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Week 8 Reading Money And Monetary System In China In 19th Notes

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EH207: Topic 8 - Reading - "Money and Monetary System in China in 19 th-20th Century" (Ma, 2011)



INTRODUCTION Monetary system in China was "chaotic eccentricities" (quoted in Kann) Was meant to be a bimetallic system Tiao unit of account varied by regions or commodities Widespread use of coins of varying qualities or simply private or counterfeited coins intermixed with the standard ones (King) Value of Spanish silver dollars as a medium of exchange often relied on additional chops by local silver asssayers to authenticate their silver contents Presence of silver dollars was negligibly in Northern China and the Hinterland

A CONCEPTUAL FRAMEWORK In some ways can be liked to the medieval European system Multiple currencies and exchange ranges Multiple jurisdictions and territories Like Europe before the gold standard Used of metallic currencies helped solve the "big problem of small change" in China Silver acted as the medium for large transactions or long-distance trade and copper cash as small change But this is a useful and misleading analogy Most distinguishing feature from medieval European system was the influence that politics had in China Must therefore analyze the Chinese system in political and geographic context Constant assessment of currency: Drove up transaction costs But, acted as a safeguard against possible tempering of currencies which is often associated with the motivation for seigniorage profits China had previously experimented with paper notes as fiat money: Song (960-1279AD) Yuan (1286-1368) Early Ming (1368-1644) But always coincided with the end of the dynasty Was seen as a bad omen (Yang) Failure reduced a large part of Chinese economy to barter exchange and self-sufficiency Maybe this was a reason why the Chinese economy was held back?
Therefore the high transaction costs may have been worth the price in the view of the history of low credibility of Chinese empire in managing currencies in largedenomination


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