User:Donald Trung/Da-Qing Yinbi (大清銀幣)

This page serves as "the editing history" of the English Wikipedia article "Da-Qing Yinbi" and is preserved for attribution.



The Da-Qing Yinbi

Background
Following Qing China's defeat in the Opium Wars during the mid-19th century and the (forced) opening up of Chinese treaty ports had intensified and accelerated foreign trade.XUNYAN In the year 1864 the total trade of the Qing Empire (or net import plus export) was at a level of 95,000,000 taels of silver, while by 1889 this had increased to as much as 207,800,000 taels of silver, and by the end of the 19th century in 1899 it had reached 460,500,000 taels. The vast expansion of China's trade with foreign countries meant that the country's stock of silver was severely affected by it, as all foreign trade in China was dominated in it. The increase in foreign trade also changed the balance of the economy of the Qing dynasty as most of the goods that were being manufactured for export were in fact made in the rural areas of China, which further promoted local production outside of large cities and towns. This meant that new trade routes were being founded across Qing China and new intermediate markets that connected both the rural and urban areas emerged. As the Chinese trade system became much more internationally and nationally integrated the Chinese market became much more sensitive towards the increase or decrease in the supply of any metal which could upset the exchange rates between its copper-alloy and silver currencies.

Internationally the change in the global silver market was prompted up by many countries adopting the gold standard during the 1870s such as the newly established Germany as well as France and the Latin Monetary Union, which caused demonetisation currencies silver lowering the value of the metal. After its demonetisation, silver became a common commodity. In the United Kingdom the price of silver was stable around 60 pence per troy ounce from 1840 until the year 1870, afterwards its price permanently declined.

The price of silver that was traded in the London market would decline even more drastically after the year 1890, in this year the price of 48.375 pence per ounce of silver while later in 1904 it was reduced to 27.844 in the year 1904. After the start of the 20th century, the price of silver would fluctuate between only 20 to 30 pence and the movement was even more volatile. Economists sometimes refer to this phenomenon as the "cheap silver" phenomenon, which had a profound impact on the currencies of the Qing dynasty, as large quantities of silver flowed into China. This all occurred despite of the growing trade deficit experienced by the Qing dynasty during this time.

From the year 1888 to 1900 the total inflow of silver that was recorded through the Imperial Chinese Maritime Customs Service was 88,771,000 Haikwan taels. However, the actual amount of silver that entered China during this period remains unknown as smuggling happened essentially unrestrained at the time. It is estimated by some economists that from the year 1871 until 1913, two years after the Xinhai Revolution, the total value of the silver that had entered China was around 241,000,000 Haikwan taels. While the total silver money stock of the Qing dynasty by the time of its demise was estimated to be around 936,000,000 taels (or 1,300,000,000 silver dollars).

The global decline in the price of silver would also permanently change the exchange ratio between the copper-alloy cash coins and the silver taels on the Chinese market. Towards the final years of the 19th century, with also two important neighbouring countries and trade partners of Qing China namely British India and Japan adopting the gold standard for their currencies, the instability issue between the two Chinese currencies would grow unprecedentedly acute threatening the entire bimetallic currency system.

The metal used by the Chinese mints for the production of cash coins was primarily dependent on imports from other countries, so the global decline in the price of silver immediately affected the market price of silver. This was most immediately seen in trade hubs such as centres of commerce and the port cities which relied heavily on international trade. This was mostly because both copper and silver were more heavily affected by any changes in the market prices of either metals there.

This resulted in the effects of Gresham's law to take place throughout China, especially since the government of the Qing dynasty maintained and enforced a rigid official exchange rate between copper-alloy cash coins and silver taels which now heavily overvalued the latter. The de facto market response to this trend was widespread counterfeiting of copper-alloy cash coins by deliberately melting down the high-quality coins and then manufacturing illegal copies with only a fraction of its copper content. The response of the government of the Qing dynasty was very much counterproductive as it only sought to conserve the traditional system and exchange ratio harming commercial activities throughout its borders.

While the relative scarcity of copper-alloy cash coins has plagued the Chinese market since the Xianfeng period during the 1870s, the rising price of copper compared to silver would discourage both the import of copper and the production of copper-alloy cash coins by native mints leading to their scarcity becoming even more extreme. The scarcity of copper-alloy cash coins resulted in them being removed from circulation not to be recast into much more coarser coins but to be melted down to make utensils and other copper items or melted down copper-alloy coins were being sold to foreign markets or locally as import substitutions, which created a vicious cycle that caused the price of copper to rise while also taking away a lot of liquidity of the Chinese monetary market.

Provincial governors soon attempted to restrict the export of copper from their own provinces to other Chinese provinces in a way to protect their own copper supply and to protect the liquidity of their own markets.

The provincial governments would soon realise that prohibiting internal exports would be a deficit to their local economies and the response would then alter in them reviving their old provincial mints in what is described as a "new wave of minting" with heavily debased copper-alloy cash coins, but this was seen as being too expensive to continue and was rapidly stopped. Afterwards they decided to mint their own silver subsidiary dollars and another type of locally produced heavily debased copper-alloy coinage.

Local production of silver coinages
During the "new wave of provincial coinages" that occurred during the Guangxu period new coinages were introduced. This included a new form of silver subsidiary coins which were minted between the years 1890 and 1901 until they were later replaced by the more centralised Da-Qing Yinbi series and new debased machine-struck copper-alloy coins which were minted from 1900 and would survive the fall of the Qing dynasty. The creation of these new coinages were both introduced by the provincial mint of Guangdong, the Guangzhou Mint. In the year 1889, the first Chinese silver mint was set up.

While the small denomination silver coins did address the lack of liquidity due to the increasing absence of copper-alloy cash coins, they weren’t universally welcomed in all Chinese cities. Meanwhile in rural China these low denomination silver coins weren’t accepted as a form of currency at all, this was because the provincial governments over-issued them and the different provincial coins weren't standardised and thus their quality varied. This meant that their market value would swiftly decline following their introduction and often they would only be accepted at less than their face value. In the year 1901 the imperial government had mandated that most provincial mints would cease issuing these small value silver coins because of the bad market response.

These new small denomination silver coins were more successful in some regions than others, in Manchuria both the native dragon dollar and the small denomination silver coins were popular and well-received by the local population. Despite their popularity there, they were still only accepted at a 3% to 6% discount in Manchuria if they were used in large quantities for payments.

While the small denomination silver coins did address the pressing lack of cash coins through mitigation, the market would become over-supplied with these small denomination silver coins which were of heterogeneous quality and bear the names of different provincial mints. Rather than circulating at nominal value they were actually circulating at their weight and silver content being accepted at bullion value, making them no different than sycees (silver ingots). This wasn't exclusive to the smaller silver coins as even the high quality Hupeh dollars and Cantonese dollars were regarded by the market based on their weight rather than nominal value. Chinese provincial dollars like foreign dollars and sycees were chopped, defaced, and deformed. Because of the monetary chaos which was created by the unlimited production of different types of silver coins of varying quality, the Guangxu Emperor issued a decree in the year 1901 which stated that all Chinese provincial mints, excluding the Guangdong Provincial Mint and the Hubei Provincial Mint, should immediately cease their production.

Numismatics and studies into the coinage
Author and economics researcher Xun Yan of the Department of Economic History, London School of Economics in their paper Money and Monetary System in China in the 19th–20th Century: An Overview noted that the introduction of the Yinyuan coins symbolised the first ever attempt by a Chinese state to try to include the silver sector under the control of its monetary system, which also made the government acknowledge the value of seigniorage. Xun Yan noted that original goal of the newly introduced Yinyuan coins was to attempt provide the Chinese market with its own coined native silver dollars and other subsidiary silver coinages that were all linked to the dollar standard. If the new government-produced silver coinage was successful then China would be able to transition from its old bimetallic system to a new monometallic one where the silver dollar would replace both copper-alloy cash coins and silver sycees as the basic unit of account. The reasons why the Chinese finally decided to produce their own silver coinages during this era was because they now had the technological means to produce uniform silver coins. The introduction of small silver coins would have actively been discouraged by the Chinese monetary system without the technological endorsement of steam powered coin presses and certain institutional arrangements present in the Qing dynasty at the time (control over the amount of small silver coins that were issued and convertibility with normally the more precious metal, as was gold in other countries). Xun Yan argued that silver should not be the first choice for money smaller denominations under the imperial Chinese monetary contest (where silver was the more precious metal, as well was where silver ingots (sycees) were circulating on the market all the time).

The reason for the failure of silver subsidiary coinages in the Qing dynasty


Author and economics researcher Xun Yan of the Department of Economic History, London School of Economics in their paper Money and Monetary System in China in the 19th–20th Century: An Overview argued that the new copper-alloy subsidiary coins, rather than the silver subsidiary coins, which were based on the understanding that they as a form of tokens, that were made by more sophisticated technology and with the quantity of their controlled by the issuer, can circulate at their nominal value instead of their intrinsic metallic content, which is seen as a great breakthrough in traditional Chinese monetary theory that has always shaped by commodity monies.

Xun Yan wrote that the success of the copper-alloy subsidiary coinages in comparison with the silver subsidiary coinages echoes the notion of the "standard formula" that in a currency system subsidiary money has to be a form of token money. The value of the new copper-alloy token money was guaranteed by the new technology used to produce the coins which discouraged counterfeiting with higher costs versus lower returns, as well as the credibility of the government to not cause inflation by over-issuing the tokens. Xun Yan argued in Money and Monetary System in China in the 19th–20th Century: An Overview that therefore this option owed everything to the introduction of steam powered coin presses.

These policies would change the Chinese currency system from a bimetallic one into a silver-based monometallic currency system with copper-alloy subsidiary coins.

The silver subsidiary coins had a different effect on the Chinese market than the copper-alloy subsidiary coins from the same period and both would eventually fail resulting in monetary chaos. But while the silver subsidiary coins failed quickly, the Tongyuan were successful for at least the first few years of their circulation. The reason why the silver subsidiary coinages failed is largely due to its natural attributes with high value metals like silver not being well suitable for small coinage as they were too big for most small daily transactions. For example, a 1900 silver subsidiary coin of 10 cents was worth 88 standard copper-alloy cash coins in South China as 1 tael = 1222 wén (with 1 dollar conventionally being 0.72 tael at the time).

Xun Yan argues that because of their high value the silver subsidiary coinages could only partially replace copper-alloy cash coins and this was largely in urban areas and in terms of tax payment (which were collected in silver). As these subsidiary silver coins could not be taken as the unit of account, and could therefore hardly replace the traditional copper-alloy cash coins in the much smaller daily transactions in rural China. Because of their relatively higher denomination compared to copper small silver coins could hardly be used as any form of real small change, or as an anchor of price quoting.

The second reason Xun Yan notes why the silver subsidiary coinage failed was because they had "a very awkward position within the Chinese bimetallic system", this was because the small silver coins were linked to silver dollars when the Chinese economy still viewed silver as bullion rather than a unit of account. While at the time both indigenous and foreigns silver dollars were widely accepted at the Chinese market (and sometimes they were even accepted with a premium) in transactions, taels of silver instead of the dollars were the main Chinese unit of account in both private book keeping and government taxation.

Xun Yan argued that the reason why the native silver dollars were not successful was because the imperial Chinese government did not prohibit the use of either silver bullion (such as sycees) or the many different kinds of foreign silver dollars circulating in China at the time, as such a prohibition would promote the use of domestic silver dollars and their subsidiaries. Domestic silver subsidiary coins were soon accepted by the Chinese market for their intrinsic value rather than their nominal value and they started to circulate at a discount. Therefore small silver coins would circulate at a price that was considerably lower than their nominal value.