Topic 8 - Money and Finance

Question 1

Why was currency confusing?

Answer 1

Values changes all over China and there were several currencies

Question 2

What are the names of the silver currencies?

Answer 2

• Silver tael/Liang

- Silver dollars

Question 3

Where were silver dollars more popular?

Answer 3

In the south of China because of the trade routes

Question 4

What was the countable form of currency?

Answer 4

Copper cash/wen. It was put on strings and counted.

Question 5

What was paper money in China?

Answer 5

Private bills or government bills circulated within certain regions

Question 6

When was paper money abandoned?

Answer 6

Under the Qing dynasty

Question 7

Why was paper money not valuable in the Ming dynasty?

Answer 7

Because of inflation

Question 8

What did people use in place of official currencies?

Answer 8

Imaginary units of currencies

Question 9

What monetary and financial developments were there in the early 20th century China?

Answer 9

• Monetary reform towards a silver standard:
  = Minting of domestic coins
  = Founding of modern banks.
• The note-suspension incidence of 1916 and privatization of modern Banks
• The growth of paper money (largely issued through banks) and monetization of the economy
• 1897 – The Imperial Bank of China, the first modern bank
• 1905 – The Bank of the Board of the Revenue (later changed to the Great Qing Government Bank), the first Central Bank
• Growth of Shanghai
• The growth of Chinese native banks
• The spread of Yuan Shikai dollars

Question 10

What was the nature of Chinese native banks?

Answer 10

• Small, often family owned

- Often do the “dirty” work such as financing the vast agricultural trade in China

Question 11

What was the Fabi reform?

Answer 11

The 1835 Fabi reform was a response to the Great Depression and the US Silver Purchase Program. It saw the introduction of the first nationwide currency system in China. Its success was short lived due to the full-scale Japanese invasion of 1937. Fabi were paper notes to replace Yuan.

Question 12

Why did the Fabi reform pave the way for disaster?

Answer 12

The flat system proved to be perfect for the fostering of hyperinflation during China’s Civil War

Question 13

What are the 3 stages of monetary and financial development that were seen between 1800 and 1935?

Answer 13

1) 1800-1850 - From “cheap silver” to “expensive silver”
2) 1850-1911 – Maritime customs service, Western banks, Imperial Bank of China
3) 1911-1935 – Political disintegration, free banking era