Shang-Era bronze cowrie shell money

Money has been in circulation in China for a very long time. The first prototype currencies were unwrought weight metals followed later by cast coins and paper notes. During the Pre-Qin period (before 221 B.C.), various prototype currencies, unwrought weight metals and cast coins were successively brought into use. From Qin and Han dynasties (221 B.C. A.D. 220) the most common types of money were round coins with a central square hole. [Source: Shanghai Museum]

Money emerged in different parts of the world around 3000 to 2000 B.C. In ancient China cowrie shells and livestock were used as a medium of exchange in the 21st century B.C. in the late Neolithic period. This kind of proto-money was gradually replaced by unwrought weight metals and caste coins in the Shang and Zhou Dynasties (16th century to 770 B.C.). Later standardized caste coins were introduced. After the unification of China in 221 B.C. under Emperor Qin, round coins with central square hole became the predominate type of coin. They circulated until the Qing Dynasty, which ended in 1911, although their styles varied over time.

The Pre-Qin period (before 221 B.C.) was a very important phase in Chinese monetary history. During this period Chinese currencies emerged and developed as the commodity economy evolved in China. [Source: Shanghai Museum]

Weight metals refers to smelted metal pieces without any denomination used as money in commodity exchanges. They were valued by weight material. Gold plates were used in the Chu state during the Warring States period (475-221 B.C.).

After the Spring and Autumn Period (771–476 B.C.), Chu State in present-day Hubei and Hunan provinces minted coins with Chinese characters. Some of them, it is said, looked like climbing ant or the the face of ghosts. In north China, silver and gold-plated bronze shells were a common form of currency. Spade-shaped and knife-shaped coins were also widely used in northern China. [Source: travelchinaguide.com]

World's First Coins and Paper Money — from China

There is some debate as to where the world's first money came from. Some scholars say the Lydians, a 7th century B.C. culture that lived on the west coast of Asia Minor near present-day Izmir, Turkey, were the first to make it. They made thumb-nail-size coins under King Gyges in 670 B.C. struck from lumps of electrum, a pale yellow alloy of gold and silver. Other scholars believe the world's oldest coins are spade money from Zhou dynasty China dated to 770 B.C. In the seventh century B.C. coins were minted in China with the names of towns printed on them. These coins were tiny, minted pieces of bronze shaped like knives and spades.

Paper money was first produced in China in 11th century when there was a metal shortage and the government didn’t have enough gold, silver and copper to meet the demand for money. It wasn’t long before the Chinese government was producing paper currency at a rate of four million sheets a year. By the 12th century paper money was used to finance a defense against the Mongols. Notes produced in 1209 that promised a pay holders with gold and silver were printed on perfumed paper made of silk. [Source: "The Discoverers" by Daniel Boorstin]

A piece of paper money used under Kublai Khan in the 13th century was about the size of a sheet of typing paper and had a furry felt-like feel. It were made from the inner bark of mulberry trees and according to Marco Polo was "sealed with the seal of the Great Lord."

"Of this money,” Marco Polo wrote, “the Khan has such a quantity made that with it he could buy all the treasure in the world. With this currency he orders all payments to be made throughout every province and kingdom and region of his empire. And no one dares refuse it on pain of losing his life...I assure you, that all the peoples and populations who are subject to his rule are perfectly willing to accept these papers in payment, since wherever they go they pay in the same currency, whether for goods or for pearls or precious stones or gold or silver. With these pieces of paper they can buy anything and pay for anything...When these papers have been so long in circulation that they are growing torn and frayed, they are brought to the mint and changed from new and fresh ones at a discount of 3 per cent."

Bronze cowries, Shang money

Cowrie Shell Money in China

Cowrie shells from the Maldives islands and other places in the tropics were sought after by ancient cultures and were used in Africa, China and Bengal as currency. The Maldives were the main producer of cowrie shells (Cypraea sp.) that were used as a currency throughout the classical world and even reached West Africa (Hogendorn and Johnson, 1986).

Shell money is a medium of exchange similar to coin money and other forms of commodity money, and was once commonly used in many parts of the world. Shell money usually consisted of whole or partial sea shells, often worked into beads or otherwise shaped. The use of shells in trade began as direct commodity exchange, the shells having value as body ornamentation. The distinction between beads as commodities and beads as money has been the subject of debate among economic anthropologists. [Source: Wikipedia]

Shell money was used in the Americas, Asia, Africa and Australia. The form most well known to Americans is perhaps be the wampum created by the Indigenous peoples of the East Coast of North America, ground beads cut from the purple part of marine bivalve shells. The shell most widely used worldwide as currency was the shell of Cypraea moneta, the money cowry. This species is most abundant in the Indian Ocean, and was collected in the Maldive Islands, in Sri Lanka, along the Malabar coast, in Borneo and on other East Indian islands, and in various parts of the African coast from Ras Hafun to Mozambique. Cowry shell money was an important part of the trade networks of Africa, South Asia, and East Asia.

In Neolithic China, shells were used as money. They were durable and easy to carry and count. Cowry shells were used as a medium of exchange in the late Xia Dynasty (21st century B.C.) Those used in the Shang Dynasty (16th century -11th century B.C.) usually had teeth on one and a hole for string and a polished back. As natural cowries were in short supply copies made of stone, ceramic, other seashells, bronze jade, bone and even gold were also put into circulation. The first minted coins in China were bronze shell-shaped coins. They were uniform in size, weight and value. Cast in the Chu state during the Warring States period (475-221 B.C.)., they usually had inscriptions of strange characters. One looked like an ant; another like a monster’s face and was later called the “monster face coin.” [Source: Shanghai Museum]

In China, cowries were so important that many characters relating to money or trade contain the character for cowry. The unit peng evolved to mean "friend" but it was not clear how many shells made up a peng in Neolithic times but later cluster of 10 shells makes one peng, the commonly held standard unit. The Classical Chinese character for "money/currency", , originated as a pictograph of a cowrie shell. Almost all things and acts related to money — such as fortune, poverty, trade, businessman, goods, greed, expense, ransom, compensation, expensive and cheap as well as noble and humble — have shell (bei) in their Chinese character. Chinese often call children or pets “bao bei” or bei bei, which literally means treasure. [Source: travelchinaguide.com]

Zhou bronze spade money

Spade Coins and Sword Money in China

Cast coins refers to metal money caste in certain shapes, sizes and weights with certain denominations and legally issued for circulation. The Chu state was the first in ancient China to caste gold coins in certain shapes such as plate or cakes. Both types had the stamped inscription: “Ying Cheng.” “Ying” was the name of the capital of the Chu state and “Cheng” used to read as “Yuan”, a unit of weight and name of the money. The gold coins were called “yuan jin,” meaning gold coins. Their value was in accordance with their weight, [Source: Shanghai Museum]

Spade-shaped coins were shaped like a spade, the farming tool, and had a hollow handle at the beginning and a solid one in the Warring States period (475-221 B.C.). One rare kind has three round holes (one at the handle and two on the feet). It contained over 20 different inscriptions, including a denomination of “Liang” (teal) and “Shi Er Zhu” (12 zhu). It is the earliest Chinese coin with a denomination. Sword-shaped coins were caste cons in the shape of a sword with a ring at the end of the handle. The Qi Fan Bang was a sword coin.

Flat-shouldered, arc-footed and hollow-socket spade coins with a five character inscription were cast and issued by the royal family of Zhou in the Spring and Autumn and the Warring States periods. The coins came in large, middle and small sizes. The most common one had a single character inscribed on them. Some had two or more characters. There are different explanations for the inscriptions with some suggesting they were names of places and others saying they were the names of a clan or the craftsmen. A coin with five characters cast by royal family of Zhou in the Spring and Autumn period is very valuable.

Ancient Chinese Round Coins

Ancient Chinese round coins came in two types: ringlike ones with a round hole in the center and round ones with a square hole in the center. The Qin Ban Laing (half teal) coin was a round coin with a square hole. It became the legal currency for all of China after Emperor Qin united the country in 221 B.C.. The denomination “Ban Liang” refers to its weight, which was equal to 7.5 grams. Wu Zhu (five zhu) coins were caste in the reign of Wudi (140-135 B.C.) of the Han Dynasty. This coin weighed three grams and was continuously used until the Sui Dynasty (A.D. 581-618).

After the reformation of the monetary system under the Xin Mang government (A.D. 9-23) the whu zhu coin system was greatly disrupted and a currency crises occurred in China. However, coin-making reached a high level at this time. Newly issued coins of various metals, in various forms and denomination, were beautifully and delicately caste. Bronze coin inscriptions were especially and fine.

Coin molds were engraved from pieces of copper or tin. The first coins cast from the mold of the original engraved models were called ‘model coins’. These were usually were not put into circulation. Coins in circulation were put in circulation after the model coins. Because they are so rare and have such high quality engraving model coins are of great value to collectors and scholars. There were two caste coins in ancient China; ones made of iron and ones made of bronze. The iron coins’ models, however, were made of bronze.

Early Systems of Currency in China

According to the “Treatise on Food and Money”: As far as media of exchange are concerned, gold, copper coins, silks, and cloths, no details are recorded concerning the periods of the Xia and the Shang. When Grand Duke Wang served the Zhou, he established the nine economic ministries and the system of round coinage. [Source: Han shu 24b.1149-50, “Treatise on Food and Money” by Ban Gu, 1st century A.D.+++ ]

“Yellow gold was minted in squares one inch (about 0.9 English inches) square and weighed one catty (about 8 oz.). Copper coins were round with a square hole in the 17 center and they were weighted by the gram. The standard width of silks and textiles was two feet two inches and the length of a bolt of fabric was forty feet. +++

Zhou ant-nosed-shape coins

“The precious nature of wealth was found in gold coinage; its sharp profitability was found in knife-shaped cooper coins; its flowing nature was expressed in strings of coins; its widespread nature was expressed in textile cloths; its worth when gathered in bolts of silk. After the retirement of the Grand Duke, he set up this system throughout his patrimonial estate in Qi.

Eno wrote: “As this concerns the founding days of the Zhou, relevant information must be considered the stuff of later prescriptive legend (imagined accounts of the past meant to guide future practice). The nine ministries are variously identified; they are said to have had control over supervision of natural resources, regulation of commerce, minting of currency, state finances, and management of the royal treasuries....A series of typical Classical puns. The word “profit” means “sharp” as well, and there was indeed coinage minted in the shape of a knife; the term used for coins strung together as a cash unit was a homophone for a “spring” of water; the word for “cloth” also means “to spread over.”

Royal Coinage Reforms of 524 B.C.

According to the “Treatise on Food and Money”: Over a hundred years later, King Jing of Zhou was distressed at the debasement of coinage (through admixed alloys or short weight). The king wished to issue a new form of larger coin. His advisor, Duke Mu of Shan objected. “This would be unacceptable. In ancient times, when heaven sent down natural disasters and calamities, the rulers would adjust the measurements of cloth currency and the weight of metal coins in order to relieve the people. If the people were distressed because coinage was too light, the ruler would mint a heavier currency and circulate it. [Source: Han shu 24b.1151, “Treatise on Food and Money” by Ban Gu, 1st century A.D.]

“Thus there came into circulation heavy coins that balanced light coins and the people all benefited. [This probably indicates that existing small coins were weighed against the newly issued large coins, the quality of which would not yet be in question.] If, on the other hand, the market could not absorb large coinage (because prices had dropped and finer denominations were needed) then greater quantities of smaller coins would be minted and circulated. The heavy coins would not be eliminated, but they would be balanced against the smaller coins. Both types of coins were of benefit to the people.

““Now your majesty intends to abolish light coins and mint heavy ones. People will in this way lose their capital; can it be that they will not be bankrupted?It would appear either that the king intended to declare existing currency non-negotiable or to fix too high a price for the new coins. If the people go bankrupt, your majesty’s revenues will become inadequate. If this happens, you will be forced to extract more from the people. Unable to support their needs, the people will set their minds on moving to distant places and in this way you will scatter your own people. “Moreover, to cut off the income of the people to fill the royal treasury is like blocking up the spring of a river to make a stagnant pool. The flow being cut off, it will not be many days before the water in the pool has evaporated away. May your majesty ponder this.” “The king did not heed this advice, and ultimately did cast the large coins. They were stamped with the words “Precious Goods,” and were round with a central hole, both the inner and outer rim possessing raised edges. The king used the coins to encourage agriculture and provide for insufficiency, and this greatly profited the common people.”

Eno wrote: “In times of famine, peasants presumably might panic if the little grain they could sell were paid for in coinage that had, over time, been debased through admixture of base metals. Early coinage was much more freely minted than today’s regulated currencies, and some licensed coiners profited by selling impure coinage at face value...Commentators are divided as to whether the duke’s arguments were, in fact, wrong, or whether the king followed them to the extent of preserving the small coinage. It is unusual for a text such as this to fail to make its “moral” clear. For our purposes, the importance of the text is its testimony concerning the attention given to the economics of currency at this early date.

Billions of Coins from Han Dynasty Mints

Chinese cash coins from the Han Dynasty—known as wu zhu coinage— are quite plentiful despite being over 2,000 years old. Although there are rare types and varieties, most are quite common and command a low price despite their age. The reason for this is that billions of them were produced at a massive Han Dynasty mint in Shanglinyuan from brick and clay molds. The ruins of Shanglinyuan are a few miles from the Han dynasty capital city of Chang’an. The ruins of both places date from 206 B.C. to A.D. 9, the period of the rule of the Western Han dynasty. [Source: Richard Geidroyc, World Coin News, December 11, 2012 =]

Richard Geidroyc wrote in World Coin News, “The wu zhu coinage type reformed the imperial coinage, which had degenerated into an unreliable coin with no standardized weight or diameter. The word “zhu” represents 100 millet seeds. Beginning sometime around 118 B.C., the wu zhu coinage became standardized. The cash coins from this time would continue in this general format until the end of the imperial period in China in the early 20th century. Wu Zhu type coins would be produced for the next 700 years. =

20080314-spade coin, Zhou dynasty shnag M.jpg
Zhou dynasty spade coin
“It is known the coins were cast rather than struck. Coins in contemporary Europe and the Near East were being struck. Liu indicated the Shanglinyuan mint site yielded what are described as brick molds with circular impressions imbedded and a square protrusion at the center of each, likely for the hole at the center of the cash coins. The brick molds are red, gray, and brown. The coinage type was adopted and used by later dynasties until the modern era of the 20th century. Cash type coins have been found throughout Southeast Asia, Japan, and Russia. =

Lauren Hilgers wrote in Archaeology Magazine, “Archaeologist Liu Rui picks up a brick which date to the Western Han Dynasty (206 B.C. - A.D. 9). Each brick has one or more circular impressions on its face, and further dusting reveals a square protrusion at the center of each circle. It is an iconic shape in Chinese archaeology—the outline of the country's longest-lived currency, the "Wu Zhu" coin. These are molds for casting the coins that helped unify China and build the Silk Road, which connected the region to the rest of the world. Liu is the head of an ongoing excavation at a Han Dynasty mint, a gigantic ancient factory located in Shanglinyuan, a few miles from the ruins of the Han capital of Chang'an. "We have discovered Wu Zhu coins in tombs all over China, but we have never excavated a site like this," says Liu. "We don't yet know the full story of how the Wu Zhu coin was minted." To him, the bricks provide a new way to look at the empire's vast wealth and an opportunity to study the lives of the workers and artisans that once kept the sprawling factory—and the empire it supplied—running. It is estimated that during the Western Han, around 28 billion coins were minted. They remained in use for 700 years, as other dynasties adopted the currency and continued minting the coins, which have been uncovered in sites as far afield as Southeast Asia, Japan, and Russia. [Source: Lauren Hilgers, Archaeology Magazine, November-December 2012 ||||]

This wasn't the only Han Dynasty mint that has been found. Gary Ashkenazy wrote in Primal Trek, “Chinese archaeologists recently excavated approximately 3,500 kilograms of coins, as well as more than 100 clay coin casting moulds, from the ruins of an ancient Chinese mint dating from the 1st Century A.D. according to several newspaper reports. The coins were found at a site in the town of Huoluochaideng in Ordos City which is located in north China's Inner Mongolia Autonomous Region. The discovery was made after local police cracked three theft cases in August, 2012. Information obtained from the tomb robbers identified the location of three underground vaults, according to Lian Jilin, a researcher with the regional Institute of Cultural Relics and Archaeology. [Source: Gary Ashkenazy, Primal Trek, January 1, 2013]

“According to archaeologists, the ruins of the coin mint dates to the period from the reign of Emperor Wu (156-87 B.C.) of the Western Han Dynasty to the reign of Wang Mang (A.D. 9-23) of the short-lived Xin Dynasty. The newspaper article states that the discovery of such a large quantity of coins in one hoard is a rare event. The digging is taking place at three pits. One site has revealed a fairly well-preserved kiln which was used to produce the clay molds needed to cast the bronze coins. A kiln used to cast the coins was also discovered but it apparently is not as well-preserved.

“In the “kiln room” and surrounding area were found more than 100 clay molds used to cast coins. The molds date from the period of Wang Mang. Seven of the molds have the Chinese inscription shi jian guo yuan nian san yue. Shi jian guo refers to the first era of Wang Mang's reign. The inscription thus dates the coin molds to the third month of the first year of Wang Mang's reign which would be the year 9 AD. The clay molds include those used to cast the most common coins of the reign of Wang Mang, namely da quan wu shi “large coin fifty”), xiao quan zhi yi (“small coin value one”), and huo quan (“wealth/money coin”).

“The archaeologists point out that the discovery of such a large coin producing operation confirms that Wang Mang had lifted the order issued by Emperor Wu which prohibited the commanderies (prefectures) from minting coins. Based on the size of the mint site and the coin hoard, Huoluochaideng must have been one of the important northern cities during the Western Han and Xin Dynasties. From the inscription found on a bronze seal discovered in a nearby grave, the area was known as the “West River Agriculture Commandery” during this period.

Tang-Era Money and Coins

Since the Tang and Song dynasties (A.D. 618-1279) silver has been widely as a kind of money. It was caste in various forms. The ignot was the most common form. The Zhu Liang monetary system which had been used as the name and unit of the currency was abolished in A.D. 621 and was replaced by Bao Wen monetary system of Bao Wen. Tong Bao and Zhong Bao were names for the currency and Wen as the unit. [Source: Shanghai Museum]

With the development of a commodity economy in the Tang dynasty, the demand for copper coins surged. By the mid-Tang dynasty, copper coins were increasingly in short supply in markets. In 845, Emperor Wuzong of the Tang dynasty implemented the law of ‘Buddha Abolishment’. He ordered collection of bronze statues of Buddha and bronze wares all over the country to cast as coins of Kaiyuan Tongbao. Because most of the coins of Kaiyuan Tongbao were minted with the names of prefectures, different from other Kaiyuan coins, they were thus called as Huichang Kaiyuan. In addition to the prefecture name Lan, there are three balls of clouds on the back of the coin, which is quite rare among Huichang Kaiyuan coins.

Before the Tang Dynasty, currency was made of gold, silver and copper. Many coins of this type — the coins of Gaochang Jili — have been unearthed in the Xinjiang region, particularly at the 16th year Zhenguan Tombs, No. 519 Ancient Tomb, excavated in Astana in Turpan Xinjiang in 1973. The Gaochang Jili coins were cast by the Jushi Gaochang dynasty before it became part of Tang China. These coins are heavy and thick, inscribed with official script, and are influenced by Chinese currency of the Central Plains.

Coins as Historical Records

Chinese coins are useful for dating. If coins can be dated it is assumed that artifacts found with the coins date to the same period. Chinese round coins derived from jade discs first appeared in China in the 4th century B.C. These early They had a round hole in the centre. Coins with a square hole are however dated to Qin Shihuangdhi who established the Qin dynasty in 221 BC. [Source: WG Cdr. Rajah M. Wickremesinhe, RTD. SLAF, President Sri Lanka Numismatic Society, Sunday Observer]

Square holed coins were used for about 2000 years and served as the standard Chinese coin. The coins were generally carried in a 'string' which was normally comprised a 1000 coins, referred to as a 'guan' which became the unit of currency. Most genuine Chinese coins can be dated precisely by their 'nianhao' (reign title). Due to the popularity and heavy demand on Chinese coins, foreign imitations had been in existence particularly from the 13th to the 19th centuries where the coins were generally smaller in size.

Later under the influence of foreign coinage culture, modern Chinese minted coins such as silver dollars during the Guanxi reign (1821—1850 AD) of the Qing dynasty, which gradually changed of the Chinese monetary system. Chinese monetary culture had a profound impact on that of the neighboring countries.

Paper Money Introduced During the Song Dynasty

20080212-paper money brook.jpg
Early paper money
During the Song dynasty (960—1279 AD) Chinese paper money was introduced and became widely circulated through the Mongol Empire during the Yuan Dynasty. These note remained in use through the Ming and Qing Dynasties. The first paper note, called “Jiao Zi” for trade, was issued in Sichuan Province, where widely-used. Early Song iron coins were light in value and heavy to carry. Merchants issued the Jiao Zi not to facilitate trade. [Source: Shanghai Museum]

According to Columbia University’s Asia for Educators: “Helping to grease the wheels of trade during the Song was the world’s first paper money. For centuries, the basic unit of currency in China was the bronze or copper coin with a hole in the center for stringing. Large transactions were calculated in terms of strings of coins, but given their weight these were cumbersome to carry long distances. As trade increased, demand for money grew enormously, so the government minted more and more coins. By 1085 the output of coins had increased tenfold since Tang times to more than 6 billion coins a year. [Source: Asia for Educators, Columbia University, Consultants Patricia Ebrey and Conrad Schirokauer afe.easia.columbia.edu/song ]

“The use of paper currency was initiated by merchants. To avoid having to carry thousands of strings of coins long distances, merchants in late Tang times (c. 900 CE) started trading receipts from deposit shops where they had left money or goods. The early Song authorities awarded a small set of shops a monopoly on the issuing of these certificates of deposit, and in the 1120s the government took over the system, producing the world’s first government-issued paper money. The earliest example of paper currency that survives today is the great Ming circulating treasure note, from 1375.”

Marco Polo described the use of paper currency during the Mongol Yuan dynasty: With these pieces of paper, made as I have described, he [Kublai Khan] causes all payments on his own account to be made; and he makes them to pass current universally over all his kingdoms and provinces and territories, and whithersoever his power and sovereignty extends. And nobody, however important he may think himself, dares to refuse them on pain of death. And indeed everybody takes them readily, for wheresoever a person may go throughout the Great Kaan’s dominions he shall find these pieces of paper current, and shall be able to transact all sales and purchases of goods by means of them just as well as if they were coins of pure gold. And all the while they are so light that ten bezants’ worth does not weigh one golden bezant. [Source: Marco Polo and Rustichello of Pisa, “Book Second, Part I, Chapter XXIV: How the Great Kaan Causeth the Bark of Trees, Made into Something Like Paper, to Pass for Money over All His Country,” in The Book of Ser Marco Polo: The Venetian Concerning Kingdoms and Marvels of the East, translated and edited by Colonel Sir Henry Yule, Volume 1 (London: John Murray, 1903). This book is in the public domain and can be read online at Project Gutenberg. Chapter XXIV begins on page 587 of this online text /]

“Furthermore all merchants arriving from India or other countries, and bringing with them gold or silver or gems and pearls, are prohibited from selling to any one but the Emperor. He has twelve experts chosen for this business, men of shrewdness and experience in such affairs; these appraise the articles, and the Emperor then pays a liberal price for them in those pieces of paper. The merchants accept his price readily, for in the first place they would not get so good a one from anybody else, and secondly they are paid without any delay. And with this paper-money they can buy what they like anywhere over the Empire, whilst it is also vastly lighter to carry about on their journeys. And it is a truth that the merchants will several times in the year bring wares to the amount of 400,000 bezants, and the Grand Sire pays for all in that paper. So he buys such a quantity of those precious things every year that his treasure is endless, whilst all the time the money he pays away costs him nothing at all. Moreover, several times in the year proclamation is made through the city that anyone who may have gold or silver or gems or pearls, by taking them to the Mint shall get a handsome price for them. And the owners are glad to do this, because they would find no other purchaser give so large a price. Thus the quantity they bring in is marvellous, though these who do not choose to do so may let it alone. Still, in this way, nearly all the valuables in the country come into the Kaan’s possession.” /

Impact of Paper Money During the Song Dynasty

Wolfram Eberhard wrote in “A History of China”: Another important innovation, that began in North China, was the introduction of prototypes of paper money. The Chinese copper "cash" was difficult or expensive to transport, simply because of its weight. It thus presented great obstacles to trade. Occasionally a region with an adverse balance of trade would lose all its copper money, with the result of a local deflation. From time to time, iron money was introduced in such deficit areas; it had for the first time been used in Sichuan in the first century B.C., and was there extensively used in the tenth century when after the conquest of the local state all copper was taken to the east by the conquerors. [Source: “A History of China” by Wolfram Eberhard, 1951, University of California, Berkeley]

So long as there was an orderly administration, the government could send it money, though at considerable cost; but if the administration was not functioning well, the deflation continued. For this reason some provinces prohibited the export of copper money from their territory at the end of the eighth century. As the provinces were in the hands of military governors, the central government could do next to nothing to prevent this. On the other hand, the prohibition automatically made an end of all external trade. The merchants accordingly began to prepare deposit certificates, and in this way to set up a sort of transfer system. Soon these deposit certificates entered into circulation as a sort of medium of payment at first again in Sichuan, and gradually this led to a banking system and the linking of wholesale trade with it. This made possible a much greater volume of trade. Towards the end of the Tang period the government began to issue deposit certificates of its own: the merchant deposited his copper money with a government agency, receiving in exchange a certificate which he could put into circulation like money. Meanwhile the government could put out the deposited money at interest, or throw it into general circulation. The government's deposit certificates were now printed. They were the predecessors of the paper money used from the time of the Song.

First Paper Money, Inflation and Banks in China

With paper money came inflation. Describing one particularly disastrous period of inflation during the Song dynasty the historian Ma Tuan-lin wrote: "After having tried for years to support and maintain these notes, the people had no longer any confidence in them, and were positively afraid of them. The payment for government purchases was made in paper. The fund of the salt manufacturers consisted of paper. The salaries of all the officials were paid in paper. The soldiers received their pay in paper...So it was natural that the price of commodities rose, while the value of the paper money fell more and more. This caused the people, already disheartened, to lose all energy. The soldiers were continually anxious lest they should not get enough to eat...All this was the result of the depreciation of paper money."

Inflation fueled resentment against of the Mongol Yüan dynasty and hastened its collapse. One of the first things the new Ming dynasty emperor did was cut back on the production of paper money as a means of stabilizing the currency.

The Chinese developed the concepts of private property, price-making markets, and networks of trade associations and banks long before the Europeans did.

The world's largest paper money was a 1 guan note issued by the Ming dynasty (1368-99) that was 9 by 13-inches.

Money and Prices in the Qing Era (1644-1912)

In the 19th century, Chinese copper coin had a square hole for stringing. The value of a coin was taken as one-thousandth of a Mexican dollar. A “string” theoretically consisted of a thousand coins, but in many regions was around 500. The latter equaled about one-third of a gold dollar. A catty, a Chinese pound, was equal by treaty to one and one-third pounds. A tæl was a weight of money equivalent to a sixteenth of a Chinese pound; an ounce. [Source: “Village Life in China” by Arthur Henderson Smith, Fleming H. Revell Company, 1899, The Project Gutenberg]

Arthur Henderson Smith wrote in “Chinese Characteristics” in 1894: “A hundred cash are not a hundred, and a thousand cash are not a thousand, but some other and totally uncertain number, to be ascertained only by experience. In wide regions of the Empire, one cash counts for two, that is, it does so in numbers above twenty, so that when one hears that he is to be paid five hundred cash he understands that he will receive two hundred and fifty pieces, less the local, abatement, which perpetually shifts in different places. There is a constant intermixture of small or spurious cash, leading to inevitable disputes between dealers in any commodity. At irregular intervals, the local magistrates become impressed with the evil of this debasement Of the currency, and issue stern proclamations against it. This gives the swarm of underlings in the magistrate's yamen an opportunity to levy squeezes on all the cash shops in the districts, and to make the transaction of all business more of less difficult. [Source:“Chinese Characteristics” by Arthur Henderson Smith, 1894. Smith (1845 -1932) was an American missionary who spent 54 years in China. In the 1920s, “Chinese Characteristics” was still the most widely read book on China among foreign residents there. He spent much of his time in Pangzhuang, a village in Shandong.]

“Prices at once rise, to meet the temporary necessity for pure cash. As soon as the paying ore in this vein is exhausted, and it is not worked to any extent, the bad cash returns, but prices do not fall. Thus the irrepressible law by which the worse currency drives out the better, is never for an instant suspended. l The Condition of the cash becomes worse and worse, until as in some parts of the province of Honan, everyone goes to market with two entirely distinct sets of cash, one of each is the ordinary mixture of good with bad, and the other is composed exclusively of counterfeit pieces. Certain articles are paid for with the spurious cash only. But in regard to other commodities this is matter of special bargain, and accordingly there is for these articles a double market price. That enormous losses must result from such a state of things; is to any Westerner obvious at a glance, although the Chinese are so accustomed to inconveniences of this sort, that they seem almost unconscious of their existence, and the evils are felt only as the pressure of the atmosphere is felt.

“Chinese cash is emphatically "filthy lucre." It cannot be handled without contamination. The strings, of five hundred or a thousand (nominal) pieces, are exceedingly liable to break, which involves great trouble in recounting and re-tying. There is no uniformity of weight in the current copper cash, but all is both bulky and heavy. Cash to the value of a Mexican dollar weigh not less than eight pounds avoirdupois. A few hundred cash are all that anyone can carry about in the little bags which are suspended for this purpose from the girdle. If it is desired to use a larger sum than a few strings, the transportation become a serious matter. The losses on transactions in ingots of sycee are always great, and the person who uses them is inevitably cheated both in buying and in selling. If he employs the bills of cash-shops, the difficulty is not greatly relieved, since those of one region are either wholly uncurrent in another region not far away, or will be taken only at a heavy discount, while the person who at last takes them to be redeemed, has in prospect a certain battle with the harpies of the shop by which the bills were issued, as to the quality of the cash which is to be paid for them. Under these grave disabilities the wonder is that the Chinese are able to do any business at all; and yet, as we daily perceive, they are so accustomed to these annoyances, that their burden appears scarcely felt, and the only serious complaint on this score comes from foreigners.”

Money in Modern China

On money in modern China, Yu Hua wrote in The Guardian: Given the speed at which new technologies become dominant, you sometimes feel that there is no gap at all between new and old. Take mobile payments: in the space of just a few years, Alibaba’s Alipay mobile app and Tencent’s WeChat Pay app have been loaded on to practically every smartphone in the country. From big shopping malls to little corner shops — any place where a transaction can be made will have the scannable QR codes for these two payment platforms displayed in a prominent location. People just need to take their phone out of their pocket, do a quick scan and the payment is made. Even Chinese beggars have to keep up with the times: sometimes they too have a QR code handy, and they will ask passersby to scan it and use the mobile payment platform to dispense some spare change. [Source: Yu Hua, The Guardian, September 6, 2018. Yu Hua is a famous writer in China, considered a candidate for the Nobel Prize. He is the author of “Chronicle of a Blood Merchant”, “To Live” and “Brothers.”]

“I recently went for more than a year without using cash or a credit card, because it is just so convenient to pay by phone instead. This July, though, when my English translator came to Beijing and my wife and I took him out for dinner, I went to scan the restaurant’s QR code but the transaction failed to go through. Instead of trying a second time, I suddenly felt an urge to pay in cash. When I pulled some banknotes out of my pocket, handed them to the cashier and received change in return, I felt a pleasant tingle of novelty.

“This novelty is all the more remarkable given that just 30 years ago, when Chinese people went on business trips, they would worry so much about their money being stolen that they would hide cash in their underpants, the safest place for it. They would have a little pocket sewn on the inside, with a button for extra security. When a bill needed to be paid they would reach a hand into their underwear, grope around a bit, and pull out the requisite five-mao or one-yuan note, distinguishable by feel because one was smaller than the other. Women would withdraw to a secluded spot to retrieve their cash, but some men would have no such inhibitions and would rummage about in their underpants quite unabashedly.”

Image Sources: Wikimedia Commons, University of Washington

Text Sources: Robert Eno, Indiana University /+/ ; Asia for Educators, Columbia University afe.easia.columbia.edu; University of Washington’s Visual Sourcebook of Chinese Civilization, depts.washington.edu/chinaciv /=\; National Palace Museum, Taipei \=/; Library of Congress; New York Times; Washington Post; Los Angeles Times; China National Tourist Office (CNTO); Xinhua; China.org; China Daily; Wikipedia; BBC. Many sources are cited at the end of the facts for which they are used.

Last updated June 2022

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