A good (and very long) read on the history of Chinese cash.

[bagerap]

This will be familiar to some, but completely blew me away.


https://www.scmp.com/magazines/post-magazine/long-reads/article/2116027/coin-stash-puts-new-spin-chinas-100-years

[Figleaf]

All new to me and I am certainly no expert, but this throws up many new questions. The article is too rambling for a good evaluation and with my collecting interest, I can't afford to buy the book. Let me try to simplify stuff.

Burger says the devaluation under the Qing is a result of financial mismanagement. The traditional explanation is that it is the consequence of opium use, which is indeed at best a story that makes a marginal effect the central effect. As Charles de Gaulle once remarked: "China is a big country, inhabited by many Chinese." The upshot of this remarkable insight is that China's economy did not depend on foreign trade. Therefore, opium was at best a contributing factor to China's monetary woes.

Financial mis-management is a far more likely cause of China's downfall, but that begs the question of what it is that needed to be managed. This is so obvious even De Gaulle would have understood. First, the Qing were a degenerated, weak clique of plotting arch-conservatives who couldn't have changed their socks without prodding and kept on executing their best supporters (those who wanted change to safeguard the Qing) and promoting the worst ones (the opportunists and yes-men). Second, that undermined trust in the Qing, making the country politically unstable. It is no coincidence that precisely in this period, colonialists were besieging the country, like wolves harassing a sick animal.

So far so good. Burger studies two things: the money quantity and exchange rates (I am assuming the journalist meant foreign exchange rates - e.g. tael/USD - but he might have meant metallic exchange rates e.g. copper/silver. Well chosen subjects anyway, but he could have added economic growth and prices (I don't suppose the Qing made unemployment stats.)

His conclusions: the Chinese cash were undercut by Vietnamese imitations. Highly doubtful. The mechanism is clear: bad Vietnamese cash drive out good Chinese cash. Except that the Chinese cash today are easy to find and the Vietnamese cash are really hard to find. Gresham's law: melt cash and have them re-minted in Vietnam for a tidy profit. It would have been the other way around if Burger had been right. Next: China should have developed banknotes. Perhaps, but in view of the appalling Qing weakness, wouldn't they have contributed to, rather than curbed inflation, as they did in the case of Law's bank in France? Next: silver went up against copper. Unless that was because cash became lighter, that doesn't tell me anything more than I already knew: the economy was unstable and people looked for a safe haven to put their wealth in. One of the safe havens apparently was silver. Next, the exchange rates. The journalist says nothing about Burger's conclusions. However, in this period, silver depreciated heavily against gold, leaving those who were invested in silver poorer off in terms of gold without doing anything. That sort of situation could easily have caused an over-valuation of silver in gold terms in China, which is an open invitation for arbitrage, with gold leaving the country and silver flowing in at inflated prices. That would have created monetary havoc.

I am very sympathetic to Burger and his efforts to publish the records (though not sure if 1 million cash of the same type tell you more than 1000 cash of the same type). However, I need way more information and analysis to draw any conclusion from this story. I hope scientists will continue Burger's efforts.

Peter