China and the End of Global Silver, 1873–1937

By Austin Dean

In the late nineteenth century, as much of the world adopted some variant of the gold standard, China remained the most populous country still using silver. Yet China had no unified national currency; there was not one monetary standard but many. Silver coins circulated alongside chunks of silver and every transaction became an "encounter of wits."

China and the End of Global Silver, 1873–1937 focuses on how officials, policy makers, bankers, merchants, academics, and journalists in China and around the world answered a simple question: how should China change its monetary system? Far from a narrow, technical issue, Chinese monetary reform is a dramatic story full of political revolutions, economic depressions, chance, and contingency. As different governments in China attempted to create a unified monetary standard in the late nineteenth and early twentieth century, the United States, England, and Japan tried to shape the direction of Chinese monetary reform for their own benefit. Austin Dean argues convincingly that the Silver Era in world history ended owing to the interaction of imperial competition in East Asia and the state-building projects of different governments in China. When the Nationalist government of China went off the silver standard in 1935, it marked a key moment not just in Chinese history but in world history.

• Language: English
• Publisher: Cornell University Press
• Release date: Nov 15, 2020
• ISBN: 9781501752414

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CHINA AND THE END OF GLOBAL SILVER, 1873–1937

Austin Dean

CORNELL UNIVERSITY PRESS ITHACA AND LONDON

To my parents

Contents

List of Figures and Tables

Acknowledgments

Notes on Terms, Currencies, Weights, and Measures

Introduction

1. A Primer on the Qing Dynasty Monetary System

2. Silver Begins Its Fall

3. Provincial Silver Coins and the Fragmenting Chinese Monetary System, 1887–1900

4. The Gold-Exchange Standard and Imperial Competition in China, 1901–1905

5. Money and Power on the World’s Last Silver Frontier

6. The Shanghai Mint and Establishing a Silver Standard in China, 1920–1933

7. The Fabi and the End of the Global Silver Era, 1933–1937

Conclusion

Appendix

Chinese and Japanese Character List

Notes

Bibliography

Index

Figures and Tables

Figures

1. The unfortunate trade dollar

2. The installed coining presses in Chengdu (1898)

3. The plant of the Shanghai Mint

4. Coin made by the Central Mint in March 1933

5. Cartoon from North China Daily News, August 4, 1936

Tables

1. Silver-Copper Ratio

2. Coinage Production of the Guangzhou Mint, 1890–1899

3. Mexican Silver Exports, Fiscal Years 1881–1882 to 1902–1903

4. Average Monthly New York Price of Fine Bar Silver, 1902

5. Monthly Price of Silver in First Nine Months of 1917

6. Annual Price of One Ounce of Silver in New York, 1921–1931

7. Average Monthly Price of One Ounce of Silver in New York, 1933

A.1. Price of Bar Silver in London, 1833–1933

Acknowledgments

In writing a book about money, it is no surprise that I have accumulated many debts.

At Grinnell College, my thanks to Andrew Hsieh, Sarah Purcell, and Don Smith for serving as mentors. A postgraduate scholarship from Grinnell to spend time in Nanjing solidified my desire to pursue a career in Chinese studies. At Georgetown University, I appreciated the guidance of Michael Green, Jim Millward, Micah Muscolino, Carol Benedict, and the late Nancy Bernkopf Tucker as I learned how to be a graduate student. Particular thanks are owed to Jim Millward for assigning China Upside Down by Lin Man-houng in a graduate course. The origins of this book in many ways connect to that assignment. I also look back fondly on the camaraderie of Julia Famularo, Kelly Hammond, Barry McCarron, and Wen Shuang from our seminars together. At Ohio State, I am incredibly grateful for the support, encouragement, and guidance of Christopher Reed, Ying Zhang, and Phil Brown. Thanks are also due to Jennifer Siegel and Steve Conn, whose perspective outside of Chinese history was valuable as I worked on making the project appealing to a wider audience. Thanks also to my classmates at Ohio State, especially Melvin Barnes, John Knight, Luo Di, Shan Yi, and Zhou Nan.

At Renmin University, I want to extend my gratitude to Dong Jianzhong for supervising my time in Beijing and Li Ming, a classmate and friend who is now embarked on his own academic career. I owe a special debt to colleagues from my Fulbright cohort and other researchers for the many dinners and lunches we shared as we mulled over our projects. Thanks to Abigail Coplin, Alex Hsu, Alexis Siemon, Eleanor Goodman, and Wes Chaney for all these wonderful memories.

I wish to thank Ohio State University, the Hoover Institution at Stanford University, the American Council of Learned Societies, the Fulbright program, and the College of Liberal Arts at the University of Nevada, Las Vegas for monetary support at different stages of the project. In addition, archivists at many repositories made this project possible by answering questions and helping me find my way.

I am incredibly grateful for the support of my colleagues at the University of Nevada, Las Vegas. I have benefited immensely from the department’s support and interest in my work. I want to particularly thank all those who participated in the faculty seminars when I shared drafts of different chapters: Greg Brown, John Curry, Carlos Dimas, Caryll Dziedziak, Andy Fry, Andy Kirk, Noria Litaker, Colin Loader, Elizabeth Nelson, Jeff Schauer, and Paul Werth.

At Cornell University Press, I want to extend my thanks to Roger Haydon for guiding me through the review process as a first-time author. Comments from two anonymous reviewers made the manuscript much stronger. I have long admired the Studies on Money series, and I am honored that the editors, Eric Helleiner and Jonathan Kirshner, decided to include my work along with a number of excellent titles. Thanks also to Brill and Sage Publishers for permission to reprint material from two journal articles: The Shanghai Mint and U.S.-China Monetary Interactions, 1920–1933, Journal of American–East Asian Relations 25, no. 1 (March 2018): 7–32; and A Coin for China? The Monetary Standards Debate at the End of the Qing Dynasty, 1900–1912 Modern China 44, no. 6 (2018): 591–619.

Finally, without my parents; my sister, Katharine; and my wife, Nancy, I would be nowhere. All errors remain my own.

Notes on Terms, Currencies, Weights, and Measures

1. When referring to Chinese or Japanese figures, I give their family name first, followed by their given name (e.g., Ma Yinchu). I use the Pinyin system of romanization with exceptions for Sun-Yat-sen, Chiang Kai-shek, and his son Chiang Ching-kuo. The nonspecialist might be more familiar with these romanizations, so I adopt them.

2. When speaking about coins, I will often refer to grains (e.g., 412 grains or 378 grains silver, etc.). A grain is equal to 0.026 grams.

3. Chinese weights and measure

1 dan (picul) = 100 jin = 59.7 kg

1 jin (catty) = 16 liang = 597 g = 0.597 kg

1 liang (ounce) = 10 qian = 37.3 g

1 qian (mace) = 10 fen = 3.7 g

1 fen (candareen) = 10 li = 0.37 g

4. In the British monetary system there were 12 pence (d.) in a shilling (s.) and 20 shillings in a pound (£), or 240 pence in a pound. In early chapters, when London was the main center for silver trading, I provide silver prices in British terms (e.g., 24d.). As New York grows in importance over the course of the narrative, I will provide silver prices in cents.

5. After the United States returned to gold convertibility after the Civil War, the dollar was in effect fixed at £1=$4.85 dollars. If the cost of procuring pounds exceeded $4.85 and was beyond the additional cost of shipping and insuring the gold, then the metal, rather than a bill of exchange, would be used to settle a transaction.

6. After Japan adopted the gold-exchange standard in 1897, one Japanese yen (¥) was equal to 50 U.S. cents.

INTRODUCTION

Following the Money

In March 2016, villagers in Hebei, China, flocked to a riverbank and dug up the earth. Rumor had it there was treasure below: not gold, jade, or precious artifacts from an ancient dynasty but silver coins minted in the 1910s featuring the plump visage of Yuan Shikai, the leader of the fledgling Chinese republic at the time. Known colloquially as Big-Headed Yuan (Yuan Datou), the coins were a common medium of exchange in the early twentieth century. Today they could be worth a significant amount of money on the collector’s market.¹

Silver usually only makes it into the news, and into our consciousness, in stories such as this one. Silver coins remain an oddity and a curiosity; they are the realm of enthusiasts, hobbyists, and collectors, not of policy makers, bankers, and merchants. While silver can still be a hedge against inflation and an investment in a time of crisis, gold retains a stronger grip on the popular imagination. Some so-called gold bugs, in a fringe view, even advocate returning to the gold standard to bring discipline to a monetary system they see as out of control.² No one talks about going back to the silver standard. Over the course of the twentieth century, silver became the forgotten monetary metal.

But silver was money for a very long time. After the discovery of the metal in the mountains of South America during the sixteenth century, Spanish and, later, Mexican silver coins traveled through the veins of world commerce for hundreds of years. Many of these coins ended up in China during the Ming (1368–1644) and Qing (1644–1912) dynasties. At the time, the price of silver drew the attention of miners, merchants, politicians, speculators, and intellectuals across the world. It is common, in a world-history textbook or class, to discuss the start of the silver era but not its close.

The silver era in world history came to an end between the 1870s and 1930s not because of some inherent inferiority of the metal, a reason stressed by many at the time and in later scholarship, but due to the interaction of imperial competition in East Asia and the state-building projects of different governments in China. As much of the world adopted some variant of the gold standard, China remained the most populous country still using silver. Yet there was no unified national currency; there was not one standard but many. Various types of silver circulated alongside copper coins and banknotes from different financial institutions. Coins and silver ingots had to be weighed and assayed as they passed from hand to hand. One Chinese student, writing in 1910, deplored how clumsy and how complicated the coinage system (if to such we apply the name system) is! All transactions were simply an encounter of wits.³ The Nationalist Chinese government’s decision to abandon silver in 1935, and its ability to create a new currency backed by foreign exchange, the fabi, thus marked a crucial moment in the history of China and, indeed, the world.

The history of Chinese currency sounds like a topic full of esoteric details and with a narrow, numismatic focus. Nothing could be further from the truth. It is a dramatic story full of political revolutions, economic depressions, chance, and contingency. The story will take us from copper mines in Yunnan, a bakery in Louisville, and mints in Sichuan to government offices in Washington, D.C., and Beijing, as well as the faculty offices of Cornell, Princeton, and Yale Universities. We will encounter Chinese statesmen, U.S. economists, and Shanghai Mint workers. Some of these figures will be familiar while others will not. These places and people may seem unconnected, but an important question brought them together: How should China change its monetary system? The narrative traces how officials, merchants, and economists around the world answered this question.

At an even broader level, China and the End of Global Silver demonstrates the contingent nature of change in any monetary regime. It aims to denaturalize money, though in most societies the opposite tends to occur; prevailing monetary arrangements are naturalized as the only way things could ever be, the inevitable result of economic forces that favor efficiency and ease of exchange. I put Chinese history in a global context and uncover a monetary, mental, and material world very different from our own.

The physical aspects of monetary life for most of human history, and particularly through the early part of the nineteenth century, had several features that, from our perspective today, appear unfamiliar: Foreign currencies circulated alongside domestic ones; low-denomination forms of money were not well-integrated into the official monetary system and officially issued currency domestically was far from homogenous or standardized.⁴ These circumstances reflected the big problem of small change.⁵ For a long time, governments could not produce high numbers of low-denomination coins at a consistent standard of quality without losing money. As described by the political economist Eric Helleiner, in the middle of the nineteenth century, emerging nation-states began to create territorial (or national) currencies that were bound by borders. Governments stopped the circulation of foreign coins within their boundaries, fully integrated low-denomination coins into the currency system, and created a homogenous standard.⁶ A blend of economic and political motivations influenced this trend. First, consolidating a national currency could lower transaction costs for merchants and increase the internal economic coherence of a country.⁷ Second, a territorial currency enabled governments to exercise control over the money supply and manage the macroeconomic environment.⁸ Third, the creation of national money made it easier to administer increasingly complex systems of public finance.⁹ Finally, nation-states used territorial currencies to strengthen national identity. These motivations, paired with technological advances, helped create part of the monetary world we inhabit today.

China and the End of Global Silver examines attempts by the Qing dynasty, the Beiyang governments (1912–1927), and the Nationalist government (1927–1949) to create a territorial, national money and the role of silver in that process. In doing so, the book addresses debates in Chinese history, U.S. history, economic, and world history.

First, in the context of Chinese history, focusing on silver illuminates connections between economic, diplomatic, political, and intellectual history that often remain unexamined. Despite popular visions of autocratic Chinese emperors, Confucian statecraft writings generally stressed the limited role of the government in the political economy. A central question for Chinese thinkers in the late nineteenth and early twentieth centuries, as the historian Julia Strauss has noted, was how a state previously content with fairly minimalist goals of self-maintenance could develop strong, proactive organizations capable of implementing new agendas of centralization and economic development.¹⁰ For many Chinese figures, this goal entailed increased government involvement in and control over the economy, including the monetary system. The economic writings of prominent Chinese officials and intellectuals known sooner for their other views and policies highlight this conceptual transition. Few historians of China would immediately associate Liang Qichao, a seminal figure in modern China, with currency issues. However, Liang wrote extensively on monetary problems and held different positions in the Ministry of Finance during the 1910s. Likewise, the book examines the monetary thought of figures like Zhang Zhidong, Kang Youwei, Sun Yat-sen, and Ma Yinchu to show that discussions about monetary standards—far from a narrow, technical issue—represented a fundamental and contentious question in Chinese state building during the late nineteenth and early twentieth centuries.

Until recently, many studies stressed the failure of Qing state-building projects and emphasized dynastic decline.¹¹ The same could be said of the Beiyang and Nationalist governments. This view also went a long way toward explaining the victory of the Chinese Communist Party (CCP) and the establishment of the People’s Republic of China (PRC) in 1949. There is some truth to this interpretation. The Qing dynasty fell; the different Beiyang governments did not consolidate control over the country; the Nationalists lost to the Chinese Communist Party. Historians now tend to focus on the successes rather than the failures of the Qing, Beiyang, and Nationalist governments, as well as the continuities between these eras and the post-1949 period. Each government inherited the goals, tools, and institutions of its predecessors.¹²

We can see these changing interpretations in the debate about whether the late Qing dynasty created a modern fiscal state or a military fiscal state. Even though the terminology is similar, they refer to very different concepts. The historian He Wenkai identifies the modern fiscal state as the centralization of tax collection, which allows the state to allocate spending out of a consolidated source of revenue which improves efficiency in managing government finance.¹³ The centralization of tax collection also enabled long-term borrowing on financial markets. He contends that the late Qing, in contrast to England and Meiji Japan, did not become a modern fiscal state because the collection and allocation of revenue remained decentralized and outside the control of officials in Beijing. Significantly, He Wenkai rejects the traditional Weberian definition of the modern fiscal state that stresses the ability of a government to achieve monopoly over the issuance of currency.¹⁴ For He, this standard is too high.

Using a different metric then He Wenkai, the historian Stephen Halsey believes the Qing did become a successful military fiscal state: it increased its administrative reach in order to extract revenue and used these funds to defend itself and spur economic growth. The looming threat of imperialism in China during the late Qing dynasty inaugurated the most innovative period of state-making in China since the early seventeenth century.¹⁵ Halsey argues that these policies worked. For Halsey, unlike He, the centralization of the collection and allocation of revenue is not as important as how the Qing used these funds. The Qing was not completely colonized; this practical standard is the one that matters. Halsey concludes by demonstrating how the Nationalist government and the PRC continued the state-building projects that originated in the Qing. However, just like He Wenkai, Halsey elides controversies about establishing a uniform monetary standard.

Focusing explicitly on the question of monetary standards allows for a fuller view of how Chinese state building took place in a worldwide marketplace for silver, which China participated in and influenced but did not control.¹⁶ In contrast to the historian Tomoko Shiroyama’s argument that the lack of separation between the domestic currency system and the international circulation of silver was not widely recognized until the financial crisis in 1934, the evidence shows that numerous Chinese figures were concerned about this quandary from a much earlier period and it formed a crucial issue in the Qing dynasty, the Beiyang period, and the Nationalist period that has not received adequate attention.¹⁷ Putting silver at the center also illuminates important global connections, particularly between China and such countries as Mexico, India, and the Philippines that are not evident in the debate about modern fiscal states and military fiscal states. Moreover, looking at the history of this period through a silver lens allows for new perspectives on important and, to the specialist, familiar events in Chinese history: the Self-Strengthening Movement, the Boxer Rebellion and its aftermath, the final days of the Qing dynasty, the Beiyang period, and the Nanjing decade (1927–1937).

Analyzing and interpreting debates about monetary standards demonstrates how officials, intellectuals, and merchants, in China and around the world, thought the Chinese monetary system should relate to the world monetary system. What type of monetary system should China have? Did a declining price of silver in relation to gold benefit or harm China? Should China adopt the gold-exchange standard? If it adopted the gold-exchange standard, would it link its new currency to the U.S. dollar, British pound, or Japanese yen? Could China carry out a program of reform without compromising its sovereignty? These questions dominated monetary discussions in China between the 1870s and 1930s. The book closes with the abandonment of the silver standard in China, but it is not a triumphalist narrative that sees the final outcome as predetermined and inevitable. Instead, it focuses on challenges, conflicts, conundrums, false starts, and reversals. Adopting this approach builds on the important work of the small but growing number of studies on Chinese monetary history in the English-language scholarly literature and the more abundant works in Chinese.¹⁸

Second, in terms of U.S. history, silver was a key variable at the intersection of U.S domestic and foreign policy across the nineteenth and twentieth centuries, though most studies focus mainly on the domestic angle and controversies about bimetallism. If scholars do examine the connections between domestic and foreign policy, they often focus on the 1930s and the role the United States did or did not play in driving the Nationalist government off the silver standard and elide the country’s decades-long interest in Chinese currency reform that helped shape its foreign policy in East Asia.¹⁹

The United States became a leading producer of silver in the 1860s after the discovery of the Comstock Lode in Nevada. For much of the late nineteenth century, the monetary standards question divided the United States on sectional and class lines. As the price of silver in terms of gold began to decline, farmers in the Midwest and miners in the West often supported bimetallism. They saw silver as an inflationary metal that would relieve the price deflation that was a fact of life in the last several decades of the century. Bankers and creditors in the East supported the gold standard. Even after the United States embraced the gold standard, a powerful Silver Bloc of legislators emerged to support the metal’s price and encourage its use around the world. Yet there were important divisions within the Silver Bloc; some people wanted a return to bimetallism, but others thought that was not politically possible and sought different mechanisms to raise or perhaps put a floor under the metal’s price.

The United States confronted significant quandaries when it became one of the largest economies in the world around 1900, was on the gold standard, yet was also a leading producer of silver and strove to take a leading place in international finance.²⁰ The role of the United States in the worldwide market for silver created important ties to China and also spurred competition with Britain and Japan for influence over Chinese monetary reform and the financial architecture of East Asia. Aware of these interests, Qing, Beiyang, and Nationalist officials often tried to draw the United States in as a balancing presence against other foreign powers. However, as we will see, different sections of the U.S. government—particularly the State and Treasury Departments—as well as bankers and merchants, disagreed about where the goal of playing a lead role in Chinese currency reform stood in relation to the broader tenets of foreign policy. While many figures in the United States wanted to participate in Chinese currency reform, they disagreed about the costs—both financial and otherwise—this goal would entail and whether the United States was willing to pay them.

Third, in terms of economic history, China and the End of Global Silver presents a new way to approach the period from the 1870s to the 1930s. Many studies emphasize the importance of China at the beginning of the silver era in world history between 1550 and 1650; in contrast, the same focus is not evident in research on the late nineteenth and early twentieth centuries.²¹ Instead, most academic literature on this period emphasizes the importance of the gold standard: how it emerged, how it worked, how it encouraged financial globalization, its role in the Great Depression, and how it came undone.²² But probing deeply in one area obscures another. As the economist Marc Flandreau lamented, much of the economic history literature has been continuously drawn to the glitter of the Gold Standard at the expense of other monetary regimes.²³ This understandable attraction to studying the data-rich workings of the gold standard creates a narrowness of vision and epistemological closure that leaves little room for silver. Placing silver at the center shows how the metal’s price and its role in the Chinese monetary system spurred cooperation, competition, and controversy around the world. This focus allows for new perspectives on how the silver era of world history ended.

Previous explanations for the shift away from the use of silver in the world monetary system emphasized a number of practical factors and focused on the key decade between 1870 and 1880, when many countries moved from bimetallism to the gold standard. One line of argument held that the increased production of silver led to the depreciation of the metal, which made a move to the gold standard inevitable: creditor classes did not want to be paid back in a depreciating currency. Another explanation stressed the respective properties of silver and gold paired with technological developments. Gold, more valuable than silver, was the much better metal for long-distance trade, but the move to the gold standard was hampered by technological issues and solving the big problem of small change. The introduction of steam-powered minting machinery then eased and enabled the transition to the gold standard. No matter whether the arguments stress macro or micro reasoning, they reach a similar conclusion: silver became inferior to gold and was no longer able to serve as money.²⁴

Studies advancing these more abstract arguments have not given proper attention to the role of China, the last and largest country on the silver standard, in the world monetary system. If China played such a crucial role at the beginning of the silver era, it surely also did as the silver era ended. Importantly, much of the economic history literature homes in on the change from bimetallism to the gold standard in the late nineteenth century and not the continued use of silver in the twentieth century. Such a perspective leads to an emphasis on the monetary history of Europe, the United States, and such countries as India that moved to the gold-exchange standard in the context of colonialism. In contrast, this narrative analyzes the interaction of Chinese state-building activities and imperial competition on what the historian Mark Metzler has called the world’s last silver frontier to demonstrate the contested and contingent nature of change in the world monetary system.²⁵

The book also makes an implicit argument for the historian’s approach to the study of monetary issues. Economists, the historian Richard von Glahn argues, chiefly concern themselves with what money does: it acts as a medium of exchange, a store of value, and a unit of account.²⁶ Historians, he continues, and virtually everyone who lived in the past, are preoccupied by what money is—not just the concrete objects that constitute money, but also the values it represents, how it affects consciousness and culture, and how the use of money intersects with other currents of historical change.²⁷ An important goal of monetary historians should be to denaturalize money. The prevailing monetary arrangements are not the only way things could ever be. In pursuing this goal, I stick to what the economist Robert Solow called the historian’s comparative advantage and highlight the codes, loyalties and organizations which men create and which are just as real to them as physical conditions.²⁸ I do not flatten out the particularities of the past but accentuate them by tracing connections and entanglements—of coins, machinery, financial advisors, monetary metals, and economic ideas—around the world.²⁹

Political, diplomatic, and economic history will blend together to demonstrate how the silver era in world history came to a close due to the interaction of imperial competition for political and economic influence in East Asia in the context of declining silver prices paired with Chinese state-building projects across the Qing dynasty, the Beiyang period, and the Nanjing decade. Moreover, placing silver at the center provides a new way to examine this sixty-year period of world history: currency reform in China was a vital issue in capitals around the world that has been obscured by a focus on more common narratives about the rise and fall of the gold standard. As such, this story writes China back into global history.³⁰

We begin with an introduction to the Qing dynasty monetary system in the middle of the nineteenth century in terms of coins—silver and copper—and monetary institutions and intermediaries. It also explains why many people in China—and around the world—thought this system needed to be changed. The rest of the book explores the international and domestic efforts to change the monetary system of China and the role of silver in that process. As the story unfolds, we will gain new insights into Chinese, U.S., and world history. All we have to do is follow the money.

1

A PRIMER ON THE QING DYNASTY MONETARY SYSTEM

Despite their privileged position in China during the latter part of the nineteenth century, foreigners liked to complain. The Chinese currency system—filled with different ghost money units of account (xuyinliang), copper coins of varying quality, silver in the form of ingots and coins from Latin America, and notes from various financial institutions—caused particular consternation. As A Merchant wrote to The Economist in 1858, there was unanimity of all parties as to the inconvenience and confusion caused by the plethora of coins and exchange rates in China.¹ Another foreign observer commented that the eccentricities of the Chinese coinage system would drive any Occidental nation to madness in a single generation.² Such thinly guised contempt elided or ignored the historical and political underpinnings of the Qing monetary system.

To understand debates and conflicts about Chinese monetary reform from the 1870s to the 1930s, it is first necessary to explain the contours of the currency, credit, and payment ecosystem in the middle of the nineteenth century. This chapter highlights the relationship between copper and silver, stresses the decentralized nature of Qing dynasty monetary institutions and practices in the middle of the nineteenth century, and introduces how and why these monetary arrangements began to be questioned in the late Qing.

The Qing Dynasty Coinage System

Copper and silver served as the foundations of a bimetallic system. Copper coins (zhiqian) with a hole in the middle so they could be strung together originated in the Qin dynasty (221–206 BCE), and from that period onward, successive imperial governments minted them. These coins circulated not only in China but also in Japan, as well as in Southeast Asia. Even before the widespread use of silver, China was integrated into the expanding economic and trading networks of Asia. In the Qing dynasty, particularly in the eighteenth century, most of the raw material for copper coins came from Yunnan Province in the southwest of the country.³

To turn this copper into coin, the Qing maintained two mints in Beijing as well as provincial mints under the supervision of bureaucratic appointees.⁴ Provincial governors in the Qing dynasty had mints to produce copper coinage and mechanisms to introduce the money into circulation.⁵ During the late imperial period, dynasties cast copper coins using a method known as sand casting. First, an ancestor coin (zuqian) was carved from pure copper and used to cast a mother coin (muqian). The muqian coins were then used to form the molds that produced zhiqian.⁶ The entire process of casting these coins was quite labor intensive and costly. Given technological constraints and the geographic extent of China, it was not possible or advisable to centralize the casting of these copper coins. In monetary matters, the Qing system had structural uniformity with local variations as provincial officials could carry out policy—after consultation with the central government—that was independent of other areas.⁷ The decentralized nature of Qing minting policy posed challenges for late nineteenth- and early twentieth-century figures that sought to implement currency reform as the power of the Qing central government waned.

Silver was the other important monetary metal and flowed into China in large amounts during the silver century, the period from 1550 to 1650. Silver was not unknown in the Chinese monetary system before this period and had circulated in the form of ingots during the Yuan dynasty (1271–1368). During the silver century, the metal came to China from Japan and then from Latin America, particularly after the establishment of Manila in 1571 and the growth of Pacific trade. The exact reason why large amounts of silver flowed into China remains a matter of debate. Some scholars hold that the balance of trade favored China and that silver covered this gap. Others argue that because silver was more highly valued in China than in any other part of the world, it naturally moved there. Richard von Glahn points out that in the early sixteenth century, the gold-silver ratio in China stood at 1:6 while in Europe the rate was 1:12, in Persia 1:10, and in India 1:8.⁸ Merchants took silver from where it was less valuable, first Japan and then Latin America, to where it was more valuable and profited from this transaction.

The influx of silver changed Chinese society and assisted the ongoing commercialization of the economy, particularly on the east and southeast coasts. As merchants and traders amassed great fortunes, conservative voices lamented a world that was quickly abandoning traditional virtues in favor of pernicious and ubiquitous vices: collecting precious works of art, consuming luxury articles, and spending money on sex.⁹ The late Ming magistrate Zhang Tao complained, The lord of silver rules heaven and earth.… Avarice is without limit, flesh injures bone, everything is for personal pleasure.¹⁰ It was a society increasingly integrated into the world economy and far removed from the autarchic, pastoral, and self-sufficient economic ideal of the Ming dynasty founder Zhu Yuanzhang. At the beginning of his reign, Zhu had attempted to enforce the circulation of a nonconvertible paper currency instead of copper coins and silver.¹¹ It did not work. The early Ming emperors printed far too many notes, their value eroded, and the importance of silver increased.

The circulation of silver changed the Ming fiscal system and initiated discussion about the role of the market and the state in the monetary economy that continued in the Qing. In the sixteenth century, the Ming dynasty shifted from collecting taxes in kind and in labor to collecting them in silver. Even if peasants only had income in copper coins, they had to use these to procure silver. Known as the Single-Whip reforms, the policy changed the relationship of the government to individuals and acknowledged the increasing role of silver in the monetary system. But these transformations also created anxiety. Officials in the latter part of the Ming were concerned about the dynasty’s reliance on silver because there were sparse supplies of the metal in China. The famed minister Zhang Juzheng, who had played an important role in the Single-Whip reforms, worried that silver exists in meager quantities, while copper is relatively abundant. Both the public purse and private citizens depend on silver to meet their expenditures. Thus both also constantly dread an insufficiency of silver.¹² Others fretted that with the influx of foreign silver, the dynasty had effectively relinquished control of the monetary system.¹³ China’s dependence on silver from abroad made it a vulnerable empire.¹⁴

Thus, in the Ming and Qing dynasties, the key relationship in the monetary system lay between copper cash and silver in its various forms and how the government did and did not try to manage that ratio. Copper cash was more