The first Chinese coins were made in the sixth century BC. Unlike the Lydian coins, Chinese coins were moulded in the shape of hoes, knives or cowries and were made of bronze. Qin Shi Huangdi, the first emperor of China, reorganized China's monetary system around 221 BC. He ended the use of hoe, knife and cowrie coins and made bronze cash coins with holes in the middle the foundation of China's monetary system for the next 2000 years. There were periodic reforms by later emperors, but for the most part, the basic monetary system remained the same.
Wang Mang (AD 7-23) reintroduced knife- and hoe-shaped coins and created fiat money by stamping coins with different denominations even though their commodity content was virtually the same. The 5-grain coin he introduced was the standard Chinese coin until the seventh century.
Cash coins were the basis of market transactions during the Chinese Empire, but since they were made of copper, they became useless for large transactions. Larger transactions were made in silver Sycee, gold bars or silk bolts. Paper currency was introduced, possibly as early as 621, to ease transactions. The government became the sole issuer of paper currency in 1024. During the Yuan Dynasty, paper money completely replaced commodity money, but because of the inflation paper money caused during the Yuan and Ming dynasties, the issue of paper money ended during the early sixteenth century and was not renewed until the nineteenth century. Coins were reintroduced in 1503 and from 1505 on, coins were made of brass instead of bronze. One reason for this was the flood of silver that began to flow into China from America providing China with sufficient liquidity for economic transactions.
The values of copper cash, silver sycee, gold and paper all fluctuated against each other according to supply, demand and the government's issuance of paper money. Sycee ingots were of no specific weight, but the Tael weighed between 34 and 38 grams of silver. The Kuan was used as a unit of account in the Tang dynasty, equal to 1000 Cash.
Because of the political anarchy of China during the twentieth century, it has had a number of financial systems. Within each financial system there were a multitude of currencies up until 1935. Individual provinces, local banks, foreign banks, and warlords, among others, issued their own banknotes and/or coins, all of which had values independent of one another based upon the probability that the banknotes could be redeemed and the cost of transporting the banknotes to an office that would redeem them into specie.
The monetary chaos in China up until 1949 was similar to the monetary chaos that had prevailed in Europe centuries before. Moreover, even though China had a single silver standard for its internal currency, just as Europe had a gold standard, the value of local currencies would fluctuate relative to each other, just as European currencies did during the gold standard era. These subsidiary provincial currencies were not used outside of China, and were not used in foreign exchange transactions, but were still an important part of the monetary system within China.
There were several types of currency in existence in China in the first half of the Twentieth Century. These can basically be divided up into Sycee, Taels, and Dollars coins (both Chinese and foreign). The Taels and Dollars ("big money") were divisible into silver subsidiary coins and copper cash coins ("small money"), which fluctuated in value relative to the big money. Banks also issued banknotes that were based upon the Taels, Dollars and subsidiary coins as well as foreign currencies. Both national and local, provincial currencies existed simultaneously within China.
The Tael (CNT) was used under the Ming Dynasty. While in theory 1 Tael/Liang was equal to 1000 Cash, in practice the rate could vary between 800 and 2800, and the rates varied from one province to the other. Under the Tael system, 1 Tael was equal to 10 Mace/Chi'en, 100 Candareen/Fen or 1000 Li/Cash, but the rates between each of these divisions fluctuated over time and between provinces.
H. B. Morse in The Trade and Administration of the Chinese Empire stated that he knew of 170 different Tael currencies within China, and there were probably some he didn't know about. The local taels would vary by weight and fineness just as coins in Europe did, but most taels were within a 15% range of value to each other. Nevertheless, there were four main taels that were used, the Haikwan (Customs) Tael levied on imports and equal to 1.50 Mexican Dollars, the Kuping (Treasury) Tael for inland Government Taxes with 1 Haikwan Tael = 1.01642395 Kuping Taels, the Tsaoping (Shanghai or "Tribute") Tael with 1 Kuping tael = 1.096 Shanghai Taels, the Canton Tael with 1 Canton Tael = 1.025 Tsao-pint Taels, and the Kuo-lu (Newchwang transfer or "book-transfer money) Tael.
Next were dollar coins, which included two kinds of Mexican dollars, the Yuan Shih Kai dollar, Hong Kong dollar, Japanese Silver Yen, Philippine Peso, Spanish Pillar Dollar, United States trade dollar, French Indochina Piastres, Chinese dragon dollar and the Straits Settlements dollar, all of which fluctuated in value above or below the mean. These were often referred to as "big money" when banknotes were issued against them. Until 1890, all silver dollars were imported into China. In 1890 the Guangzhou mint in southern China began striking silver Dragon dollars and smaller coins.
Subsidiary coins made of silver also circulated, usually in denominations of 10, 20 and 50 cents (1, 2, or 5 fen), which were referred to as "small money" when banknotes were issued against them. Copper coins were also issued, and these fluctuated widely against the silver dollars. Cash coins were alloys made of 50% copper, 41.5% zinc, 6.5% lead and 2% tin, though these ratios often varied.
Although in theory there were 1000 cash to a dollar, the actual conversion rates were could vary widely. For example, a dollar might be worth 1400 cash, though 100 cash was actually equal to 80 cash, and the 80 cash consisted of 60 large cash and 20 small cash. A "copper" (10 cash) could be worth 8 to 11 cash, and a dollar could be worth from 1/70 to 1/75 of a tael of silver, which could be anywhere from 90-100 percent pure silver. If someone went into a shop with 93 cash, including 65 large cash and 28 small cash, the shopkeeper and customer could argue for hours on the right amount of currency equal to a dollar. To quote S. R. Wagel, "The cash currency is reckoned in the terms of tiao of minimally a thousand coins. But, in practice, the tiao is only 490 coins in Tientsin, 160-163 in and around Lanchow, 620 in Yunnan city, and 980 in the Province." (Wagel, Chinese Currency and Banking, p. 42)
In northeast China, irredeemable tiao banknotes were issued, in theory equal to 1000 cash, but being irredeemable, they sank in value quickly. In addition to this, foreign banknotes circulated in China, including banknotes issued by foreign banks, and denominated in foreign currencies.
In addition to "National" currency, there was also "local" currency, which fluctuated in value relative to the national currency, depending upon business conditions and the overissuance of banknotes. Banknotes would be denominated in National or Local currency, and their value would depend upon this designation.
Consequently, you had different currency areas within China, each of which used different forms of specie and paper currency and had different exchange rates between subsidiary coins and the money of other provinces (see Frederic E. Lee, Currency, Banking, and Finance in China, Washington: Government Printing Office, 1926, pp. 27-41). These currency areas can be divided into
1. Guangdong, Guangxi and Guizhou (These provinces primarily used the Kwangtung dollar Canton 20-cent coin and Hong Kong dollar for foreign transactions.) The Kwangtung currency had depreciated when the currency was reformed in July 1914 and existing notes were redeemed at 45.5% of their face value. On January 1, 1938, the legal tender notes issued by the Kuomintang replaced local currency notes. Hao Yang notes from Guangdong were called in at an official exchange rate of 1.44 Hao Yang Yuan to one legal tender yuan, and Hao Yang notes from Guangxi were exchanged at the rate of 2 Guangxi Hao Yang for 1 yuan of legal tender.
2. Yunnan (The Yunnan Yuan, at a premium to the Nationalist Yuan until 1919, slowly depreciated thereafter due to overissue by the Futien Bank and the Bank of Territorial Develoment of Yunnan. In 1936, the Nationalist government redeemed the notes at the rate of 10 old Futien Bank Dollars or 5 New Futien Bank Dollars to the Nationalist Dollar. Indochinese Piastres and Indian Rupees were also used.)
3. Fujian (Silver Dollars, subsidiary coins, and primarily "taifu" paper Yuan, equal to 134 cash or $0.945 "chopped" Mexican.)
4. Hong Kong (Hong Kong was separate both politically and monetarily and its currency remained strong, though based on silver.)
5. Zhejiang, Jiangsu and Anhui (Shanghai was the commercial center of Nationalist China. Nationalist Yuan dollars, Mexican dollars and banknotes were the primary media of exchange.)
6. Shandong (The situation in Shandong was similar to that in Shanghai, but because of the Japanese occupation of Tsingtau until 1922, Japanese Yen were in use in the region).
7. Hebei and Shanxi (Centered around Beijing and Tientsin, silver dollars, foreign banknotes and local banknotes were used.)
8. Gansu (Dollars, silver bullion, currency notes and fractional currency circulated, usually at depreciated values.)
9. Henan, Hubei, Shaabxu, Hunan and Jianxi (These provinces were commercially centered around Hankow and primarily relied upon silver dollars and banknotes.)
10. Sichuan (Sichuan used its own dollar as well as Yunnan dollars. Paper currency played a minor role.)
11. The three Manchurian provinces were governed as a separate Dependency until April 20, 1907 when Shing King, Kirin and Heilung Kian were combined into a single Viceroyalty of the Three Eastern Provinces. Manchuria (In addition to Chinese currency, in the 1920s silver and gold yen were used around Dairen and in the Kwangtung Leased Territory, even before the Japanese invaded Manchuria. Russian Rubles were used in Harbin until the Russian Revolution. The provinces of Kirin (CNKT) and Heilungkiang (CNHT) had an irredeemable Tiao, equal to 1000 cash, issued by its provincial banks, which circulated between 1914 and 1931. The Kirin Yung Heng Provincial Bank also issued "Big Dollar" notes and "Small Dollar" notes. These currencies depreciated sharply over time and in 1935, the Central Bank of Manchuo took over the issue of banknotes in Manchukuo, redeeming the Tiao, Big Dollar and Small Dollar notes at different conversion rates. The Heilungkiang Provincial Bank also issued Tiao, Big Money and Small Money issues, which were redeemed by the Bank of Manchou. The Three Eastern Provinces Bank of Fengtien overissued banknotes between 1918 and 1935. When the Bank of Manchuria redeemed all of its notes in 1935, it did so at the rate of 50 Fengtien Dollars for one Manchurian Yuan.)
12. Xinjiang (The Sinkiang Yuan moved independently of the Nationalist Yuan, primarily because of the distance between Sinkiang and Nanking/Beijing. The Sinkiang Banks issued Taels, Yuan, Gold Yuan and Silver Yuan before the People's Bank redeemed its outstanding issues.)
Rather than trying to delineate every single currency that ever existed in China, which would number into the thousands, the Chinese Yuan is divided up into these twelve subsidiary currencies to represent the monetary system of China in the first half of the twentieth century. Monetary unity wasn't established until the Communists took over China in 1949.
During the Boxer Rebellion, the Xing Dynasty issued paper currency (CNTP) in the form of Taels and Cash that quickly depreciated, worth only 3% of their face value only a few years later, and were ultimately repudiated by the government.
The Chinese Dollar (CND) was based on the Mexican Silver Dollar (XMSD), which had been introduced into China in the 1600s, and the official rate was set at one Dollar equal to 0.72 Tael on May 25, 1910.
When the Chinese Revolution occurred in 1911, local governments and the Central government financed their military activities through printing money. As a result, paper depreciated to a discount of 10-44% of the face value depending upon where the currency was issued. A currency reform in 1914-1915 converted the depreciated banknotes into stable Chinese Dollars.
Local governments also issued their own Dollars. This included the Kwangtung dollar (issued from the Guangzhou/Canton mint), Hubei dollar (from Wuchang), Fujian dollar (from Fozhou), Jiangsu dollar (from Nanjing), Zhejiang dollar (from Hangzhou), Fongtien dollar (from Shenyang/Mukden), Kirin Dollar, Sichuan dollar (from Chengdu), Pei-yang and Taching dollars (from Tianjin). In addition to this, Carolus dollars (of Charles III and Charles IV of Spain) from Peru, Bolivia and Chile circulated as well as American Trade dollars, Mexican dollars, French piastres, British (hong Kong) Trade dollars, Japanese Yen and Indian rupees circulated as well. After the establishment of the Republic, the Provinces lost their right to issue their own dollars, and the Republic became the sole issuer of dollars from their mint in Tianjin.
The 1930 Kemmerer Report proposed that China adopt a gold standard with the unit of account to be known as the "Sun" valued at 0.601866 grams of gold, or the equivalent of 2.5 CNC = 1 USD.
The Chinese Dollar was used throughout China until the 1930s, in areas not occupied by Japan during World War II, and once again in all of China after 1945. The Nationalist government Banks and the Chinese government issued banknotes and coins in both Tael and Dollars/Yuan until the 1930s. As the area under Nationalist control shrank, the Nationalist Dollar was variously referred to as the Chungking or Shanghai Dollar to differentiate it from other Chinese currencies.
Private banks were free to issue their own banknotes until May 1, 1931 when nonofficial issues were banned, and only provincial, national and foreign banks were allowed to issue banknotes. The Chinese Dollar replaced Sycee and Tael on March 8, 1933. On November 3, 1935, the Chinese Dollar was made legal tender, and banknote issue was limited to the Bank of Communications, the Bank of China, the Central Bank of China and the Farmer's Bank of China.
After the Chinese government consolidated the currency in 1935, it forbade local banks and provinces from issuing their own banknotes, but this didn't stop communist banks, Japanese banks and warlords that were not under the political control of the Nationalist government from issuing their own banknotes.
After the consolidation of Chinese currencies in 1935, the southern provinces seceded monetarily. The Central Bank of Canton issued the Canton Dollar (CNDC) equal to 1.44 Chinese Dollars (or one old Tael). This continued to be used until the Japanese occupied Canton on October 31, 1938 and replaced the Canton Dollar with their own currency.
The Mexican Peso (Hai Kwan Tael) was used as a customs unit of account until February 1, 1930 when China introduced the Custom Gold Unit for the payment of customs. CGU Banknotes were 100% backed by US Dollars and were convertible at the rate of 1 US Dollar equal to 2.5 CGU. The gold standard was abandoned on November 3, 1935. As the inflation accelerated, the government introduced Custom Gold Units (CNU) for general use in China. Originally, these had been used for paying import duties and were equal to 20 Yuan, but after 1945 they were used to fuel the Chinese inflation. After the war, the Chinese government kept Taiwan and northeastern China as separate currency areas within the China.
The political chaos caused hyperinflation, leading to the introduction of the Gold Chin Yuan (CNG) on August 19, 1949 with 1 Gold Yuan equal to 3,000,000 old Chinese Yuan and 4 Gold Yuan equal to 1 US Dollar. There was no gold behind the Gold Yuan (sic), so it quickly became worthless.
To see the impact of the currency conversions, someone who had USD $1,000,000 in 1937 would have received 3,000,000 CNC (Chinese National Currency). When the Japanese took over Shanghai, this had to be converted at a 2 CNC: 1 CRB rate into Japanese Reserve Bank notes leaving CRB 1,500,000. At the end of the war, the nationalist government forced this to be converted back into CNC at the rate of 200 CRB: 1 CNC leaving 7500 CNC and when these were converted into Gold Yuan in 1949 he would have received GY 0.0025. The USD $1,000,000 was now worth less than one penny!
When this scheme failed, the Silver Yin Yuan (CNS) was introduced in the southern provinces that the Nationalist government still controlled in late 1949. It was theoretically backed by Chinese Dollars minted by the nationalist government and equal to approximately 100,000,000 of the "Gold" Yuan, but it lasted about a month before the Nationalist government was forced to abandon the mainland for Taiwan. See Taiwan for issues by the Nationalist government after 1949.
The Japanese issued a number of different currencies during their occupation of China, most of which were tied to the Japanese Yen. The Central Bank of Manchukuo under the Japanese puppet government issued Yuan banknotes (CNMY) tied at par to the Japanese Yen. A separate currency was issued for Mongolia (CNPM) by the Central Bank of Inner Mongolia (Meng Cheng Bank) that was set at par to both the Manchukuo Yuan and to the Japanese Yen. The Japanese also issued a Military Yen (CNPY) in areas that it occupied. The Military Yen was redeemed by the Central Reserve Bank in March 1943 at the rate of 100 Central Reserve Bank Yuans per 18 Military Yen, though some Military Yen continued to circulate until the end of the war.
When the Japanese invaded the rest of China, they issued separate currencies for northern China and for southern China, as well as a Military Yen. The Northern Chinese Dollar (also known as the Peking Dollar or Tientsin Dollar) was issued by the Federal Reserve Bank of China (CNPP). Northern China had refused to send its silver reserves to the Nationalist government under the 1935 monetary reform, and autonomous coins and banknotes were issued in 1936 prior to the Japanese invasion. The Northern Chinese Dollar was set at par to the Japanese Yen, and later set at 1 Northern Chinese Dollar equal to 3.8 Nanking Dollars.
The Japanese set up the Central Bank of China in Nanking after they invaded southern China. The Nanking Yuan (CNPN) was equal to one-fourth Military Yen and was exchanged at the rate of 1 Nanking Yuan equal to 2 Chinese Dollars after occupation. All five Japanese currencies became worthless after the Japanese lost the war, though citizens were usually allowed to redeem some of them into the depreciating Nationalist Yuan. After the Chinese Nationalist Government recovered Manchuria from Japan, they issued a special Manchurian Yuan (CNNY) that had a higher value than the Nationalist Yuan, since the Manchurian Yuan under the Japanese had depreciated less than the Nationalist Yuan. This currency was in circulation from 1945 until 1948 when the Communists took over Manchuria.
The Chinese Communists had issued their own banknotes and coins (CNSD) before the monetary reform of 1935 with an exchange rate of about 1.2 Communist Chinese Dollars equal to 1 Nationalist Dollar. After the Japanese lost the war, the Communist government set up banks in areas they occupied. Although the banknotes were used to fund the Chinese Communists' financial needs, the notes depreciated at a slower rate than the Nationalist notes.
The Bank of Central China, the Bank of Peihai and the Bank of Shansi, Chahar and Hopeh were consolidated to create the People's Bank of China in 1948, which became the sole banknote issuing authority in China. The People's Bank redeemed issues of other Communist banks at the rate of 1 Jen Min Piao Yuan equal to 1 Great Wall Bank Dollar, 1 Shensi-Kansu-Ninghsia Border Region Bank Dollar, 2 Chung-Chou Farmers Bank Dollars, 9.5 Northeast Bank Dollars, 9.5 Inner Mongolia People's Bank Dollars, 100 South Hopeh, Dollars 100 Peihai (North Sea) Bank Dollars, 100 Central China Bank Dollars, 100 Chinan Dollars, 350 Sinkiang People's Bank Silver Yuan, 1000 Shansi-Chahar-Hopeh Dollars, 2000 Northwest Farmers Bank Dollars, 5000 Hopei-Chahar-Liaoning Dollars, and 100,000 Central Bank of China Gold Yuan (June 1-6, 1949, worthless thereafter). (Kann, p. 712)
The new Jen Min Piao Yuan replaced the old Jen Min Piao Yuan (CNP) on March 1, 1955 at the rate of 10,000 Old Jen Min Piao (Yuan) equal to 1 New Jen Min Piao (Yuan). In 1969 the name of the Yuan was changed to the Renminbi (People's) Yuan. The Chinese government issued Dollar Foreign Exchange Certificates (CNX) before making the Yuan semi-convertible.
Foreign enclaves also issued their own currencies. Kiau Chau came under German occupation in 1897 and remained German territory until the Japanese invaded it in 1914. Kiao Chau was returned to China in 1922. Dollar notes (KCHD) were issued first by the German Asiatic Bank under the Germans and by the Yokohama Specie Bank under the Japanese. Treaty ports continued to issue their own banknotes until they were taken over by the Japanese in 1941. |
