
usually 40 per cent or more. "Ch'ien" in this context is an abbreviation of
"pai-ch'ien" as contrasted with "hei-ch'ien"; hence the confusion. However,
there are times when this "ch'ien" refers in fact to lead, and again the con-
text alone can decide.
b. "Yang-ch'ien" has two meanings. Perhaps the more common is that of
"model" or "pattern cash," that is, either the model sent to the provincial
the bronze alloy cash, the latter to the brass alloy cash. 5 Both were legal
tender.
/. " M a o , " for monetary purposes, signifies a specific number of cash coins
to be minted within a period to be specified. However, the term " m a o " is
simply a number and in itself contains no time element. T h u s the mint of
the Board of Revenue may be ordered to cast 5 m a o a month or 70 mao for
the year. In the Statutes, varying definitions are given for the mao, but
throughout the nineteenth century it would appear to have been approxi-
mately 12,500 ch'uan. In this context, ch'uan is not a unit of account, but
refers to 1,000 cash coins, and thus m a o is defined as 12,500,000 cash coins.
T h i s is an exception to the definition of ch'uan given in paragraph 2 above,
and "strings of 1,000 cash coins" may be an appropriate translation. In certain
contexts m a o may be translated as " q u o t a , " thus avoiding clumsy wording. 6
Reign Periods:
CC Chia-ch'ing (1796-1820)
CL Ch'ien-lung (1736-1795)
HF Hsien-feng (1851-1861)
KH K'ang-hsi (1662-1722)
SC Shun-chih (1644-1661)
TC T'ung-chih (1862-1874)
TK Tao-kuang (1821-1850)
YC Yung-cheng (1723-1735)
24. The French occupation of Mexico, for example, resulted in changes in the design
of the Mexican dollar. The new "Eagle dollar" was assayed officially in Shanghai and
found IV2 per cent better than the old, and was then accepted by the Customs in 1872.
NCH (July 13, 1872), p. 24; (Dec. 18, 1872), p. 532.
25. The idea that the dollar circulated by weight only is probably the result of
supposing such statements as "[Dollars] never passed into their hands by count, but
always by weight in Chinese liang or taels modified by touch" to be valid for all times
and places in China. The statement is found dated 1690 in Morse, Chronicles, I, 68;
see also Lien-sheng Yang, Money and Credit in China: A Short History (Cambridge,
Mass., 1952), p. 48. But under an 1811 date in Morse, Chronicles, III, 161-162, it is
stated that dollars were at a premium over sycee. As early as 1736 the Chinese had
expressed their preference for dollars as a means of payment over bullion {ibid., II,
351).
26. When one currency depreciates in terms of another in some foreign country, the
change is typically reflected in the exchanges. However, this can be avoided by the
interposition of an imaginary money, called a "money of exchange," which remains
stable in terms of the foreign unit of account. The depreciation is then reflected in the
changing relationship between the money of exchange and the unit of account used
to value domestic transactions. An example of such a money of exchange was the
Spanish dollar or dollar of exchange. It was first a unit of account valuing a coin of
the same name. When the coin's dimensions changed from 8 reals of old plate to 10
and later 10% reals, the foreign exchange rate continued to be quoted on the basis of
8 reals. P. Kelly, The Universal Cambist and Commercial Instructor (London, 1821),
II, 18. For reference to the Hong Kong example, see Edward Kann, "The Mystery of
the Hong Kong Dollar," Chinese Economic Journal, 6:9-32 (Jan. 1930). Shanghai is
discussed in our Chapter VII; for Amoy see Chapter IV. See also, H. Schmidt, Tate's
Modern Cambist, 17th ed. (London, 1880), p. 125; and William F. Spalding, Eastern
Exchange, Currency, and Finance, 2nd ed. (London, 1918), p. 338.
27. The Foochow Haikwan or Customs Bank, for example, paid out in yang-p'ing
liang, which were about 1/8 per cent lighter than the hsin-i liang, the unit of weight
in which it received payments. China, Chinese Customs Service, Documents Illustrative
of the Origin, Development, and Activities of the Chinese Customs Service (Shanghai,
1940), III, 363.
28. Lists of the varying weights and types of silver are available in Kann, Currencies
of China; Η. B. Morse, "Abstract of Information on Currency and Measures in China,"
JCBRAS, 24:46-135 (1889-1890); and in the reports of the Imperial Maritime Customs.
29. This follows indirectly from the decision to set 1000 cash coins equal to 1 liang
of silver. P'eng Hsin-wei, Chung-huo huo-pi shih (History of Chinese money; Shanghai,
1954), II, 485, 525. See also Morse, Trade and Administration, pp. 124, 144.
30. This is a description of the ch'ang-ch'ien system. In Chapter II the chung-ch'ien
and hsiao-ch'ien systems will be introduced, and it will be seen that the essential dif-
ference among the three is the number of standard coins required to satisfy a debt of
1000 ch'ien.
31. John Hall, "Notes on the Early Ch'ing Copper Trade with Japan," Harvard
Journal of Asiatic Studies, 12:444-461 (Dec. 1949); and L. S. Yang, pp. 38-39.
32. In his Chronicles Morse states that he has extracted all information of interest to
economic historians from the records of the East India Company. If this is so, and
the author's spot check of the archives would indicate that it is, the monetary system
of China is not subjected to particular criticism but is merely mentioned in the course
of business. In another work on this period, The Crucial Years of Early Anglo-Chinese
Relations, 1750-1800 (Pullman, Wash., 1936), the author, Earl H. Pritchard, has noth-
GLOSSARY
INDEX
287
290
291
292
294
296
297
Hall, John. "Notes on the Early Ch'ing Copper Trade with Japan, "
Harvard Journal of Asiatic Studies, 12:444-461 (Dec. 1949).
Hallock, James C. J r . Refusing Its Own Coin: A Protest against
Repudiating United States Coin—Even Trade Dollars. Brooklyn,
1884.
The United States Treasury Should Not Refuse United States Coin.
Brooklyn, 1884.
, ed. Repudiation of Trade Dollars. New York, 1887.
Hart, Sir Robert. Manuscript letters. Deposited in Houghton Library,
Harvard University.
"Memorandum by Sir Robert Hart Proposing the Conversion of
the Haikwan Tael into a Gold Unit, " March 1896, in China,
Documents Illustrative of the Origin, Development, and
Activities of the Chinese Customs Service, VI, 584-586.
298
299
300
301
302
303
304
306
307
308
309
310
311
United States Senate, 53rd Congress, 2nd Session. Report No. 235,
Coinage Laws of the United States, 1792-1894. 4th ed.;
Washington, D. C., 1894.
Usher, A. P. The Early History of Deposit Banking in Mediterranean
Europe. Cambridge, Mass. , 1943.
"Value of Cash, " China Review, 2:130 (Sept. and Oct. 1873).
Van-Braam Houckgeest, A. E. An Authentic Account of the Embassy of
the Dutch East India Company to the Court of the Emperor of
China in the Years 1794-1795. London, 1798.
van der Sprenkel, O.B. "High Officials of the Ming: A Note on the
•^C ?tf Щ Ch'i ch'ing nien pi ao of the Ming History,"
Bulletin of the School of Oriental and African Studies, 14.1:88-114
(1952).
Vissering, G. , with Dr. W. A. Roest. On Chinese Currency: Preliminary
Remarks about the Monetary Reform in China. Batavia, Netherlands
East Indies, 1912(?).
Vissering, Willem. On Chinese Currency, Coin and Paper Money.
Leiden, 1877.
Volpicelli, Z. The Silver Question in China and the Fluctuations of
Prices. Shanghai, n.d.
312
313
314
315
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Feng Kuei-fen jMl *
Hua-sheng (fang-chih tsung-ch'ang)
feng-shui
^ *
# ( Μ Й ^ )
317
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hul-tui-chuang Kung-pu i 4f
hung-ch'ien kuo-chang ιä. Ψ*.
kuo-lu-yin i g . Ϊ& 4h
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kung-fa yi Ning-wu
kung-ku-chü
318
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319
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tou-kuei-yüan i- yang-ch'ien
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320
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Index
Abbreviations, list of, 248 B a n q u e de l'Indo-Chine, 2 6 4 n 3 8
Accounting dollar, 8 9 - 9 0 , 173 Barter, 3 0 - 3 1 , 4 2 - 4 3 , 174, 2 5 3 n l 2
Accounting tael, 8 9 - 9 0 , 173 Big-cash ( c o i n ) , 61, 104, 1 3 4 - 1 3 5 , 143, 1 4 5 -
Agency houses, 90n, 95, 9 7 - 1 0 0 , 165, 1 6 9 - 1 7 1 , 150, 1 5 2 - 1 5 7 , 158, 211, 2 1 3 - 2 1 5 , 244,
1 7 4 - 1 7 5 , 182, 206, 236, 2 6 3 n 3 5 , 2 8 3 n 2 3 , 2 5 8 n 3 3 . See also Ta-ch'ien
n28 Bimetallism, 27, 3 9 - 4 2 , 4 6 - 4 7 , 50, 57, 121,
Agio, 1 0 6 - 1 0 8 , 2 6 5 n 7 6 , n78 253nl3
Aglen, F. Α., 2 0 9 - 2 1 0 Board of Revenue: a n d standard cash, 5 2 - 5 3 ,
Agra and M a s t e r m a n ' s Bank, 99 215; and Shansi banks, 94; functions and
Alcock, Sir R u t h e r f o r d , 221, 2 6 3 n 2 0 role of, 1 2 3 - 1 2 7 , 1 2 9 - 1 3 2 , 1 4 9 - 1 5 1 , 156,
American trade dollar, 85, 1 7 9 - 1 8 1 , 186, 206, 163, 167, 1 9 0 - 1 9 1 , 1 9 3 - 1 9 4 , 195, 2 1 6 , 218,
222, 225, 2 7 3 n 4 8 , n 5 0 244, 247, 2 6 0 n 2 8 ; organization of, 1 2 5 - 1 2 6 ;
A m o y , 12, 46, 85, 93, 97, 114, 116, 197, 203, staff of, 1 2 5 - 1 2 6 , 1 3 2 - 1 3 3 , 146n, 153n,
206, 2 6 3 n 3 1 , 2 6 6 n 8 6 154, 156n, I 5 7 n , 158, 216, 2 5 4 n 2 3 , 2 6 2 n l 0 ,
Amoy dollar, 46, 85, 116, 206 2 6 8 n 2 6 , n 4 0 ; m i n t s of, 1 2 6 - 1 2 7 , 134, 136,
A n h u i , 62, 153n, 219, 227 138, 140, 147, 153, 214, 2 6 9 n 5 0 ; a n d pro-
A n n a m , 140 vincial g o v e r n m e n t s , 128, 1 3 0 - 1 3 2 ; utensils
Assay: inaccuracy of, 35, 70, 74, 82, 1 9 0 - 1 9 1 , ordered sold to, 146. See also Board of
200, 204, 207, 2 6 6 n 9 7 , 2 7 5 n 5 , n 8 ; F o o c h o w , W o r k s ; Mint, traditional; Mao; Pao-ch'tian-
110; of new dollars, 170, 180, 221, 2 5 5 n 2 4 , chü
2 7 4 n 5 0 ; Royal Mint, 191, 197, 2 8 1 n 4 6 ; Board of W o r k s , 123, 125, 1 2 6 - 1 2 7 , 156,
A m o y , 197, 206; C a n t o n , 1 9 7 - 1 9 8 , 200, 157n, 190, 2 5 7 n 2 8 , 2 6 9 n 5 0 , 2 7 0 n 9 . See also
2 0 4 - 2 0 7 , 209; S h a n g h a i , 2 5 5 n 2 4 ; in tax Pao-yiian-chii
payments, 2 6 0 n l 5 . See also Kung-ku Bowring, Sir John, 184, 1 9 8 - 1 9 9
Augustine H e a r d and Co., 99, 177. See also Boxer uprising, 3, 92, 144, 208, 211, 222
H e a r d , A. F. British dollar, 74, 179, 1 8 6 - 1 8 7 , 228. See also
United K i n g d o m
Balfour, Capt. G., 204 Bullion, 3 1 - 3 4 , 3 7 - 3 9 , 45, 49, 69, 81, 103,
Bank m o n e y , see Bank notes; C u r r e n t accounts 1 0 7 - 1 0 8 , 1 1 1 - 1 1 3 , 116, 156, 1 6 6 - 1 6 7 , 174,
B a r k notes: in a metallic m o n e t a r y system, 34, 1 7 5 - 1 7 7 , 1 7 8 - 1 7 9 , 185, 187, 191, 1 9 5 - 1 9 7 ,
134; in Chinese m o n e t a r y system, 90, 1 0 3 - 200, 209, 222, 245, 2 5 5 n 2 5 , 256n33,
106, 174, 218, 230; of specific e x c h a n g e 2 7 3 n 3 6 . See also Dollar silver; Monetary
banks, 98, 183, 187; described, 103, 105; silver
issuance a n d r e d e m p t i o n , 1 0 3 - 1 0 5 , 109, 183,
2 6 5 n 6 3 , n 7 6 ; d u r i n g H s i e n - f e n g , 154, 163, Calcutta, 74, 179, 186, 228, 2 7 5 n 6
2 7 1 n 3 6 ; appreciation of, 217 C a n d a r e e n , 243, 246
Bank of Asia, 98 C a n t o n , 2, 12, 18, 42, 44, 53, 95, 202, 210,
Bank of China ( 1 8 6 4 ) , 99, 2 6 3 n 3 7 231, 2 6 1 n 4 2 , 2 6 2 n l , 2 6 5 n 8 5 , 2 7 6 n l l ; im-
Bank of C h i n a ( 1 8 7 2 ) , 100 port of dollars, 69, 82, 1 6 8 - 1 6 9 ; p a y m e n t s
Bank of C h i n a , Japan, a n d t h e Straits, 100 in silver, 74, 7 7 - 7 8 , 88, 116, 192, 2 6 1 n 4 4 ;
B a n k i n g crises, 77, 93, 9 6 - 9 7 , 104, 128, 1 6 2 - c h a n g i n g standard dollar, 85, 1 6 8 - 1 7 2 , 175,
163, 175, 218, 2 6 3 n 3 1 , 2 6 4 n 5 9 176, 1 8 3 - 1 8 4 ; cash-silver e x c h a n g e rate,
Banks and b a n k i n g system, 42, 67, 69, 74, 78, 1 4 1 - 1 4 2 ; assay, 1 9 7 - 1 9 8 , 2 0 4 - 2 0 7 , 2 0 9 ;
86, 9 0 - 1 1 0 , 134, 150, 163, 171, 217, 218, duty p a y m e n t s , 2 0 6 - 2 0 7 ; m i n t , 114, 2 2 0 ,
230, 2 6 2 n l , n8, n l 3 , n l 4 , 2 6 3 n 2 0 , n 3 1 , n 3 5 , 222n, 223-224, 225-228, 281n54
2 6 4 n 5 9 , 2 8 0 n 4 1 . See also B a n k i n g crises; C a n t o n liang, 73, 80, 82, 194
E x c h a n g e banks-, N a t i v e b a n k ( l o c a l ) ; Re- Canton tael, 2 7 2 n 2 1
mittance bank Capital, Marx's, 129, 153n
157-158, 163, 184, 217-218, 259n48; in banking system, 93, 94-97, 101, 107-110,
Hong Kong, 181-187; British colonial, 182- 230, 2 6 2 n l 8 ; source of funds, 96, 262nl3,
184. See also Monetary reform n l 8 ; and note issue, 104-106, 109-110, 154,
Monetary reform: in British territories, 29, 163, 175, 217; and current accounts, 106-
182-184, 187; foreign pressure for, 49, 121, 109; cooperation among, 109-110. See also
134, 164-166, 176, 189, 202-203, 211-212, Banking crises; Remittance bank
221-222, 224, 259n60; in cash sector, 104, New York, 86, 90, 230
108, 212, 213-219, 227-228; national, 132, Newchwang, 92-93, 107-108, 115, 178, 204-
152, 165, 202, 211, 221-222, 230; in Hong 205, 233, 261n44, 2 8 2 n l l
Kong, 183, 187; of silver coinage, 212, 221, Ningpo, 12, 86, 97, 105, 107-109, 115, 204-
224; national dollar, 222n, 224, 225; Chi- 205, 238n, 268n30, 2 7 6 n l l
nese concern with, summarized, 230. See North-China Herald: on cash, 51, 114; an-
also Monetary policy nounces Bank of China, 100; on Haikwan
Monetary silver: sycee as, 31, 107, 111-113, banks, 102; on Mexican as standard, 172,
167, 193, 195-197, 209, 222, 226, 245, 176; on Shanghai tael, 177; policy of, 221;
255n25, 273n36; survey of, 70-83; nomen- on Canton mint, 226; on Shanghai industry,
clature, 72-73, 79; form, 72-74; fineness, 237
statement of, 75-76, 80; and unit of ac- Notes, government cash and silver, 150-151,
count, 76-79, 172, 178-179, 195-196, 154-155, 157n, 158-163. See also Monetary
255n27; and dollar, 82, 84, 255n25; bank policy; Paper money
note redemption in, 107; tax payments in,
9, 112, 204; in monetary policy, 130, 134, "Official supervision, merchant management"
140, 143; wen-yin, 245. See also Dollar companies, 13-14, 18-19, 102, 143, 144,
silver; Silver; Sycee, shoes of 235, 238
Monetary system, Chinese: and economic de- Old Canton system, 2, 12, 82, 97-98, 190-
velopment, 2-3, 20, 229; compared, 25-26,
194, 202, 231, 2 7 5 n l l
44, 46-47, 49-50, 174, 230; foreign opinions "Old head" dollar, 86, 168-169. See also
on, 25, 49-51, 57, 94, 110-111, 116-117, Spanish dollar
164, 229-230, 251n28, 255n32, 256n33, Opium, 12, 43, 96, 141-142, 156n, 176,
258n35; ideal model of, 27-28, 46-49, 61; 254n20, 266n86
local nature of, 43-44, 62, 115-116, 164, Oriental Banking Corporation, 98, 100, 104,
198-199, 200-202, 222; and tax payments, 183, 186
45, 55-56, 64, 78, 86, 108-109, 189, 191- Overend Gurney, 99
195, 260n28; role of dollars in, 81-90, 165,
167-168, 174, 198, 201, 224, 255n2; con- Pai-ch'ien, 245
tribution of banks to, 91, 98, 230; of mer- Pai-yin, 245
chants, 91n, 97-98, 223; summary of, 114- Pakhoi, 206
117 Pao-ch'üan-chü, 126-127, 134, 136, 138, 146
Money: and unit of account, 26, 28-30, 170n, Pao-yüan-chü, 126, 127, 134, 138, 146
252n3, 253n7; defined, 28, 34, 39, 43, Paper money, 9, 90, 98, 103-106, 109-110,
252n3; and barter, 30-31, 42-43, 253nl2 135, 145, 150-151, 154-155, 156n, 157,
Money changers, 42, 58, 95, 137, 169, 174 158-163, 174, 183, 185-187, 217, 223,
Money of account, 252n3 254n20, 264n62, 265n63, n72, n76, 271n36.
Money of exchange, 46, 116, 255n26 See also Bank notes; Monetary policy;
Money substitutes, 43, 254n20 Notes, government cash and silver
Morse, Hosea В., 3, 80, 178, 210, 242n Parkes, Sir Harry S., 109-110, 171
Mu-ch'ien, 52, 2 7 0 n l 3 Pawn shops, 42, 101, 102, 109
Mukden, 134 Peking, 7, 8, 10, 12, 18, 93, 133, 139, 147-
149, 151, 154, 191-192, 194, 200, 213-215,
Mutual financing associations, 102-103 221-223, 225, 272nl6, 2 7 6 n l l ; tax monies
to, 44, 75, 127, 2 5 4 n l 9 , 265n85; cash sys-
Nan-shan, 146 tem of, 60-61, 150, 158-163, 211, 213,
Nanking, 65-67, 71-72, 74-75, 144-145, 215-218, 258n30, n31; taels, 72, 80; official
259nl3, 278n42. See also Treaty of Nanking banks, 102, 150, 154, 158, 163; cash notes,
National Bank of China, 100, 107, 267n2 102, 104, 150-151, 154-155, 156n, 157n,
Native bank (local): defined, 91, 94-95; in
Sinkiang, 6, 44, 223 141-142, 145, 150, 163, 172-179, 190, 192,
Sino-foreign banks, 97, 174, 230 194, 197, 199, 201, 203-207, 210, 216, 220,
Small dollar, 114, 266nl08 241-242, 268n40; cash subsidiary to, 57,
Smith, Adam, 154, 239 135; defined, 70-71, 243; alternate names,
Soochow, 97, 176, 268n30 70; imaginary and real, 71-72, 115; values
Sovereign, Australian (coin), 183 and differing silver weights, 76-78, 178-
Spanish dollar (coin): type unspecified, 45, 179; and dollar, 82, 115-116. See also Liang
181, 224, 2 7 2 n l 6 ; Carolus, 83, 86-87, 169- T'aichow, 224
174, 182-183, 261n37; pillar, 86; old head, Tainan, 55
86, 168-169; Ferdinand, 168 Taiping rebellion, 4, 6, 9, 13, 15, 18, 92, 110,
Spanish dollar (unit of account), 98, 116, 123, 144-145, 152, 172, 212, 213
167-174, 183, 206, 224, 255n26 Taiwan 224, 225
"Squeeze," 111, 117, 146, 191, 232, 2 7 6 n l l , Taiyuan, 226
278n38, 282n5 Takao, 206
Ssu-ma scale, 80 Tamsui, 19, 67, 206
Standard silver, 7, 75-76, 79, 81, 115, 173, T'ang Chiung, 215, 219-220
177-179, 203, 204. See also Monetary silver Tao-kuang period, 52, 134, 140-143, 144,
Statistics, inadequacy of: monetary, 2, 26-27, 147, 168, 212, 224
42, 139-140, 2 5 4 n H ; natural disaster, 5; Tariff autonomy, 208. See also Customs duty
trade, 12-13; balance of payments, 13; pro- Taxation: land tax, 8, 112, 126, 144-145, 193,
duction, 13; business, 15n, 16, 250n25, 2 7 5 n l ; likin, 8 - 9 , 111, 214-215, 2 4 9 n l l ,
251 n27; employment, 16-17; price, 139- 2 7 5 n l ; other, 9, 42-43, 189-190, 214,
140, 162 2 7 5 n l ; remission of, 9, 122, 144-145; form
Sterling, 15, 30, 47, 182-184, 197, 242. See of payment, 42-43, 55-56, 64, 78, 86, 193,
also Shilling 195, 225, 2 6 0 n l 5 ; grain tribute, 42-43, 96,
Steuart, Sir James, 252n3, 256n32 2 5 4 n l 9 ; remittances to Peking, 44, 56, 75,
Straits Settlements, 186-187, 272nl7, 279nl 78, 93, 110, 111, 191, 195, 201, 216,
String of cash, 25, 30, 103, 216; premium on, 254nl9, 260n26, 277n24; and monetary sys-
26, 54-55, 63; in ideal model, 27-28, 5 9 - tem, 45, 110-113, 140, 166; and banks, 93,
63, 159; sub-strings, 54, 61, 66-68, 244, 95, 101, 110; and Board of Revenue, 124-
258n33; construction of, 54, 95; in pay- 125; and "extra charges," 191-193. See also
ments, 55-57, 62-63, 77-78, 153; defined, Customs duty
59, 244; local variations, 62; nomenclature, Tea, 7, 12, 13, 77, 92, 170, 237, 263n31
64-68; in duty payments, 205 Telge and Co., 264n44
Su-shun, 150, 155, 156n, 157-158 Textiles, 13, 18-19, 92, 230, 239, 251n28,
Sun (coin), 210 281n2, 283n28
Sun, Ε-tu Zen, 124n Three-tael touch, 75
Sun Shan-pao, 278n42 Tiao, 60, 61-63, 65, 104, 106, 115, 159-163,
Sung-chiang-yin, 72, 80 217, 243-245, 258n33
Swatow, 93, 206, 209-210, 262n8 Tiao ta-ch'ien, 258n30
Sycee, 192-193, 197. See also Monetary silver T'ien shops, 102, 150
Sycee, shoes of: as coins, 31, 73, 79, 81; in Tientsin, 10, 18, 62, 74, 92-93, 104, 205,
Shanghai, 72-76, 78-79; premium on, 73, 213-215, 220-221, 225-228, 256n63,
76-77, 195-196, 204, 2 6 0 n l 8 ; stating silver 260n26, 261n44, 2 7 6 n l l . See also Treaties
content of, 74-76, 81, 2 6 0 n l 8 ; debasement of Tientsin
of, 74, 78-79; inconvenience of, 81, 82; in Times (London), 174, 177
payment system, 108, 174, 273n36. See also Tin, 138, 146, 283n20
Monetary silver; Shanghai sycee Ting hsien, 6 - 7
Szechuan, 6, 62, 149 Ting Pao-chen, 216n
Tokens, 113n, 230
Ta-ch'ien (unit of account), 158-161, 2 4 4 - Transfer tael, 107-108, 115
245. See also Big-cash Transportation, 2, 7 - 8 , 13, 15, 18-19, 92,
Tael (means of payment), 176, 195, 223-225 111-112, 143, 214, 220
Tael (unit of account), 27-28, 48-49, 59-61, Treaties of Tientsin, 197-199
65, 69, 70-81, 104-108, 111-112, 114-116, Treaty of 1871 (Japanese), 199
3. REFORM IN SUNG CHINA: WANG AN-SHIH (1021-1086) AND HIS NEW POL-
ICIES. By James Т. C. Liu.
15. CHINA AND T H E WEST, 1858-1861: THE ORIGINS OF THE TSUNGLI YAMEN. By
Masata\a Banno.