A Coin for China? The Monetary Standards Debate at the End of the Qing Dynasty,1900

Abstract

This article examines debates about monetary standards in the final years of the Qing dynasty. As silver depreciated on the world market, Qing statesmen discussed whether to adopt the gold-exchange standard or to stay on the silver standard. These debates took place on a conceptual and practical level: Should and could the Qing dynasty adopt the gold-exchange standard and what were the economic, political, and symbolic implications of doing so? The article contributes to the history of the late Qing dynasty by focusing on the monetary thought of figures more famous for their other roles: Zhang Zhidong, Liang Qichao, and Kang Youwei. It shows how the monetary standards debate had complex links to international finance, conceptions of sovereignty, central-provincial relations, and public finance. The article concludes by demonstrating how these debates continued in the next decades, becoming a central issue in modern Chinese history.

Keywords

silver gold-exchange standard Liang Qichao Zhang Zhidong Kang Youwei

Liang Qichao 梁啟超 (1873–1929), like many other observers at the end of the Qing dynasty (1644–1912), lamented the minting of debased copper coins 銅元 (tongyuan) by provincial officials as a means to increase revenue. These coins, whose face value was much greater than their intrinsic metallic content, proliferated at the end of the Qing. In fact, Liang felt that debased tongyuan coins created more societal unrest than the worst of tyrants (Liang, 1941a: 107). He admitted that the Qing dynasty needed to undertake many reforms, but he argued that some of these could be delayed while others could not. Currency reform was in the latter group (Liang, 1941a: 109).

While many figures at the time, and later historians, focused on the plethora of tongyuan in the Qing dynasty’s last decade, this article examines how Chinese officials and writers debated whether the dynasty should and could adopt the gold-exchange standard 虛金本位 or whether it should stay on the silver standard 銀本位.¹ This debate often related to tongyuan, but by focusing explicitly on the role of silver and gold in the Chinese monetary system, this article approaches the monetary history of the late Qing from a different perspective.

In the final decades of Qing rule, control over money came to be seen as a crucial part of nationhood as the world continued to shift from international monies like Spanish or Mexican dollars to national ones—monetary units with clear national boundaries (Helleiner, 2002). Whereas in the early nineteenth century the circulation of foreign monies in a country was normal and accepted, not only in China but also in the United States and other places, by the end of the century it was seen as something unnatural and backward. A unified, national currency would help create national markets by lowering transactions costs, give the government greater control over the supply of money, help in the administration of complex fiscal systems, and solidify national identity (Helleiner, 2002: 8–10). How to unify the Chinese currency system, and whether to do so on the silver or gold standard, became an important question for late nineteenth- and early twentieth-century Chinese officials, academics, and writers as well as for foreign merchants and governments.

The question of how to unify the Chinese currency system in the early twentieth century and what standard to adopt took place in an international monetary system affected by two significant trends: the falling price of silver and the spread of the gold standard, particularly in colonial contexts. After the discovery of rich silver deposits in Nevada in the 1860s, the gold price of silver declined for the next several decades. At the same time, a number of countries adopted the gold standard: Germany in 1872 after the Franco-Prussian War, Japan in 1897 after the Sino-Japanese War, and Russia in 1897. One explanation for why countries went on the gold standard emphasizes that it acted as a “good housekeeping seal of approval” that facilitated access to capital markets by signaling that governments would not rely on “policies of creating surprise fiduciary money issues in order to capture seigniorage revenue or defaulting on outstanding debt” (Bordo and Rockoff, 1996: 391). Other explanations highlight the growth of trade brought about by the predictability of exchange rates and the likelihood of adopting gold if a country had significant levels of trade with other gold-standard countries (Meissner, 2005: 398–400).

More relevant for debates in the late Qing was the development of the gold-exchange standard. As will be explained in greater detail below, the gold-exchange standard differed from the gold standard in several important ways: silver coins with a face value above their bullion value circulated and could be exchanged for drafts on a reserve fund denominated in British pounds, U.S. dollars, or another currency on the gold standard. No gold coins circulated. In this way, the gold-exchange standard was a means to economize on world gold supplies while creating closer links between imperial centers and territories in different parts of the world. India went on the gold-exchange standard in 1898; and the United States put Puerto Rico and the Philippines on the gold-exchange standard soon after acquiring them in the Spanish-American War. How Chinese writers in the early 1900s viewed the gold-exchange standard in other countries became an important part of the monetary standards debate because these areas were in an explicitly colonial relationship while the Qing dynasty was not.

After first providing an overview of the Chinese monetary system before 1900 as background, this article examines how prominent Chinese officials and writers in the last decade of the Qing dynasty pondered what role silver and gold should play in the Chinese monetary system. The complex debate connected understandings of worldwide economic trends, particularly the present and future price of silver, conceptions of what sovereignty was and how to defend it in the context of growing economic imperialism, and tension in central and provincial financial relations.

Prominent and familiar figures such as Liang Qichao, Kang Youwei 康有為 (1858–1927), Zhang Zhidong 張之洞 (1837–1909), and others relied on a combination of these perspectives to advocate different monetary standards. Sometimes they addressed each other directly; other times they talked past each other. These differences originated from conflicting views on several core issues: whether the rapidly falling price of silver in the early 1900s constituted a crisis, whether its decline actually brought more benefits than drawbacks, and whether adoption of the gold-exchange standard was both feasible and desirable, in terms of its impact on the economy and the Qing’s international position, as well as its political symbolism. As historian Li Yuping argues, since the topic of monetary reform at the end of the Qing was so broad and related to so many issues, various figures disagreed on the timing, scope, and rationale for currency reform (Li, 1987: 4).

As we shall see, Zhang saw the declining price of silver as a temporary affliction rather than a permanent condition and did not think the Qing should go on the gold-exchange standard due to fears of ceding too much control of the monetary system to foreign advisors. Liang, looking at broader world trends, supported the gold-exchange standard, but urged adopting it without placing foreign advisors in powerful positions. In the final years of the Qing, Kang believed the falling price of silver represented a grave and growing crisis; it was necessary to adopt the gold-exchange standard, and quickly.

In chronicling the monetary thought of figures much more famous for their other actions and writings, this article demonstrates the centrality of the monetary standards debate in the final ten years of the Qing dynasty and enriches our understanding of the political, economic, and intellectual history of the period. Importantly, this debate did not end at the close of the Qing dynasty; it continued to be a crucial issue until 1935 when the Nationalist government went off the silver standard. During this later period the core issues—whether the falling price of silver was a crisis, whether it brought more benefits than drawbacks, and whether adopting the gold-exchange standard was both possible and advantageous—remained the same. Thus, the article not only provides new insights on the final years of the Qing dynasty but also examines the origins of a complex debate that remained a fundamental issue during the Beiyang and Republican periods.

The Background of Qing Currency Policy

Copper coins and silver were the two most important forms of money in the Qing dynasty. The Qing operated two mints in Beijing, one under the supervision of the Board of Revenue and one under the authority of the Board of Works, as well as provincial mints throughout the country. The mints in the capital and mints in the provinces produced copper coins 制錢 (zhiqian) with a hole in the middle so they could be strung together.² One copper coin was one 文 (wen). These coins primarily functioned as a means of exchange in local, small-scale transactions. Silver in the form of ingots or foreign silver coins—Spanish pieces of eight and Mexican silver dollars—served in international trade and interregional trade within China. Until the late 1880s, the Qing government did not mint its own silver coinage. In this way, the Qing provided copper coinage, but the global market provided silver. This reliance on silver from abroad that could fluctuate with trade made the Qing a “vulnerable empire” (Lin, 2006: 29).

The relationship between copper and silver was crucial for the functioning of the monetary system. Copper coins were strung together and the benchmark was that 1,000 copper coins equaled one Chinese ounce 兩 (liang) of silver, which the Qing treasury named as 37.3 grams of the metal, known as the kuping tael (Lin, 2006: xxiii). This one liang of silver satisfied a unit of account known in English as a tael. Throughout the article I use the term “liang” to refer to the weight of silver and “tael” to refer to the unit of account.³ Each individual copper coin originally weighed one mace 錢 (qian), which was 0.1 of one liang. Thus, one copper coin weighing 0.1 liang or one qian was worth 0.001 taels because it was the result of multiplying 0.1 and 0.01. In this idealized form, a string of one thousand copper coins could satisfy a debt of one silver tael (King, 1965: 28).

Numerous taels served as units of account across China. These taels were at the heart of daily commerce and grew out of the plethora of mediums of exchange that circulated: Spanish and Mexican silver dollars of different quality and fineness as well as silver ingots of various sizes and shapes. In addition, there were separate tael units of account used by the Imperial Maritime Customs administration as well as different customary tael standards in cities and market towns. By the late Qing dynasty and into the twentieth century, according to historian Dai Jianbing’s estimate, there were at least 170 tael standards in common use across China for commercial purposes (Dai, 2007: 66). Importantly, the different tael units of account were “not a legal standard, but a private one,” which was based on “agreements between merchants” (Kuroda, 2005: 105). These “abstract silver taels” 虛銀兩, created a “distinction between unit of account and means of payment” and the “amount to be paid when settling a debt will depend on the relationship of money to the unit of account at the time of actual payment” (King, 1965: 29). Although China used silver, there was not one silver monetary standard but many.

The exchange rate between copper and silver depended on the supply and demand of the two monetary metals. In the lexicon of Qing political administration, silver could be expensive and copper cheap 銀貴錢賤, meaning that it took more copper coins to buy one ounce of silver; or silver could be cheap and copper expensive 銀賤錢貴. The former situation could have resulted from a scarcity of silver or a high demand for it; the latter from “either a scarcity of cash coins in circulation or a high demand of copper in the private market, an oversupply of silver bullion or a combination of all these factors” (Vogel, 1987: 5). These factors of supply and demand created what economic historian Akinobu Kuroda calls currency circuits. These currency circuits “did not reflect the segregation of markets but rather the multiplicity of interfaces” as well as “the seasonality of monetary demands and the primary commodity traded in any particular zone” (Kuroda, 2008: 18).

Maintenance of the market exchange rate at close to the official rate of 1,000 copper coins to one liang of silver “was one of the main objectives of the government,” but market conditions often outpaced the ability of Qing officials to do so (Vogel, 1987: 5). The Qing government had several channels to influence the ratio between silver and copper: in times of cash oversupply, it could stop production; in periods of high demand it could mint more cash if copper supplies were adequate. Moreover, the government could change the weight of copper coins, decreasing it when cash was valued highly in terms of silver and increasing it when cash depreciated in terms of silver (Vogel, 1987: 10).

Qing monetary policy sought to balance the Qing’s assertion of control over the right to mint copper coins as well as respect for market forces and an awareness of the importance of maintaining a circulating medium for everyday transactions. The Qing maintained harsh punishments for counterfeiting zhiqian, but when the price of copper was high, provincial officials might tolerate the circulation of small coins 小錢 that had a much lower copper content than standard coins and were in fact made from melted down zhiqian. Confronted with this problem in Jiangxi in the 1740s, the prominent eighteenth-century official Chen Hongmou recognized that simply outlawing small coins would not remedy the situation and would make it worse by further reducing the already limited supply of coinage in the locality (Rowe, 2001: 205). Instead, Chen suggested the Qing mints lower the copper content of coins in order to make it unprofitable to melt them down for small coins or other purposes. In this way, one prominent strain of mid-Qing statecraft thinking recognized the constraints that economic forces placed on government policy, but also maintained that, when properly understood and applied, “they were a powerful weapon in official hands” (Rowe, 2001: 205). As we shall see, this hesitancy to set the price of goods was one significant objection raised by Qing officials to the gold-exchange standard in the early 1900s.

The rate of exchange between silver and copper became a crucial issue in the early nineteenth century as silver became more expensive in terms of copper, leading to the Daoguang depression (1820–1850). During this depression, tax revenues declined, the tax burden on individuals increased, and native banks collapsed (Rowe, 2010: 70). As examined by Lin Man-houng and William Rowe, in the midst of these conditions, Jiangnan literatus Wang Liu 王瑬 (1786–1843) made a proposal for monetary reform—relying on a paper currency—that would alleviate Qing dependence on silver. Lin sees Wang’s proposal to replace silver and private notes with state-backed currency as part of what she terms the “interventionist” approach of Chinese statecraft because it would increase government involvement in the economy (Lin, 2006: 20–21). The “interventionists” were not successful in the 1830s and 1840s, but they became more influential with the financial crises brought on by the Taiping Rebellion, which led to the minting of coins with values of 10, 20, 50, 100, and 500 qian, but whose actual copper content was much lower.

From the 1870s through the early 1900s the international silver market began to change. Supplies increased with the discoveries of the Comstock Lode in Nevada and demand decreased as a number of countries abandoned bimetallism in favor of the gold standard. During this period, China suffered from a copper famine and a lack of small denomination coinage in much of the Qing territory that contemporary observers linked to several causes. In 1883, one Qing official thought that nefarious merchants took copper to treaty ports to be melted down and sold abroad because the price of the metal was appreciating on the world market. Others noted that it cost more money to secure the materials for producing zhiqian, making it unprofitable to mint copper coins. For example, one picul 石 of copper cost 16 taels of silver in the first year of Guangxu’s reign, 32 taels of silver in the twenty-sixth year of his reign, and 36 taels in the twenty-eighth year. Several proposals to deal with these conditions emerged: preventing the export of copper, making zhi-qian of progressively lighter weight, and minting silver coins (Wang Hongbin, 1990: 114–22).

It was against this background that Zhang Zhidong, the governor-general of Liangguang (Guangdong and Guangxi), memorialized the throne in 1887 in order to import steam-powered minting equipment to produce provincial silver dollars and subsidiary silver coins. In the Qing political economy, it was normal that “the initiative for coining silver dollars came from the provinces,” because the central government “had never been responsible for actually providing the coinage of any but the metropolitan area” (King, 1965: 223). Zhang favored minting silver dollars for several reasons. First, at the most practical level, Zhang sought to relieve the copper famine by increasing the number of silver coins in circulation. Moreover, Zhang, based in the Guangzhou area, which had a high circulation of foreign silver coins, took his argument a step further by observing that other countries obtained the benefits of using their own coins in trade with China. For China, that was a loss of economic privileges 漏卮, a metaphor that described wine leaking out of a cup (Zhang, 1990: 1.398).

Here Zhang built on the language of Wang Liu, who had also employed this metaphor, but altered it to describe a different issue. Whereas Wang used the term to refer to the problem of silver flowing out of China, Zhang used it to refer to the ability of a foreign silver coin to trade above the value of its silver content inside of China. However, in both senses, the metaphor refers to what William Rowe calls “an incipient Chinese nationalism”—the necessity to gain more control over the monetary system and lessen the reliance on silver, particularly foreign silver dollars (Rowe, 2010: 85). Similarly, Zhang connected reform of the coinage system with other aspects of the Self-Strengthening movement of the 1880s by employing the phrase “self-strengthening” 自強 (Zhang, 1990: 1.398). In using the language of a leaky wine cup, economic rights, and the desire to prevent the circulation of foreign silver, Zhang saw the coins produced by the Guangzhou mint as “the forerunner of a national currency” (King, 1965: 225).

Minting of silver dollars and subsidiary coinage continued throughout the 1890s. When Zhang Zhidong became governor-general of Huguang (Hubei and Hunan), he argued that due to Hankou’s unique position in the economic geography of the country, he must take steps to increase the amount of money in circulation by minting silver coins in order to ease the people’s trouble and resolve an urgent crisis (Gongzhong dang’an quanzong, 1893). It was vital to increase the amount of money in circulation to pay for agricultural products, particularly tea (Kuroda, 2005: 109–12). Throughout the 1890s, mints to produce silver coins sprung up throughout the empire. In all cases, the provincial coinage of silver dollars mirrored the weight of Mexican silver dollars, 0.72 liang. However, provincial minting standards varied, and eventually deteriorated. An article in the North China Herald in 1897 lamented that the design of the provincial silver dollars “is different and their weights not uniform, not to mention the quality of the silver used varies widely” (North China Herald, 1897). In the spring of 1899, the Grand Council ordered all mints except for those in Guangzhou and Hankou to close.

At the same time that the central government tried to limit the power of provinces to mint silver coins, it granted them the power to produce tongyuan, copper coins made by steam-powered minting equipment, and without a whole in the middle, whose face value was well above the value of their metallic content. The goal of minting tongyuan was the same as minting silver coinage: to increase the amount of small-denomination money in circulation to facilitate transactions (Ho, 1993: 416, 423). As the next section shows, debates about the gold-exchange standard took place against the background of these previous experiments in minting silver coins and tongyuan and were accompanied by the rapid fall of world silver prices after the Qing began to pay the Boxer Protocol Indemnity.

The Boxer Indemnity and the Gold-Exchange Standard Debate

Article VI of the Boxer Protocol stated that in an edict of May 29, 1901, the Emperor of China “agreed to pay the Powers an indemnity of 450,000,000 Haikwan taels” (King, 2006: 668). Significantly, and the source of later controversy, the English version of the treaty stated that the Boxer Indemnity was a “a gold debt calculated at the rate of the Haikwan (customs) tael to the gold currency of each country.” In fixing the rate of exchange between the Haikwan tael and the currencies of individual countries, the Boxer Protocol created a nominal entity known as a Boxer tael. This clause, as foreign nations interpreted it, meant the Qing government bore the exchange rate risk. If the market value of silver fell, it would have to pay more silver to procure the equivalent amount of gold; if the value of silver rose, it would have to procure less silver.

The Qing dynasty shifted much of the annual burden for paying the Boxer Indemnity onto the provinces (Shen, 2003: 90–92). Areas under the authority of Liu Kunyi 劉坤一 (1830–1902), then the governor-general of Liangjiang, in charge of Jiangsu, Jiangxi, and Anhui, had some of the highest payment burdens in the realm. Throughout the first part of 1902, Liu peppered the central government with memorials and telegrams explaining why he believed the Boxer Indemnity was a debt in silver and not gold. First, Liu stood on precedent. All of China’s previous indemnities, he pointed out, were denominated in silver and not gold. How could the Boxer Indemnity be different? Next, he looked at the treaty itself. In the table listing the payment schedule, there were only figures in silver taels. If the payment schedule said the Qing had to provide that amount of silver, why should it suddenly have to pay more? Liu also made the argument that the indemnity should be interpreted as a debt in silver and not gold because of the precarious state of Qing finances and its inability to pay the higher costs associated with a gold debt (Gengzi shibian Qinggong dang’an huibian, 2006: 20, 56, 65–67, 102, 107, 118). In response to Liu’s arguments, Qing officials consulted Sir Robert Hart, chief of the Imperial Maritime Customs, who insisted that it was in fact a debt in gold, the exchange rates between silver and gold having been clearly established in the Boxer Protocol (King, 2006: 674). Qing officials in the central government who likely saw the benefits of Liu’s argument faced more direct foreign pressure concerning how to interpret the contested clauses of the indemnity.

Discussion quickly moved from an argument about principles to a real problem in the summer of 1902, when Yuan Shuxuan 遠樹勛 (1847–1915), the Shanghai daotai in charge of indemnity payments, said that the Qing would no longer make payments on a gold basis. On June 10, Wu Tingfang 伍廷芳 (1842–1922), the Chinese minister in the United States, cabled the Ministry of Foreign Affairs to say that the U.S. government agreed that it was a debt in silver and not gold. The next day, the American minister in Beijing, E. H. Conger, attended a meeting of foreign ministers on the indemnity question, expressing his personal opinion that the debt was in silver and not gold. He did not receive notice of Washington’s position until after the meeting, whereupon he informed the Chinese government (Wang Shuhuai, 1974: 193).

As these discussions continued throughout the rest of 1902, the price of silver in terms of gold continued to fall, and the “decline [was] more rapid than anyone expected when the [Boxer] protocol was signed” (New York Times, 1903). At the end of the year, The Economist thought that the silver market of late had been in a “panic-stricken condition” (Economist, 1902). Some observers attributed the fall in the price of silver directly to the payment of the Boxer Indemnity, with the Washington Post noting that “as a result of collecting large sums of silver in the empire and throwing them on the open market to raise gold to pay for the indemnity, the price of silver has been depressed by nearly 25 per cent” (Washington Post, 1903). Based on this logic, the price of silver would decline as the Qing continually collected silver and sold it on the market for gold, in the process increasing its own debt burden. By the end of 1902, a unique and diverse coalition of government officials and merchants emerged in order to do something to stabilize rates of exchange between silver and gold.

At that time, the Mexican minister to the United States approached the acting Chinese minister to the United States about working together to stabilize the ratio between gold and silver (People’s Bank of China, 1964: 1113–14). As a large producer of silver, Mexico suffered greatly from the decline in the metal’s price.⁴ In early 1903, Mexican and Chinese representatives in the United States sent formal letters to the U.S. Department of State asking for the assistance of the U.S. government in forming a plan to stabilize the ratio between gold and silver.

In transferring these notes to President Theodore Roosevelt, who in turn sent them to Congress asking for authorization to put together a monetary commission, Secretary of State John Hay stressed the benefits to trade that might come from establishing a more stable relationship between silver and gold as well as resolving questions related to the Boxer Indemnity. Of course, both of these would be beneficial not only to the United States but “also to China herself and her future development” (Stability of International Exchange, 1903: 40). A number of motivations lay behind his words. Hay and E. H. Conger thought controversy over the Boxer Indemnity might lead Europeans to declare China in default and necessitate military action, a result the United States, with its “Open Door” policy, hoped to avoid (Rosenberg, 2004: 23). Not explicit in this message to Congress was the more subtle hope that “spearheading reform of China’s currency would give the United States a preeminent position in China’s financial affairs and assert its ambitions in the Pacific” (Rosenberg, 2004: 19). In March 1903, the U.S. Congress approved the creation of the Committee on the Stability of International Exchange. The committee would ultimately suggest that both the Qing dynasty and Mexico adopt the gold-exchange standard.

The gold-exchange standard was the main mechanism available to stabilize the rate of exchange between gold and silver. It originally evolved as a way for imperial powers to bind the gold currency of the home country with newly won territories in Asia that used silver. At the simplest level, this arrangement involved the creation of “a gold standard without gold currency” (Laughlin, 1927: 645). Instead, the “currency media used in internal circulation are confined to notes and cheap token coins, which are made to act precisely as if they were bits of gold by being made convertible into gold for foreign payment purposes” (Keynes, 1913: 12). The token coins, usually silver, had a face value higher than the coin’s bullion value. The face value was maintained by controlling the number of coins in circulation. A gold-exchange fund in U.S. dollars or British pounds, usually based in New York or London, served to facilitate payments between the two places. The gold-exchange standard was another form of financial leverage, a key mechanism in neo-imperialist empires (Metzler, 2006: 37–38).

When a merchant in a gold-exchange standard country had to make a gold payment, he could take token silver coins to the exchange bureau and pay the number of token coins necessary to settle his debt. The exchange bureau then drew a bill ordering the payment out of the gold-exchange fund. When a foreigner wanted to buy goods in the gold-exchange country, the opposite transactions took place and silver token coins were released in the country (Laughlin, 1927: 645–46). At a broad level, the gold-exchange standard has the following principles: token coins with a higher face value than the market value of the bullion content which creates seigniorage profits, the absence of free coinage, a limited quantity of coinage in circulation, and strict convertibility of the coins into drafts on the reserve fund (Laughlin, 1927: 660).

However, some criticized the gold-exchange standard on the grounds that its proponents emphasized that the value of the “coin is determined by the quantity in circulation, as demanded by the obsolete quantity-theory” (Laughlin, 1927: 660). According to this assessment, advocates of the gold-exchange standard overlooked the impact of the balance of trade on the level of a country’s gold-reserve fund. Others had the more political objection that the gold-exchange standard tied a country’s monetary system too closely to that of another country, depriving the country of financial independence. Qing officials generally voiced this second type of argument.

The American commission thought the Qing dynasty should first adopt a standard unit of value based on a certain amount of gold. With this standard in place, the Qing would allow free coinage of gold in certain denominations as well as a number of silver coins that would be maintained at par with the standard gold unit of about 32:1. This ratio would become a source of controversy and misunderstanding. As the commission explained, not entirely effectively, the ratio of 32:1 “is simply one of weight between the silver coins and the standard gold unit” and it was not an attempt at “maintaining the absolute stability of bullion at that ratio” (Stability of International Exchange, 1903: 121–22). Under the gold-exchange standard, the value of the silver coin comes not from this ratio, “but upon its exchangeability for gold drafts.” Setting this ratio between the weight of the silver coin in relation to the gold unit was supposed to help the new coinage system by allowing it to weather fluctuations in the market ratio of silver to gold. A critical threat to the gold-exchange standard system was that the bullion value of silver in the coin, lower than its face value, would rise, and make it profitable to melt the coins down. The ratio was meant to absorb future changes in the price of silver and avoid this scenario (Lai, Gau, and Ho, 2009).

To make the proposal work, the Qing would have to establish a gold-reserve fund in a bank in either Europe or the United States. However, the American commission tried to show that establishing this fund would not be particularly burdensome. The commission first brought up the example of India. The Indian colonial government maintained a gold-reserve fund of less than ten million pounds sterling, around 8% of the total money in circulation in the country (Stability of International Exchange, 1903: 117). Moreover, the commission stressed that the fund would not have to be used to settle every transaction. Instead, only when the rates of exchange went higher than the parity between the new gold monetary unit and other currencies “would it sell bills of exchange against its gold reserve for silver coins or other equivalent paid in” (Stability of International Exchange, 1903: 118). There were several ways to accumulate the reserve fund. First, seigniorage on minting silver coins in the new system would provide a large profit since their face value would be significantly greater than their value as silver bullion. Also, various European nations might agree to accept Boxer indemnity payments in silver for several years with the stipulation that China use this period to establish a gold-reserve fund. The commission felt that a loan would be necessary but that it would not be burdensome, especially because the profits on seigniorage were likely to outstrip the interest paid on any loan. Even more, once established, the gold-reserve fund would be deposited in an account earning interest (Stability of International Exchange, 1903: 118). However, some Qing officials later objected that setting up the reserve fund would not be so simple. This issue became an important part of the debate about whether China could and should adopt the gold-exchange standard.

Finally, the Commission on International Exchange suggested the Qing appoint several foreigners to the office of Comptroller of the Currency in order to oversee the new system. The comptroller and his assistants would make “monthly reports in detail on the currency including amounts in circulation, loans, drafts on foreign credit, etc.” and also have the “right of suggestion and recommendation.” The accounts relating to monetary matters (but not those of the general government) would be open at “reasonable times to inspection by accredited representatives of the powers interested in the indemnity” (Stability of International Exchange, 1903: 119). As the system developed and a national bank issued banknotes, these too would also be under the supervision of the comptroller so that they could be maintained at parity with gold. Exactly what these provisions meant, and how Chinese officials interpreted them, led to vocal and vociferous criticism of the commission’s plan. Much of the criticism was related to how Qing officials and Chinese writers defined, and tried to defend, sovereignty.

In 1904, a member of the American commission, Jeremiah Jenks, a professor at Cornell University, journeyed to China in order to convince Qing officials of the benefits and viability of adopting the gold-exchange standard. Significantly, at the same time as the controversy over the nature of the Boxer Indemnity and the falling price of silver, the Qing made a formal commitment to create a uniform currency in the second clause of the Mackay Treaty, an agreement between Great Britain and the Qing that dealt mostly with commercial matters signed in September 1902 (Faure, 2000: 82–83). Prominent Qing officials Yikuang 奕劻 (1838–1917) and Qu Hongji 瞿鴻禨 (1850–1918) led the group tasked with currency reform, and Jenks met with some of its members on his trip (Li, 1906).

Liu Shiheng 劉世珩 (1874–1926), an official in the Jiangnan commercial bureau who had studied in Japan, emerged as Jenks’ first critic. As the Cornell professor arrived in China, Liu published a long pamphlet naming the flaws in the Jenks plan. He wrote that the plan focused on satisfying the indemnity powers first, and the interests of the Qing were secondary, or not even taken under consideration. Liu lashed out at the idea of a foreigner serving as comptroller of the currency. Though admitting that the Qing government was in need of foreign assistants, he objected to foreigners becoming chiefs. Liu saw a slippery slope in appointing a foreigner to such a key position. If, he asked, the basis of a state was wealth, what happens to the state when it no longer has control of its finances? Here he brought up the frightening example of Egypt, in which the country slowly lost its financial and political sovereignty to European dominance (People’s Bank of China, 1964: 1180–85). Fears of Egyptization were increasingly common in the East Asian political discourse at the turn of the twentieth century as the threat of international financial capital became clear (Schiltz, 2012: 1156).

Zhang Zhidong, who had undertaken previous experiments in minting in the 1890s as discussed above, emerged as Jenks’ most vociferous and influential critic, penning two memorials that argued that the Qing should not and could not adopt the gold-exchange standard. Zhang held two meetings with Jenks when the economist was in Hankou in the spring of 1904 and had read over the proposals in Chinese. Zhang objected to the plan on political and practical grounds, as well as out of an understanding of the current and future national situation of China. First, Zhang wrote that the gold-exchange standard proposal would cede too much of China’s sovereignty, noting that there is no independent nation in the world that willingly gives another country the power to administer its financial affairs. Like Liu Shiheng, he thought the authority given to the comptroller of the currency, as he read the plan, put all the power of the Qing’s financial administration in the hands of a foreigner. Under these circumstances, China would become nothing more than a public marketplace with no sovereignty 主權 whatsoever (Zhang, 1990: 2.50).

Next, Zhang objected to the gold-exchange standard proposal based on a misunderstanding of the proposed 32:1 ratio between the gold unit and the weight of silver coinage, thinking that the commission proposed to set the overall rate between silver and gold. He read the plan to imply that Chinese merchants would have to sell to the government an ounce of gold for 32 taels of silver that, on the market, would be worth 40 taels. The mismatch in rates, Zhang felt, would drive whatever domestic stocks of gold that remained out of the country (Zhang, 1990: 2.52–53).

Zhang voiced several other practical objections. He was skeptical that the Qing would be able to establish a gold-reserve fund, the key mechanism to maintain the gold-exchange standard. Other countries, most recently Japan, had relied on the receipt of an indemnity to establish the gold reserve, but that option was not available to the Qing. The Qing, Zhang wrote, would only be able to secure the gold fund through a loan made at a significant discount. Even if a fund was established, Zhang also doubted the ability of the Qing to conduct exchange operations successfully, especially when a plethora of banks were already engaged in exchange operations (Zhang, 1990: 2.54). The Qing had no experience or expertise in this area. Echoing earlier ideas about management of the monetary system, he also doubted the ability of the government to force the populace to use the gold-exchange standard (Zhang, 1990: 2.54).

Zhang went on to admit that the low price of silver raised the cost of indemnity payments but would be beneficial to exports. In his mind, the gains from increased exports would outweigh the losses associated with increased indemnity payments due to falling silver. Most interesting of all, Zhang thought that the price of silver had bottomed out in the summer of 1904. Mentioning silver interests in the United States 美國用銀黨 who thought the decrease in the price of silver improper, he surmised that there would be no further dramatic drops in the price of the metal, and if there were, it would only benefit China’s exports (Zhang, 1990: 2.54–55). Essentially, Zhang made a prediction that the worldwide price of silver had reached its nadir and could only rise. With such an assumption, going on the gold-exchange standard was unnecessary. Zhang went on to argue that the fact that the Boxer Indemnity was paid in gold was unfortunate but not insurmountable; changing the monetary system to fix this one problem would result in greater trouble and popular protest as the Qing handed over control of its finances to foreigners. Interestingly, despite his vociferous objections to the plan, Zhang was not opposed to the gold standard in general. He thought China would eventually go on the gold standard, but only in 50 years’ time and after more economic development (Zhang, 1990: 2.55–56). At the moment, however, Zhang emphasized that the Qing should not and could not adopt the monetary reform proposed by Jenks.

However, not all the Qing officials stridently opposed the plan. In the summer of 1904, Jenks held extended discussions with Zhao Erxun 趙爾巽 (1844–1927), then head of the Board of Revenue and later well known for his role in compiling the Draft History of the Qing after the fall of the dynasty.⁵ The conversations between Zhao and Jenks took place on the level of analogy, practicality, sovereignty, and whether the Qing could and should adopt the gold-exchange standard. In these conversations, Jenks addressed the “Egypt” analogy expressed by Liu Shiheng by arguing from the opposite angle. Liu thought the Qing dynasty risked becoming like Egypt if it did adopt the Jenks proposal, while Jenks told Zhao Erxun that the Qing risked becoming like Egypt and losing control of its finances if it did not adopt gold-exchange standard reforms. In other words, the Qing had to take action before it was too late.

The other analogy that both Jenks and Zhao debated was the recent gold-exchange standard coinage reform implemented by the United States in the Philippines, with Zhao arguing that it was successful because the Philippines was a smaller land mass than China, but Jenks countering by saying that was a moot point since the coinage situation in the Philippines was actually more complex than it was in China. In the background of Zhao’s objections was the fact that the gold-exchange standard in the Philippines took place in the colonial context.

Zhao was concerned about two sides of the same problem, setting the price of gold and raising the value of silver coins above their bullion value. If the Qing government set the price of gold, the prerequisite to establishing the gold-exchange standard, it would be a departure from normal practice of the people determining the price of goods 民間自定. Zhao and Jenks also went back and forth on whether a silver coin valued more highly than its bullion content would be accepted and able to circulate freely. Jenks cited the example of the successful reform in the Philippines as well as the phenomenon of foreign silver coins in China circulating at a price above the value of their silver bullion (von Glahn, 2007). Zhao countered that it was the market that granted these foreign coins a high market value, not the government. He felt that if the Qing government set the price of gold and raised the value of silver coins, its success would not be guaranteed and it would be a departure from past practices.

However, issues of analogy and practicality were secondary to issues of sovereignty. Zhao noted that discussion of the gold-exchange standard in China divided between those who simply argued over the possibility of whether or not it could be implemented and those who thought it should not be carried out regardless of feasibility, due to a potential loss of sovereignty. Zhao believed that monetary reform that did not involve a loss of sovereignty 失主權 was possible. Zhao pressed Jenks on the feasibility of the Qing undertaking the gold-exchange standard reform on its own without the aid of a foreign advisor; Jenks responded that the presence of a foreign advisor was key to maintaining outside confidence in the system. The crucial issue from Zhao’s point of view was what materials the proposed comptroller of the currency would have access to, along with his actual role in the financial policy of the dynasty. By their last meeting, Zhao was persuaded that the proposed advisor would not play as central a role in Qing economic policy as he originally had thought, but that provincial officials had a much different conception of the role of the proposed advisor.

The most prominent supporter of the gold-exchange standard outside of the government was Liang Qichao, but he ultimately developed objections similar to the ones voiced by Zhang Zhidong. Liang, living in Japan after having fled China in 1898, did not actually meet with Jenks, but read the Chinese translation of his proposal and had a favorable opinion of its general outlines. He began his discussion of the plan by commenting that China at that time did not have a monetary standard and that the world trend was toward the gold standard. As Lai Jiancheng observes, Liang employed a biological analogy to note that the world monetary system had evolved from copper to silver to gold. China’s monetary system had to keep pace with this change (Lai, 2006: 30). However, Liang thought it impractical for the Qing to adopt the gold standard outright. Thus, the gold-exchange standard was the best option (Liang, 1941b: 105–6).

Liang then proceeded to critique Zhang Zhidong’s objections by answering how it could be the case that in China the ratio between silver and gold would be 32:1 while in the rest of the world it would be 40:1. Three things make this system possible: trust 信用, limits on the amount of coin produced 限制, as well as the selling and buying of drafts 操縱 on the gold fund located abroad. There were no problems with the system itself, Liang argued, only with the fact that the proposals were misunderstood by Zhang (Liang, 1941b: 111–12).

Although Liang endorsed the gold-exchange standard in its outlines, he ultimately objected to the Jenks plan due to concerns about sovereignty. Liang made an important and revealing contrast between the powers of the proposed currency advisor and Robert Hart. Liang thought that Hart, as head of Maritime Customs, only had authority along rivers and in coastal areas, but the proposed advisor on currency reform would be at the center of government. The advisor’s every act would be enough to cause a mortal threat to the Qing dynasty.

This point is particularly revealing because its speaks to the changing conceptions of sovereignty in the late Qing, influenced in part by prior conceptions of Qing law, comparisons to other situations in China, as well as analogies from the larger international context. After the term “sovereignty” 主權 was introduced to the Chinese language in the translation of Henry Wheaton’s Elements of International Law by missionary-educator W. A. P. Martin in the 1860s, its exact definition became a source of contestation and confusion: it was just one of the neologisms that Martin “often employed at the expense of intelligibility” (Liu, 2004: 125). As Stephen Halsey observes, discourse about and definitions of “sovereignty, rights (quanli), and independence (zizhu)” were “inconsistent” and “tentative” (Halsey, 2014: 83). With concerns about maintaining sovereignty in mind, Liang thought the Qing needed to adopt the gold-exchange standard but to administer it without the assistance of any foreign advisor. Otherwise, as the Chinese currency system became a site of competition between imperials powers, China’s sovereignty could be further eroded (Liang, 1941b: 120–22).

After Jenks left China, the debate about the scope of monetary reform continued. Zhang Zhidong not only opposed the gold-exchange standard, he also pointed out what steps the Qing should take toward currency reform. Zhang thought China first needed to become a silver-using country. Though foreigners often said that China was a silver-using country, Zhang believed the areas that relied primarily on copper coins outnumbered those that used silver ten to one (Zhang, 1990: 2.54). The most important goal at the present was to establish a national currency and a fixed ratio between silver and copper coinage. Reflecting on his own coinage reforms in Guangdong in the 1880s, he considered these steps a temporary expedient. His minting of provincial silver dollars was not supposed to be a national coinage but instead was intended to discourage the import and circulation of foreign coins and relieve a dearth of small-denomination coinage. With various treaty commitments to create a national coinage, Zhang knew the Qing had to decide on a monetary standard. He believed the provincial dollars, which were all coined to mirror the weight of the Mexican dollar at 0.72 liang, were not appropriate for China’s national coinage. Instead, he thought the Qing should adopt a one-liang coin.

He argued for the one-liang standard in several ways. First, he stressed that every nation determines the unit of its own coinage by itself and does not imitate others. Each country has the pound, the mark, the franc, or the ruble, and within the boundaries of that state merchants are required to use this standard. Adopting a standard that mirrors another country’s coinage, as in the case of the Mexican dollar, is something that should not be done, because it is implicitly giving away the right of a country to determine for itself the value of its own coinage. He also mentioned that taxes and daily commercial interactions were calculated in various taels. Codifying a standard that was different from a one-liang coin would impose significant costs and confusion in collecting taxes and in daily commercial transactions. In memorializing the throne, he asked for and received permission to mint one-liang silver coins for one year to see how they circulated (Zhang, 1990: 2.56–58). Later, in 1905, the Currency Commission of the Board of Revenue announced regulations about currency reform that adopted a one-liang silver coin as the unit of account. There was no mention of adopting the gold-exchange standard and a significant part of the announcement addressed trying to limit the amount of tongyuan minted by provincial officials and the appointment of an imperial commissioner to undertake further investigations (Li, 1906). At the time, Zhao Erxun asked the U.S. minister in Beijing to tell Jenks “not to be impatient” and that “the advantage of the system [gold-exchange standard] will gradually be understood” (Department of State, Nov. 14, 1904).

This section has highlighted critiques of the gold-exchange standard that were both political and practical, but one more factor must be mentioned. Another possible objection to the plan by Qing provincial officials related to the implied loss of control over provincial minting profits. Under the gold-exchange standard, there would still be large minting profits, but they would accrue to the central government and go toward supporting the gold-exchange fund. Thus, the adoption of the gold-exchange standard would mark an increase in the power of the central government and deprive provincial officials of the profits from minting, particularly from the tongyuan that had become a common coin and a source of provincial revenue in the early 1900s. In fact, the years 1904 and 1905 marked what Ho Han-wai calls a watershed in the history of provincial minting of copper tongyuan as production increased dramatically (Ho, 1993: 418). Ho estimates that in 1904 various provinces minted nearly 1.7 billion tongyuan and in 1905 that number jumped to 7.5 billion (Ho, 1993: 419). Though the exact revenue derived from coining was a source of debate, the publication Eastern Miscellany 東方雜誌 estimated that a provincial mint would earn 2,431 silver taels on the production of one million 10-wen copper coins. If a mint produced that many 10-wen copper coins a day, and assuming 320 work days a year, the annual mint profits from that coin alone would run to nearly 778,000 silver taels (Ho, 1993: 416). The Shanghai Chamber of Commerce estimated that one-third of mint profits remained at the facility with two-thirds accruing to the provincial government (Department of State, June 2, 1905).

It is significant that as Jeremiah Jenks prepared to leave China in August 1904, the Qing court dispatched the Manchu official Tieliang 鐵良 (1863–1939) to Jiangsu, Anhui, Hunan, and Hubei to inspect provincial accounts (Ho, 1997: 95). Officials in Beijing suspected that provincial leaders, including Zhang Zhidong, were hiding revenues from the central government, especially revenues from mints (Zhang, 2008: 112–20). Tieliang’s task was to find the hidden revenue and send part of it to the Qing court to be used for national projects such as army reform. In order to aid Tieliang’s investigation, the Qing court ordered Zhang to travel to Beijing for an imperial audience and directed Wei Guangtao 魏光燾 (1837–1915), governor-general of Jiangsu, Jiangxi, and Anhui, to move to a new official post (Zhang, 2008: 109). The point here is not to argue that Zhang’s more practical arguments against the gold-exchange standard were simply a guise for his self-interest as a provincial official. Instead, highlighting the temporal linkages between the Jenks visit and the Tieliang mission suggests the complex levels on which the standards debate took place: it combined conceptions of sovereignty, practical doubts about the feasibility of the gold-exchange standard, as well as wariness about the shift in central-provincial financial relations that it would bring about in the context of a growing controversy about the minting of tongyuan coins.

Continued Debates after the 1905 Currency Regulations

The currency regulations of 1905 did not end the monetary standards debate. In fact, it continued and took place in the changing political and bureaucratic contexts of the final years of the Qing dynasty. The international price of silver also influenced these discussions. As Zhang Zhidong had predicted, after hitting a low in 1902, the price of silver rebounded. But what he could not foresee was that the price of silver would resume its fall in 1907. By 1910, its price approached the lows of 1902 and 1903 (Lai, 2006: 32–33). As a Chinese observer put it, “opinion was about equally divided” about whether the Qing dynasty should stay on silver or switch to gold (Ching-Chun Wang, 1911: 165). While some argued for taking measures to adopt the gold-exchange standard, others discussed what type of silver standard to adopt: a coin of one liang or 0.72 liang. Thus, while previous English- and Chinese-language work sees the Jenks visit to China as a failure since it did not result in the Qing adopting the gold-exchange standard, it may be more useful to view the visit as the start of a debate about the gold and silver standards that would last for the next several decades (Rosenberg, 1985: 191; Yang, 2007: 303).

In 1905, the Board of Revenue became the Ministry of Finance, with the Manchu bannerman Zaize 載澤 (1876–1929) serving as the head of the new organization. Zaize carried out an overarching program of budget, taxation, and fiscal reform that connected to the call for constitutionalism (Liu, 2014). In May 1907, Zaize made his initial recommendations about currency reforms. He wrote that the one-liang coins minted in Hubei province under the auspices of Zhang Zhidong and the currency regulations of 1905 were a failure. The coins, he argued, were not circulating; they were too heavy and contained too much silver. They were quickly melted down for bullion. Zaize contended that currency laws should focus on circulation and the types of currency that people were already familiar with using. The monetary standard should be silver coins that weighed 0.72 liang, approximately mirroring the weights of Mexican dollars and silver provincial dollars minted since the late 1880s and 1890s. Moreover, because the value of the Mexican silver dollar was roughly half the American dollar, Zaize thought the 0.72-liang standard might facilitate a future shift toward the gold-exchange standard (People’s Bank of China, 1964: 736–37). For current use and future plans, a silver coin that weighed one liang was impractical.

The most vociferous and extensive critiques of Zaize’s position came from Yuan Shikai 袁世凱 (1859–1916), viceroy of Zhili province and later a leader in the Beiyang period after the fall of the Qing. Yuan opposed the 0.72-liang standard and endorsed the one-liang standard. He first took issue with Zaize’s facts, particularly the claim that the one-liang coins minted by Zhang Zhidong were a failure because they had been melted down. Yuan insisted that the coins circulated and had the confidence of merchants and the people. They were melted down not because of their heavy weight but due to the need to make a slightly different coin at the mint. In fact, he estimated that more than a hundred thousand of the one-liang coins were still in circulation (People’s Bank of China, 1964: 742).

Yuan then proceeded to more abstract reasons for opposing the monetary standard of 0.72 liang. First, mirroring Zhang Zhidong’s argument during the Jenks mission, he stressed the right of every country to decide on its own currency system and that China should not imitate a foreign system by producing coins weighing 0.72 liang. He noted that one of the express purposes of provincial minting of 0.72-liang coins in the 1880s and 1890s had been to oppose the circulation of foreign coins, but he believed this goal was not accomplished; foreign coins still proliferated. In fact, he argued that the 0.72-liang provincial dollars actually promoted the circulation of Mexican silver dollars. He thought Zaize’s proposal would have a similar result.

Next, he focused on the problems and contradictions that would arise from a government-sanctioned standard of 0.72 liang in the context of the differing tael standards across the country. Codifying the 0.72-liang standard would not eliminate the different tael units of account that had emerged in the natural course of commerce due to the different mediums of exchange. Under these competing standards, how would China unify the currency system? Customary practice, Yuan argued, was powerful and should be respected. Significantly, he questioned Zaize’s proposition that people were used to handling and using 0.72-liang coins that mirrored the weight of Mexican silver dollars. Admitting that this statement might be true for the southeast of the country, Yuan maintained that in other areas, particularly the northwestern provinces, Mexican silver dollars only made up one percent of the monetary system. Ultimately, he argued that areas that did not use silver coins were much more widespread than the places that did. Tax payments, business relationships, and customs payments were all calculated in taels and the conversion costs of reckoning on a standard of 0.72 liang—in terms of keeping accounts and daily habits—would be too great. Instead, Yuan argued for a pure one-liang standard that adhered to customary practice (People’s Bank of China, 1964: 744–45).

In the face of these very different arguments, the central government instructed provincial officials to give their opinions on whether the base of the monetary system should be a coin of one liang or of 0.72 liang. However, the responses did not bring much clarity; nearly equal numbers of officials endorsed the one-liang and 0.72-liang standards and employed similar arguments to the ones used by Zaize and Yuan Shikai (Junjichu shangyudang, 1908). Significantly, opinions changed on this question as officials weighed the practical issue of circulation with the current system of taxation. Zhang Zhidong at first had supported the 0.72 tael-coin but later shifted to advocating the one-liang standard. The central question was how to mint enough standardized coins to satisfy demand and how this proposed monetary medium would link to the current, and future, system of taxation.

The advocates of the one-liang standard continued to be influential throughout 1908. Zhang Zhidong, Yuan Shikai, and others united to advocate the one-liang coin as the base of the monetary system (People’s Bank of China, 1964: 747–52). Tang Shaoyi 唐紹儀 (1862–1938), at that time a special commissioner to the United States trying to draw the American government into the defense of Manchuria, told State Department officials that China planned to go on the gold-exchange standard, but in correspondence with the Qing court, he supported a one-liang silver standard (Hunt, 1973: 170–74). He urged that the one-liang silver standard be announced as soon as possible (People’s Bank of China, 1964: 759–60). On October 5, 1908, within days of Tang’s memorial, the government reaffirmed the one-liang silver coin as the monetary standard. In 1908, unlike in 1905, the order that codified the one-liang standard mentioned a desire to go on the gold standard in the future but pointed to the impracticality of doing so immediately (Junjichu shangyudang, 1908). This was a defeat for Zaize’s position on the 0.72-liang standard, but only a temporary one.

Zaize ascribed the failure of his arguments supporting the 0.72-liang silver standard to overriding political conditions, particularly the influence of Zhang Zhidong and Yuan Shikai, the two most important provincial officials at the time (Wei, 1986: 123). However, Qing politics changed dramatically soon after the promulgation of the edict supporting the one-liang standard. The Guangxu emperor, who had been sidelined since the Hundred Days Reform movement of 1898, and the Empress Dowager, who had been the main authority in the dynasty for several decades, died in quick succession in November 1908. Before her death, the Empress Dowager named Prince Zaifeng 載豐 (1883–1951) as regent for the next emperor, still a child. Zaifeng relieved Yuan Shikai of all his posts in January 1909, reportedly on the deathbed order of his brother, the Guangxu emperor (Rhoads, 2000: 133). Zhang Zhidong passed away in October 1909. Two of the strongest advocates of the one-liang coin as the base of the monetary system lost their political influence.

Zaize took advantage of these changing political dynamics by penning a memorial on currency reform in the first year of the Xuantong emperor when the regent Zaifeng held sway at court. In line with his earlier arguments, Zaize stated that that the one-liang standard acted as an impediment to currency reform (People’s Bank of China, 1964: 763–64). By the spring of 1910, the Ministry of Finance issued another set of currency regulations making a silver coin weighing 0.72 liang, nine-tenths fine, the main currency unit, along with 50-, 25-, and 10-cent pieces (People’s Bank of China, 1964: 783–85). This edict was a reversal of the two previous promulgations on currency reform that had backed the one-liang standard. The decree also reflected the reality that 0.72-liang coins continued to increase in circulation across the country (Yeh-chien Wang, 2003: 210–15). Importantly, despite this decree, the numerous tael standards did not disappear.

In 1910, however, prominent voices continued to advocate currency reform on a gold basis. Liang Qichao published several articles on the inadequacy of the new currency law and the need to adopt the gold-exchange standard (Lai, 2006: 33–34). More surprisingly, at the same time, Kang Youwei, perhaps due to the influence of Liang, published a volume that argued for a gold-exchange standard. Kang believed that not adopting the Jenks plan was a mistake. Staying on silver, he argued, caused great harm to both the government and the Chinese people. Kang thought the issue of currency reform was so urgent that if his ideas were not adopted within two years, calamity would befall the country. How astonishing it would be, he continued, if a civilization with five thousand years of history, a vast territory, and 400 million people was undone by the rising price of gold and the falling price of silver. In order to accumulate an appropriate amount of gold to change the monetary standard, Kang suggested the Bank of Communications draw on the resources of overseas Chinese communities in New York, San Francisco, Honolulu, and Sydney by exchanging silver for gold (Ye, 2003: 280–81). Kang, unlike Zhang Zhidong, viewed the falling price of silver as a real and immediate threat. The gold-exchange standard had to be adopted quickly.

After the promulgation of the new regulations the Qing began negotiations to secure funds to implement currency reform. The Qing initially approached American bankers and government officials, hoping that they would provide a loan for both currency reform and development in Manchuria. However, after initially agreeing with Zaize and Sheng Xuanhuai 盛宣懷 (1844–1916) to make a loan, the group of American bankers used the preliminary contract as a way to enter the previously formed consortium of British, French, and German banking groups that had been created to prevent the Qing from playing different bankers off against one another.

During loan negotiations in early 1911, Sheng Xuanhuai and the representatives of foreign bankers debated the role of the proposed currency advisor and the exact plans for currency reform. Sheng said that China could accept a foreign advisor along with the loan if the Qing government was in charge and the advisor only helped. If the advisor had power over the currency, he could later force the Qing to go on the gold standard. In that case, Sheng told his foreign interlocutors, the proposed currency advisor would have more authority than not only the minister of finance but even the emperor himself (Sheng Xuanhuai dang’an, 1910). The Qing government and the banking consortium signed the loan for currency reform and Manchurian development 幣制實業借款 in April 1911. Significantly, the contract did not resolve the issue of who the currency advisor would be. The Qing officials who met with foreign bankers in the summer of 1911 settled on the Dutch official Gerald Vissering, a long-time advocate of the gold-exchange standard. However, soon thereafter the Wuchang Rebellion broke out and the Qing dynasty fell. The monetary standards question, however, would continue for several decades.

Conclusion

Examining debates about monetary standards at the end of the Qing provides new perspectives on several historiographic issues. First, while many observers at the time, and later historians, focused on the plethora of copper tongyuan minted by provincial officials as the key element of Qing financial history from 1900 to 1911, this article highlights the interconnectedness of copper, silver, and gold, both conceptually and temporally. This perspective provides insights into how Qing officials and thinkers not normally associated with economic issues pondered how the Chinese currency system should—and ultimately did—relate to the monetary system of the rest of the world. Although debates about the gold-exchange standard and silver monetary unit might appear distinct, to figures at the time they combined issues of sovereignty and public finance, as well as the impact on the economy and popular welfare (Li, 1987: 128, 160).

Writers used comparisons with Egypt and the Philippines, their predictions for the future of the world silver market, and their idea of what the Qing must do to protect its sovereignty to argue for or against the gold-exchange standard. For Zhang Zhidong, adopting the gold-exchange standard was akin to the Qing giving up sovereignty and implementing a calamitous policy for what was simply a temporary problem. He did not oppose the gold-exchange standard in principle but thought that China first needed to unify its monetary system on a silver basis. For Liang Qichao, if China administered the system on its own, the gold-exchange standard might be a way to prevent further encroachments by foreign powers. Kang Youwei believed that the falling price of silver was a mortal threat. All saw the monetary standards question as crucial to the present and future development of China.

Although this article does not explicitly seek to explain the failure of the Qing to adopt measures that would lead to a unified national currency, two possibilities might be mentioned. First, the complexity of the debate itself, paired with tension between central and provincial officials, made it unlikely the Qing could carry out any meaningful currency reform. Second, and echoing arguments made by historian He Wenkai in explaining why a centralized system of public finance did not emerge in China, the Qing never faced a crisis that required a change in monetary regimes, even though many at the time emphasized the urgency of the situation. He Wenkai argues that the Qing was able to muddle through when faced with situations that might otherwise have caused a fiscal consolidation along the lines seen in England and Japan (He, 2013). Likewise, the world price of silver in the first decade of the 1900s—falling, rebounding, and falling again—created a crisis in the minds of some, but others saw benefits. However, these price movements were never enough to create a crisis that would force a switch in monetary regimes, either under the direction of the Qing itself or imposed by foreign governments.

The complex landscape of the monetary standards debate that emerged in the last decade of the Qing continued during the Beiyang and Republican periods as Chinese politicians, bankers, economists, and merchants discussed how to unify the currency system and whether China could and should adopt the gold-exchange standard. The key issues remained the same: whether the falling price of silver, particularly in the 1920s, created a crisis, and whether adopting the gold-exchange standard would solve that problem without imposing unacceptable economic and political costs. In short, how could China implement currency reform without giving up sovereignty?

In this later period, some figures, such as Liang Qichao, continued to advocate the gold-exchange standard. Others, like economist and academic Ma Yinchu 馬寅初 (1882–1982), opposed the gold-exchange standard for most of the 1920s until supporting it at the end of the decade when, just like at the turn of the twentieth century, the price of silver dropped precipitously. Still others, such as economics professor Huang Yuanbin 黃元彬 (1893–1956), echoing the ideas of Zhang Zhidong, believed that China benefitted from the declining price of silver and had done so since the 1870s. There was no need to adopt the gold-exchange standard. Thus, the contours of the debate about the gold-exchange standard that emerged from 1900 to 1912 continued to play a crucial role in the political, economic, and intellectual history of China until 1935 when the Nationalist government abandoned the silver standard.

Footnotes

Acknowledgements

The author would like to thank Michael Alarid, John Curry, Christopher Reed, Jeff Schauer, and anonymous referees for encouraging me to improve the article.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The research for this article was supported by an IIE Fulbright grant.

Notes

Author Biography

Austin Dean, PhD, is assistant professor of History at University of Nevada, Las Vegas. He is currently working on a book titled China and the End of the Silver Era, 1873–1937.

References

Bordo

Michael

Rockoff

Hugh

(1996) “The gold standard as a ‘good housekeeping seal of approval.’” J. of Economic History 56, 2: 389–428.

Dai

Jianbing

(2007) Zhongguo jindai yinliang shi (The history of silver taels in modern China). Beijing: Shehui kexueyuan chubanshe.

Department of State (1904–1905) United States National Archives, Record Group 59, M92, Dispatches from United States Ministers to China, microfilm reels 127 and 128.

Economist (1902) “Mexico and the silver problem.” Dec. 13, p. 1930.

Esherick

Joseph

(1976) Reform and Revolution in China: The 1911 Revolution in Hunan and Hubei. Berkeley: Univ. of California Press.

Faure

David

(2000) “The Mackay Treaty of 1902 and its impact on Chinese business.” Asia Pacific Business Rev. 7, 2: 79–92.

Gongzhong dang’an quanzong [Number One Historical Archives of China] (1893) Palace memorial, 04-01-35-1373-056.

Gengzi shibian Qinggong dang’an huibian [Materials relating to the Boxer Rebellion at the Number One Archives of China] (2006) Gengzi peikuan choufu (The preparation and payment of the Boxer Indemnity), vol. 11. Beijing: Renmin daxue chubanshe.

Halsey

Stephen

(2014) “Sovereignty, Self-strengthening, and steamships in late imperial China.” J. of Asian History 48, 1: 81–111.

10.

Wenkai

(2013) Paths to the Modern Fiscal State: England, China and Japan. Cambridge, MA: Harvard Univ. Press.

11.

Helleiner

Eric

(2002) The Making of National Money: Territorial Currencies in Historical Perspectives. Ithaca, NY: Cornell Univ. Press.

12.

Han-Wai

[HE HANWEI] (1993) “Cong yinjian qianhuang dao tongyuan fanlan” (From cheap silver and a money famine to the inundation of copper coins). Zhongyang yanjiuyuan lishi yuyan yanjiusuo jikan 63, 4: 389–489.

13.

Han-Wai

(1997) “Cong Qingmo Gangyi, Tieliang nanxun kan zhongyang he difang de caizheng guanxi” (Late Qing center-provincial fiscal relations as seen in the missions of Gangyi and Tieliang in 1899 and 1904). Zhongyang yanjiu-yuan lishi yuyan yanjiusuo jikan 68, 1: 55–115.

14.

Hunt

Michael

(1973) Manchurian Defense and “The Open Door”: Manchuria in Chinese-American Relations, 1895–1911. New Haven, CT: Yale Univ. Press.

15.

Junjichu shangyudang [Orders of the Grand Council] (1908) Number One Historical Archives of China. Guangxu 25, fourth month 24th day 2:1442: 1, and Guangxu 34, ninth month, 11th day, 2:1511:5.

16.

Keynes

John Maynard

(1913) Indian Currency and Finance. London: Macmillan.

17.

King

Frank H. H.

(1965) Money and Monetary Policy in China, 1845–1895. Cambridge, MA: Harvard Univ. Press.

18.

King

Frank H. H.

(2006) “The Boxer Indemnity—‘nothing but bad.’” Modern Asian Studies, 40, 3: 663–89.

19.

Kuroda

Akinobu

(2005) “The collapse of the Chinese imperial monetary system.” Pp. 103–26 in Sugihara

Kaoru

(ed.), Japan, China, and the Growth of the Asian International Economy, 1850–1949. Oxford: Oxford Univ. Press.

20.

Kuroda

Akinobu

(2008) “Concurrent but non-integrable currency circuits: complementary relationships among monies in modern China and other regions.” Financial History Rev. 15,1: 17–36.

21.

Lai

Cheng-Chung

[LAI JIANCHENG] (2006) Liang Qichao de jingji mian-xiang (Liang Qichao’s economic turn). Taipei: Lianjing chuban gongsi.

22.

Lai

Cheng-Chung

Jr-Shiang Gau

Joshua

Tai-Kuang

(2009) “Professor Jeremiah Jenks of Cornell University and the 1903 Chinese monetary reform.” Hitotsubashi J. of Economics 50: 35–46.

23.

Laughlin

J. Laurence

(1927) “The gold-exchange standard.”Q. J. of Economics 41, 4: 644–63.

24.

Jingye

(1906) Caizheng cheng zouzi jiyao (A summary of fiscal administration policy). Beijing: Guanshuju.

25.

Yuping

(1987) Jindai Zhongguo de huobi gaige sichao, 1902–1914 (Views and ideas on monetary reform in modern China, 1902–1914). Taipei: Guoli Taiwan shifan daxue lishi yanjiusuo.

26.

Liang

Qichao

(1941a) “Lun bizhi banding zhi chisu xi guojia zhi cunwang” (On the speed of promulgating currency reforms and the life and death of countries). Yinbingshi heji, ce 7 (Collected works from the Ice-Drinker’s studio, volume 7). Shanghai: Zhonghua shuju.

27.

Liang

Qichao

(1941b) “Zhongguo huobi wenti” (China’s currency problem). Yinbingshi heji, ce 6 (Collected works from the Ice-Drinker’s studio, volume 6). Shanghai: Zhonghua shuju.

28.

Lin

Man-Houng

(2006) China Upside Down: Currency, Society and Ideologies, 1808–1856. Cambridge, MA: Harvard Univ. Asia Center.

29.

Liu

Lydia

(2004) The Clash of Empires: The Inventions of China in Modern World Making. Cambridge, MA: Harvard Univ. Press.

30.

Liu

Zenghe

(2014) “Cai” yu “zheng”: Qingji caizheng gaizhi yanjiu (Wealth and government: research on reform of public finance in the Qing). Beijing: Sanlian shudian.

31.

Meissner

Christopher

(2005) “A new world order: explaining the international diffusion of the gold standard, 1870–1913.” J. of Int. Economics 66: 385–406.

32.

Metzler

Mark

(2006) Lever of Empire: The International Gold Standard and the Crisis of Liberalism in Prewar Japan. Berkeley: Univ. of California Press.

33.

New York Times (1903) “The Chinese indemnity.” April 10, p. 8.

34.

North China Herald (1897) “Mints and railways in China.” Oct. 22, p. 733.

35.

Passananti

Thomas

(2008) “The politics of silver and gold in an age of globalization: the origins of Mexico’s monetary reform of 1905.” América Latina en la Historia Económica 30: 69–95.

36.

People’s Bank of China [Zhongguo renmin yinhang zonghang canshi shi jinrong shi-liaozu] (1964) Zhongguo jindai huobishi ziliao (Materials relating to the monetary history of modern China), vol. 2. Beijing: Zhonghua shuju.

37.

Rhoads

Edward J. M.

(2000) Manchus and Han: Ethnic Relations and Political Power in Late Qing and Early Republican China, 1861–1928. Seattle: Univ. of Washington Press.

38.

Rosenberg

Emily

(1985) “Foundations of United States international financial power: gold standard diplomacy, 1900–1905.” Business History Rev. 59, 2: 169–202.

39.

Rosenberg

Emily

(2004) Financial Missionaries to the World: The Politics and Culture of Dollar Diplomacy, 1900–1930. Durham, NC: Duke Univ. Press.

40.

Rowe

William

(2001) Saving the World: Chen Hongmou and Elite Consciousness in Eighteenth-Century China. Stanford, CA: Stanford Univ. Press.

41.

Rowe

William

(2010) “Money, economy, and polity in the Daoguang-era paper currency debates.” Late Imperial China 31, 2: 69–96.

42.

SCHELL

WILLIAM

JR. (1996) “Mexico’s conversion to the gold standard, 1905.” Mexican Studies/Estudios Mexicanos 12, 1: 67–89.

43.

Schiltz

Michael

(2012) “Money on the road to empire: Japan’s adoption of gold monometallism, 1873–97.” Economic History Rev. 65, 3: 1147–68.

44.

Shen

Xuefeng

(2003) Wan Qing caizheng zhichu zhengce yanjiu (Research on government income and expenditures in the late Qing dynasty). Beijing: Renmin daxue chubanshe.

45.

Sheng Xuanhuai dang’an [The papers of Sheng Xuanhuai] (1910) Shanghai Municipal Library, 004555 and 004556.

46.

Stability of International Exchange: Report of the Introduction of the Gold-Exchange Standard into China and Other Silver-Using Countries (1903) Washington: Government Printing Office.

47.

Vogel

Hans Ulrich

(1987) “Chinese central monetary policy, 1644–1800.” Late Imperial China 8, 2: 1–52.

48.

Von Glahn

Richard

(2007) “Foreign silver coins in the market culture of nineteenth century China.” Int. J. of Asian Studies 4, 2: 51–78.

49.

Wang

Ching-Chun

(1911) “The new Chinese currency.” J. of the Amer. Asiatic Association 11, 5: 164–69.

50.

Wang

Hongbin

(1990) Wan Qing huobijia yanjiu (Research on the price of money in the late Qing). Kaifeng: Henan daxue chubanshe.

51.

Wang

Shuhuai

(1974) Gengzi peikuan (The Boxer Indemnity). Taipei: Zhongyang yanjiuyuan jindaishi yanjiusuo.

52.

Wang

Yeh-Chien

[WANG YEJIAN] (2003) “Zhongguo jindai huobi yu yinhang de yanjin, 1644–1937” (Development of money and banking in China, 1644–1937). Pp. 161–274 in Yejian

Wang

(ed.), Qingdai jingjishi lunwenji (Collected essays on the economic history of Qing China). Taipei: Daoxiang chubanshe.

53.

Washington Post (1903) “The Chinese indemnity: will the creditor nations break concessions, or force China into bankruptcy?” Jan. 8, p. 6.

54.

Wei

Jianyou

(1986) Zhongguo jindai huobishi (The currency history of modern China). Hefei: Huangshan shushe.

55.

Weiner

Richard

(2000) “Battle for survival: Profirian views of the international marketplace.” J. of Latin American Studies 32: 645–70.

56.

Yang

Duanliu

(2007) Qingdai huobi jinrong shigao (Draft history of Qing currency and finance). Wuhan: Wuhan daxue chubanshe.

57.

Shichang

(2003) Zhongguo huobi lilun shi (A history of Chinese monetary theory). Xiamen: Xiamen daxue chubanshe.

58.

Zhang

Elya

(2008) “Spider Manchu: Duanfang as networker and spindoctor of the late Qing New Policies, 1901–1911.” PhD diss., Univ. of California, San Diego. http://gradworks.umi.com/33/20/3320191.html.

59.

Zhang

Zhidong

(1990) Zhang Wenxianggong quanji (The collected works of Zhang Zhidong), vols. 1 and 2. Beijing: Zhongguo shudian.

A Coin for China? The Monetary Standards Debate at the End of the Qing Dynasty,1900–1912

Abstract

Keywords

The Background of Qing Currency Policy

The Boxer Indemnity and the Gold-Exchange Standard Debate

Continued Debates after the 1905 Currency Regulations

Conclusion

Footnotes

Acknowledgements

Declaration of Conflicting Interests

Funding

Notes

Author Biography

References