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Empire of Silver: A New Monetary History of China
A thousand-year history of how China’s obsession with silver influenced the country’s financial well-being, global standing, and political stability
"A wonderful book for understanding one thousand years of Chinese monetary history."--Debin Ma, Hitotsubashi University
This revelatory account of the ways in which silver shaped Chinese history shows how an obsession with “white metal” held China back from financial modernization. First used as currency during the Song dynasty in around 900 CE, silver gradually became central to China’s economic framework and was officially monetized in the middle of the Ming dynasty during the sixteenth century. However, due to the early adoption of paper money in China, silver was not formed into coins but became a cumbersome “weighing currency,” for which ingots had to be constantly examined for weight and purity—an unwieldy practice that lasted for centuries. Jin Xu argues that even as China’s interest in silver spurred new avenues of trade and helped increase the country’s global economic footprint, in the long run silver played a key role in the struggles and entanglements that led to the decline of the Chinese empire.
"A wonderful book for understanding one thousand years of Chinese monetary history."--Debin Ma, Hitotsubashi University
This revelatory account of the ways in which silver shaped Chinese history shows how an obsession with “white metal” held China back from financial modernization. First used as currency during the Song dynasty in around 900 CE, silver gradually became central to China’s economic framework and was officially monetized in the middle of the Ming dynasty during the sixteenth century. However, due to the early adoption of paper money in China, silver was not formed into coins but became a cumbersome “weighing currency,” for which ingots had to be constantly examined for weight and purity—an unwieldy practice that lasted for centuries. Jin Xu argues that even as China’s interest in silver spurred new avenues of trade and helped increase the country’s global economic footprint, in the long run silver played a key role in the struggles and entanglements that led to the decline of the Chinese empire.
374 pages, Hardcover
First published January 1, 2017
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April 7, 2021
Jin Xu's Empire of Silver is an interesting book that delves into the complex topic of China's financial history up to the Nationalist regime preceding Mao. It covers a fairly long period, from the bronze age to the mid-1940s. Most of the book is, nevertheless, spent on the Tang/Song, the Ming, and the Qing dynasties, ending with the post-Qing era of the republican and Nationalist regimes. While being previously steeped in Chinese history would be useful, it's not necessary. Xu does a great job relating events both to historical events in China and in Europe, and eventually the United States.
China was the first country to experiment with paper currency, and in that sense it was ahead of the curve. Why did a country that was the source of so many of western civilization's initial innovations fall behind? Xu argues that, despite innovation in the shape and nature of currency, China lacked the necessary political innovation to properly use paper money. As a result, the benefits turned into weaknesses, as unconstrained printing catalyzed by the constant fiscal needs of war led to inflation and, ultimately, regime-change.
For Xu, silver — historically, China's primary commodity standard — was not a source of strength, but a signal for its weakness. That is, Chinese society recurred back to the demand for silver when Chinese government abused its ability to print currency. Silver's relative stability was not a product of its inherent strength, but rather a result of the weakness in the balance between monetary centralization and the distribution of political power.
At the beginning of the book, there is an interesting foray into political philosophy that sets the stage for the rest of the narrative. Xu talks about libertarian small government, and there's an indirect or unsourced reference to Hoppe's (and other libertarian's) idea of monarchy being preferential due to low nominal taxation. She shows that China was, by that definition, a small government for most of its history. But, small government is not always good government. China was a small government because of lack of political innovation that disallowed scaling tax revenues through commercial stimulation (and taxation), and therefore China could not provide the legal framework of property rights protection that in the West gave rise to complex finance. And, if taxes were low nominally, they were not low in real terms — (a) there were hidden local taxes as a result of local corruption; (b) real incomes were lower than those in the West, and therefore the latter may have had higher taxes but these were less liable to strangle economic growth.
In fact, the lack of political sophistication and the necessary infrastructure to leverage higher tax revenues meant that China had to rely on inflation to pay for military expenses. These military expenses were dictated by the need to defend against northern nomadic tribes, as well as Japanese incursions into Korea in the 16th century and, finally, the critical defensive needs against the brutal Japanese invasion of China during the 1930s and 40s.
Xu contrasts Chinese fiscal financing to that developed by the Italian city-states of the 13th and 14th centuries. She notes that the latter could count on complex finance, namely public loans, that used larger tax revenues as collateral. The Chinese state did not have this type of fiscal power and that was not a source of strength, it did not lead China to economic prosperity, the reality was the exact opposite.
There is an interesting citation of Jesus Huerta de Soto in the "further reading" section of the book. Huerta de Soto is not cited in the bibliography, rather Hernando de Soto (The Mystery of Capital) is cited. Neither is Hayekian capital theory really referenced or used in the book, so I'm not sure if the reference to Huerta de Soto was a typographical error. That being said, there are undertones of Hayekian capital theory (although as someone who knows Hayekian capital theory it's much more likely that I am reading into it).
After the Mongolian Yuan dynasty, there is a retreat from paper currency. Government has lost trust as an issuer of money, and therefore there is a demand for silver. Why silver? It's about the relative value of commodities. The value of gold was too high, therefore the Chinese considered silver a better choice as the "parent" currency (for large transactions and clearance operations) to copper, which was used for everyday exchanges. This demand for silver increased its price in China, leading to a huge inflow of silver from Japan and, more importantly, the Americas after the Spanish conquest. The inflow of silver is associated with commercial prosperity in China. In the 19th century, as Western trade with China grows, these Western countries take affront to the outflow of silver from their markets into the Chinese market. This was driven by a trade imbalance; China did not buy foreign goods, but foreigners bought Chinese silk and tea. The Western solution was to capitalize on a growing opium addiction to buy Chinese silver, leading to a silver drain that the Chinese government could not end (even through a drug ban).
There is a similar period of inflow-outflow dynamics after the fall of the Qing dynasty. The shift away from bimetallism in the West to the gold-exchange standard led to a relative increase in the value of silver in China, and therefore a capital inflow of silver. This is associated with prosperity. In 1934, as governments in the Great Depression leave the gold-exchange standard, the United States passes an act to buy silver and stabilize the price of silver in the United States. The relative value of silver shifts in favor of the U.S. and there is a capital outflow of silver in China, leading to a monetary crisis that also aligns with growing defense spending needs as a result of Japanese encroachment in Manchuria.
Within these inflow-outflow dynamics there is an Austrian business cycle story. Xu doesn't really go into it, but given the single citation of Jesus Huerta de Soto one wonders whether this is the underlying assumption in her narrative.
Ultimately, Xu's book is not about monetary instability as a result of foreign exchange rates and the vacillations of metallic capital flows. Rather, her book is about how weak Chinese government was the underlying common factor behind its history of weak finance and monetary structure. All Chinese governments inevitably ran into large fiscal requirements as a result of war and national defense, but no Chinese government was able to develop the necessary political infrastructure to fund these through taxes and, ultimately, complex finance. Instead, it had to rely on inflation with the inevitable result of financial crisis and regime-change.
Empire of Silver covers more ground than what this review suggests. It's a serious multi-disciplinary economic history of China. The complexity is why this book could have been much longer. It doesn't really dive deep into why no Chinese regime, prior to the modern period, could develop a complex bureaucracy. There is some discussion of misaligned incentives, and there's the beginnings of a very interesting narrative, but it's not the main focus of the book. The narrative is that in the West political fragmentation led to competition, so some European governments (e.g. Spain) followed a Chine-esque trajectory, while metallic commodity-weak governments (e.g. England's) followed a different path toward industrialization. China, as a historically unified and centralized state, lacked this critical political competition that leads to political innovation. This is an area for further research, at least to the extent that we can draw parallels between Europe and Asia.
Overall, Xu does a great job introducing China's monetary history. It's a fairly quick read and the translation is good, except for a very small handful of editorial mistakes (typos).
China was the first country to experiment with paper currency, and in that sense it was ahead of the curve. Why did a country that was the source of so many of western civilization's initial innovations fall behind? Xu argues that, despite innovation in the shape and nature of currency, China lacked the necessary political innovation to properly use paper money. As a result, the benefits turned into weaknesses, as unconstrained printing catalyzed by the constant fiscal needs of war led to inflation and, ultimately, regime-change.
For Xu, silver — historically, China's primary commodity standard — was not a source of strength, but a signal for its weakness. That is, Chinese society recurred back to the demand for silver when Chinese government abused its ability to print currency. Silver's relative stability was not a product of its inherent strength, but rather a result of the weakness in the balance between monetary centralization and the distribution of political power.
At the beginning of the book, there is an interesting foray into political philosophy that sets the stage for the rest of the narrative. Xu talks about libertarian small government, and there's an indirect or unsourced reference to Hoppe's (and other libertarian's) idea of monarchy being preferential due to low nominal taxation. She shows that China was, by that definition, a small government for most of its history. But, small government is not always good government. China was a small government because of lack of political innovation that disallowed scaling tax revenues through commercial stimulation (and taxation), and therefore China could not provide the legal framework of property rights protection that in the West gave rise to complex finance. And, if taxes were low nominally, they were not low in real terms — (a) there were hidden local taxes as a result of local corruption; (b) real incomes were lower than those in the West, and therefore the latter may have had higher taxes but these were less liable to strangle economic growth.
In fact, the lack of political sophistication and the necessary infrastructure to leverage higher tax revenues meant that China had to rely on inflation to pay for military expenses. These military expenses were dictated by the need to defend against northern nomadic tribes, as well as Japanese incursions into Korea in the 16th century and, finally, the critical defensive needs against the brutal Japanese invasion of China during the 1930s and 40s.
Xu contrasts Chinese fiscal financing to that developed by the Italian city-states of the 13th and 14th centuries. She notes that the latter could count on complex finance, namely public loans, that used larger tax revenues as collateral. The Chinese state did not have this type of fiscal power and that was not a source of strength, it did not lead China to economic prosperity, the reality was the exact opposite.
There is an interesting citation of Jesus Huerta de Soto in the "further reading" section of the book. Huerta de Soto is not cited in the bibliography, rather Hernando de Soto (The Mystery of Capital) is cited. Neither is Hayekian capital theory really referenced or used in the book, so I'm not sure if the reference to Huerta de Soto was a typographical error. That being said, there are undertones of Hayekian capital theory (although as someone who knows Hayekian capital theory it's much more likely that I am reading into it).
After the Mongolian Yuan dynasty, there is a retreat from paper currency. Government has lost trust as an issuer of money, and therefore there is a demand for silver. Why silver? It's about the relative value of commodities. The value of gold was too high, therefore the Chinese considered silver a better choice as the "parent" currency (for large transactions and clearance operations) to copper, which was used for everyday exchanges. This demand for silver increased its price in China, leading to a huge inflow of silver from Japan and, more importantly, the Americas after the Spanish conquest. The inflow of silver is associated with commercial prosperity in China. In the 19th century, as Western trade with China grows, these Western countries take affront to the outflow of silver from their markets into the Chinese market. This was driven by a trade imbalance; China did not buy foreign goods, but foreigners bought Chinese silk and tea. The Western solution was to capitalize on a growing opium addiction to buy Chinese silver, leading to a silver drain that the Chinese government could not end (even through a drug ban).
There is a similar period of inflow-outflow dynamics after the fall of the Qing dynasty. The shift away from bimetallism in the West to the gold-exchange standard led to a relative increase in the value of silver in China, and therefore a capital inflow of silver. This is associated with prosperity. In 1934, as governments in the Great Depression leave the gold-exchange standard, the United States passes an act to buy silver and stabilize the price of silver in the United States. The relative value of silver shifts in favor of the U.S. and there is a capital outflow of silver in China, leading to a monetary crisis that also aligns with growing defense spending needs as a result of Japanese encroachment in Manchuria.
Within these inflow-outflow dynamics there is an Austrian business cycle story. Xu doesn't really go into it, but given the single citation of Jesus Huerta de Soto one wonders whether this is the underlying assumption in her narrative.
Ultimately, Xu's book is not about monetary instability as a result of foreign exchange rates and the vacillations of metallic capital flows. Rather, her book is about how weak Chinese government was the underlying common factor behind its history of weak finance and monetary structure. All Chinese governments inevitably ran into large fiscal requirements as a result of war and national defense, but no Chinese government was able to develop the necessary political infrastructure to fund these through taxes and, ultimately, complex finance. Instead, it had to rely on inflation with the inevitable result of financial crisis and regime-change.
Empire of Silver covers more ground than what this review suggests. It's a serious multi-disciplinary economic history of China. The complexity is why this book could have been much longer. It doesn't really dive deep into why no Chinese regime, prior to the modern period, could develop a complex bureaucracy. There is some discussion of misaligned incentives, and there's the beginnings of a very interesting narrative, but it's not the main focus of the book. The narrative is that in the West political fragmentation led to competition, so some European governments (e.g. Spain) followed a Chine-esque trajectory, while metallic commodity-weak governments (e.g. England's) followed a different path toward industrialization. China, as a historically unified and centralized state, lacked this critical political competition that leads to political innovation. This is an area for further research, at least to the extent that we can draw parallels between Europe and Asia.
Overall, Xu does a great job introducing China's monetary history. It's a fairly quick read and the translation is good, except for a very small handful of editorial mistakes (typos).
August 4, 2022
Monetary history of Imperial and Republican China, starting with the early adoption of paper money and silver weights, before continuing to the introduction of coinage in the Qing Dynasty. Xu notes that having a silver-backed currency and relatively few sources of silver within China meant that it lacked "monetary sovereignty" - it had no control over its own money supply. When the price of silver fell, the early Republic enjoyed an export boom but also inflation. Likewise, in the 1930s, when the United States engineered a rise in the price of silver through the Silver Purchase Act of 1934, deflation and capital flight resulted, which weakened the country's position in the face of a looming Japanese invasion.
Rather light on the political analysis of things, and resorts to some pat statements and older historiography (Qian Mu is often cited). But for a general economically-minded audience, there are many interesting stories here to consider.
Rather light on the political analysis of things, and resorts to some pat statements and older historiography (Qian Mu is often cited). But for a general economically-minded audience, there are many interesting stories here to consider.
June 11, 2021
I learned so much, and this book was also so boring. Found the author’s affinity for people like Milton Friedman kind of weird, but also had lots of solid observations. Had to reread a lot and read other stuff because I was just so bored
December 23, 2021
The book is a treasure trove of new information on the centuries-long monetary history of a society (which happens to be China). While its content may have value for many political historians of China or East Asia, there are numerous things of all kinds to learn for monetary economists.
To be sure, the author does not spend adequate time on implications or theoretical lessons as on numbers and event descriptions. Comprehension becomes even more difficult for readers unfamiliar with Chinese history or those who struggle with Chinese nouns/names.
The most important lesson from the book for this reviewer is that currencies and monetary policies have had vastly different forms and results over time. Historically, perceived value in any non-specie currency was primarily a function of the trust and legitimacy of the issuing rulers. Once past this, acceptance in pre-industrial communities depended on the imposed use cases - first and foremost driven by the acceptable mode of payment (as well as the amount) for taxes.
If Chinese monetary history provides good evidence to bolster chartalism, there is much more ammunition in the book for money supply monetarists. With different forms of fiat currencies in issuance over almost a thousand years, China's political history has examples of ravages wrought by both excessive and deficient money supply.
There are tales of instability caused by the uncontrolled private money-minting for present-day policy practitioners. Less useful are flows instigated by inefficient markets and exchange rate arbitrages. While linkages between monetary and fiscal policies are obvious to any economist, the book provides good examples of connections between money and politics/geopolitics.
This is not an easy read but for the interested, here is a unique history that leaves one with many things to ponder.
To be sure, the author does not spend adequate time on implications or theoretical lessons as on numbers and event descriptions. Comprehension becomes even more difficult for readers unfamiliar with Chinese history or those who struggle with Chinese nouns/names.
The most important lesson from the book for this reviewer is that currencies and monetary policies have had vastly different forms and results over time. Historically, perceived value in any non-specie currency was primarily a function of the trust and legitimacy of the issuing rulers. Once past this, acceptance in pre-industrial communities depended on the imposed use cases - first and foremost driven by the acceptable mode of payment (as well as the amount) for taxes.
If Chinese monetary history provides good evidence to bolster chartalism, there is much more ammunition in the book for money supply monetarists. With different forms of fiat currencies in issuance over almost a thousand years, China's political history has examples of ravages wrought by both excessive and deficient money supply.
There are tales of instability caused by the uncontrolled private money-minting for present-day policy practitioners. Less useful are flows instigated by inefficient markets and exchange rate arbitrages. While linkages between monetary and fiscal policies are obvious to any economist, the book provides good examples of connections between money and politics/geopolitics.
This is not an easy read but for the interested, here is a unique history that leaves one with many things to ponder.
October 6, 2021
This book is a hot mess. It had no thesis, so far as I could find, and was rather just a long parade of facts, each following the previous one, with no direction. As someone who maintains an interest in Chinese economics, I had trouble finding one thing I learned in this book.
I also thought the translation and editing were half-assed.
"Historians tend to focus more on dynastic change, while economic historians compare GDPs." p. 297. - aren't economic historians also historians. I don't know if this is the slipshodness of the author or the translator, but it only added to the difficulty of caring about this book.
"Dethe is my finaunce" - Anon. p. 117 - I guess this is just a misspelling of finance. Again, poor editing
I also thought the translation and editing were half-assed.
"Historians tend to focus more on dynastic change, while economic historians compare GDPs." p. 297. - aren't economic historians also historians. I don't know if this is the slipshodness of the author or the translator, but it only added to the difficulty of caring about this book.
"Dethe is my finaunce" - Anon. p. 117 - I guess this is just a misspelling of finance. Again, poor editing
March 25, 2022
At first I thought this book would basically be an economic history of China. Then it seemed like it was one of those books overly emphasizing one single item throughout history (c.f. Salt, Cod, etc.). It turned out to be a combination of the two. Silver really did overly influence China's trajectory, especially during the late Qing dynasty.
I found the story of Zhong Gongquan, Song Hanzhang and the Bank of China to be amazing. I hope someone makes a short movie of this entire incident or something. When Yuan Shikai declared himself emperor, government finances were in tatters. So the government defaulted, and said its banknotes would no longer be accepted. Zhang and Song, after initially panicking, got together and "they made an astonishing decision, which was to categorically refuse to execute the order in hopes of gaining the public's understanding and support".
Basically they said the government had no control over their monetary policy and they would continue to accept the banknotes. They were then worried Beijing would just fire them, so they asked the international shareholders to sue them personally (!!), so that they would be held responsible regardless.
Then they opened the bank, and there was a run, but it was mostly people with small notes. They remained open Saturday afternoon and Sunday (usually bank holidays), and all this quelled the panic. Then they were pretty much out of money, but other banks (HSBC and Yokohama) loaned them enough to cover the overdraft, and so they survived. (pp 259-261)
Another interesting point was the take on the opium wars, and how they just precipitated what was already inevitable. Since China refused to engage in "trade", but only in "tribute", it didn't enter into any treatise, but still let the foreigners buy Chinese products. The emperor said China already had everything it needed, so there was no need to trade. Except that actually China did need Silver, which it received from trade. When the trade in silver dried up, chaos ensued.
Some of my notes:
"Let’s shift the scene back to 1262, when the two poles of world civilization, Venice in the West and the Southern Song in the East, both faced the specter of war, and funding for these wars hung by a thread. Almost simultaneously, the authorities of both places came up with plans to deal with their emergencies, both involving the most advanced financial innovations of that time. The Southern Song’s Jia Sidao raised military funding by using the steadily devaluing huizi to buy up public land the strip the populace of wealth. Venice took a different road: Its parliament authorized the government to mortgage its tax revenue, and when a fiscal deficit developed, the administration issued government bonds paying interest of 5 percent. In retrospect, Venice’s financial innovation summoned the magic power of public debt as capital and effectively led Europe into an era of financial revolution. As for china, the excessively issued huizi did not regain the favor of the market; rather, public discontent and unrest threw open the door for invasion by the Mongolians."
(p. 34)
Yap Island, and the trade in rocks
Keynes and Friedman, who probably never agreed on anything when it comes to economics, "each paid tribute to the monetary concepts of the Yap islanders" (David Hume: 'humanity has endowed gold and silver with imagined value').
(pp. 43-44)
Isaac Newton served as warden of the Royal Mint for 28 years, during which time England moved over to the gold standard. He came up with a gold-silver exchange rate which was not perfect, even "excessively high", but it created a "chain effect and gave rise to surprising consequences that developed in England's favor" (p. 60)
Chinese tend not to see the Song as a successful dynasty and "reading Song history is a tearful process" (p. 69), but achievements of the Song are highly praised overseas.
It boasted the "greatest economic accomplishments of China's imperial dynasties (p. 74)
It is considered the "world's first maritime empire" (p. 76)
Population and per capita income both increased by over 200 percent. (p. 76)
Song dynasty's economic prosperity "not only exceeded that of the Tang dynasty.., but was a time in Chinese history when per capita income briefly surpassed that of Europe" (p. 77)
In terms of per capita income... it rose to $464 at the end of the Northern Song and then continued to rise to $585 in the last part of the Southern Song. Its economic scale far exceeded Europe's and placed it first in the world. China did not achieve this income level again until the 1980s." (p. 208)
I found the story of Zhong Gongquan, Song Hanzhang and the Bank of China to be amazing. I hope someone makes a short movie of this entire incident or something. When Yuan Shikai declared himself emperor, government finances were in tatters. So the government defaulted, and said its banknotes would no longer be accepted. Zhang and Song, after initially panicking, got together and "they made an astonishing decision, which was to categorically refuse to execute the order in hopes of gaining the public's understanding and support".
Basically they said the government had no control over their monetary policy and they would continue to accept the banknotes. They were then worried Beijing would just fire them, so they asked the international shareholders to sue them personally (!!), so that they would be held responsible regardless.
Then they opened the bank, and there was a run, but it was mostly people with small notes. They remained open Saturday afternoon and Sunday (usually bank holidays), and all this quelled the panic. Then they were pretty much out of money, but other banks (HSBC and Yokohama) loaned them enough to cover the overdraft, and so they survived. (pp 259-261)
Another interesting point was the take on the opium wars, and how they just precipitated what was already inevitable. Since China refused to engage in "trade", but only in "tribute", it didn't enter into any treatise, but still let the foreigners buy Chinese products. The emperor said China already had everything it needed, so there was no need to trade. Except that actually China did need Silver, which it received from trade. When the trade in silver dried up, chaos ensued.
Some of my notes:
"Let’s shift the scene back to 1262, when the two poles of world civilization, Venice in the West and the Southern Song in the East, both faced the specter of war, and funding for these wars hung by a thread. Almost simultaneously, the authorities of both places came up with plans to deal with their emergencies, both involving the most advanced financial innovations of that time. The Southern Song’s Jia Sidao raised military funding by using the steadily devaluing huizi to buy up public land the strip the populace of wealth. Venice took a different road: Its parliament authorized the government to mortgage its tax revenue, and when a fiscal deficit developed, the administration issued government bonds paying interest of 5 percent. In retrospect, Venice’s financial innovation summoned the magic power of public debt as capital and effectively led Europe into an era of financial revolution. As for china, the excessively issued huizi did not regain the favor of the market; rather, public discontent and unrest threw open the door for invasion by the Mongolians."
(p. 34)
Yap Island, and the trade in rocks
Keynes and Friedman, who probably never agreed on anything when it comes to economics, "each paid tribute to the monetary concepts of the Yap islanders" (David Hume: 'humanity has endowed gold and silver with imagined value').
(pp. 43-44)
Isaac Newton served as warden of the Royal Mint for 28 years, during which time England moved over to the gold standard. He came up with a gold-silver exchange rate which was not perfect, even "excessively high", but it created a "chain effect and gave rise to surprising consequences that developed in England's favor" (p. 60)
Chinese tend not to see the Song as a successful dynasty and "reading Song history is a tearful process" (p. 69), but achievements of the Song are highly praised overseas.
It boasted the "greatest economic accomplishments of China's imperial dynasties (p. 74)
It is considered the "world's first maritime empire" (p. 76)
Population and per capita income both increased by over 200 percent. (p. 76)
Song dynasty's economic prosperity "not only exceeded that of the Tang dynasty.., but was a time in Chinese history when per capita income briefly surpassed that of Europe" (p. 77)
In terms of per capita income... it rose to $464 at the end of the Northern Song and then continued to rise to $585 in the last part of the Southern Song. Its economic scale far exceeded Europe's and placed it first in the world. China did not achieve this income level again until the 1980s." (p. 208)
May 27, 2024
This is a sweeping monetary history of China up to the Republican era, with a thematic focus on the use of silver as currency, but bringing together broader themes of economic and political history. The framing question is a subsidiary of the Needham question of, roughly, "Why did China, after being economically and technologically ahead for many centuries fall behind the West". One proposed answer, prominent among a certain strand of Chinese intellectuals in the 19th and early 20th centuries, was that the use of a silver monetary standard played some important role.
This book is basically an argument against that conclusion, taking the perspective that monetary problems were largely reflective of underlying fiscal and administrative issues. In periods of high state capacity, including the period of the Song dynasty famous for use of paper currency, stable and liquid money was supportable by a well-financed state. In periods of low state capacity, at the end of dynasties facing expenses from war (Northern Song, Qing, Republican era) or famine (Ming), the actual and perceived anticipation of inflationary or expropriatory policies led to collapse of centralized monetary systems and the proliferation of systems based on use of commodities as currency, with a financial system similar to what American economic historians would call free banking, with decentralized issuance of credit. The Ming period provides a slight exception of a stable state but decentralized currency, due to the sudden increase in supply after the discovery of New World silver, in part because this liquidity increase was generally favorable for the state. Overall, the broad outlines of the story are consistent with the deemphasis on money as a driver of major economic trends, though recognizing some effects both through liquidity costs (which could be very substantial without the standardization on financial industry capacity to facilitate credit) and through short to medium run impacts on economic activity (more Hume than Keynes, as there was little active management of money for stabilization purposes in this era).
While there is, more or less, a thesis to the book, it is more in the narrative historical style than economic social science style, with many detours into interesting anecdotes and facts and figures used liberally but unsystematically. Much of the editorializing is offloaded to historiographical summaries of various commentators on related issues, not all of which are well supported in the text and many of which are slightly muddled or contradictory. While I didn't always find the opinions to be adding value, I don't think they detract from the book as a source of a detailed narrative of monetary practices in China over the past 1000 years. Given how sparsely the Chinese example is covered in general monetary and economic history texts, I found this to be an eye-opening contribution.
This book is basically an argument against that conclusion, taking the perspective that monetary problems were largely reflective of underlying fiscal and administrative issues. In periods of high state capacity, including the period of the Song dynasty famous for use of paper currency, stable and liquid money was supportable by a well-financed state. In periods of low state capacity, at the end of dynasties facing expenses from war (Northern Song, Qing, Republican era) or famine (Ming), the actual and perceived anticipation of inflationary or expropriatory policies led to collapse of centralized monetary systems and the proliferation of systems based on use of commodities as currency, with a financial system similar to what American economic historians would call free banking, with decentralized issuance of credit. The Ming period provides a slight exception of a stable state but decentralized currency, due to the sudden increase in supply after the discovery of New World silver, in part because this liquidity increase was generally favorable for the state. Overall, the broad outlines of the story are consistent with the deemphasis on money as a driver of major economic trends, though recognizing some effects both through liquidity costs (which could be very substantial without the standardization on financial industry capacity to facilitate credit) and through short to medium run impacts on economic activity (more Hume than Keynes, as there was little active management of money for stabilization purposes in this era).
While there is, more or less, a thesis to the book, it is more in the narrative historical style than economic social science style, with many detours into interesting anecdotes and facts and figures used liberally but unsystematically. Much of the editorializing is offloaded to historiographical summaries of various commentators on related issues, not all of which are well supported in the text and many of which are slightly muddled or contradictory. While I didn't always find the opinions to be adding value, I don't think they detract from the book as a source of a detailed narrative of monetary practices in China over the past 1000 years. Given how sparsely the Chinese example is covered in general monetary and economic history texts, I found this to be an eye-opening contribution.
May 26, 2023
The is a history of the Chinese monetary system from the beginning until the Natijonalist Government and failures after WW2. Most of the book surveys the various Chinese currency systems in chronological order by dynasty. (Have a list of dynasties handy so you do not have to cross reference too frequently.). There are some general presumptions about how different currency systems (gold, silver, mixed, etc.) work in theory or typically. The book is not excessively technical, however, and the general story, including the financial principles, is relatively easy to follow, although it can be slow going with translations of Chinese names and places.
The interesting point of all of this is what difference it made for China to have one monetary system or another. This question concerns what made China relatively unusual among major political units - it has used silver as the major reserve commodity for its currency (along with copper) for the vast majority of its history. While other nations were moving away from silver and towards some form of gold standard, China remained focused on silver.
So was the reliance on silver critical for how weak China was in the early colonial era (around the Opium Wars, for example)? Did reliance on silver lead to weakness? Why? The book has a lot to say about this, most of which suggests that yes, silver made a difference and it was not generally good.
This brings up the larger question of the relationship of the currency and monetary system to the broader social, economic, and political arrangements. The short answer here is - it’s complicated. To make strong currency systems work, politics and administration need to be rationalized and centralized in important way. Decentralized and disorganized polities are more open to corruption and fractional arrangements, which keep the monetary system from being as effective as possible. The operation gets bogged down when there are too many intermediaries that complicate even the most routine transactions. This issue also comes up in the shift away from money based on commodities and towards paper money. Without controls, this can lead to serious inflation, especially in wartime, when governments have to pay a lots of bills while the survival of the regime is at stake. So the monetary system has its own effects but is also strongly linked to the broader political and economic system. The author does a good job of summing up these issues at the end of the book.
Then the are the historical oddities. I had not known that during the Ming Dynasty, the Chinese court became increasingly dependent on silver obtained from the Spanish territories, especially the Potosi silver mine in Peru. This silver was shipped to the Philippines from which it went to China. That is an example of an early globalization.
This was a fairly straightforward read and was enjoyable.
The interesting point of all of this is what difference it made for China to have one monetary system or another. This question concerns what made China relatively unusual among major political units - it has used silver as the major reserve commodity for its currency (along with copper) for the vast majority of its history. While other nations were moving away from silver and towards some form of gold standard, China remained focused on silver.
So was the reliance on silver critical for how weak China was in the early colonial era (around the Opium Wars, for example)? Did reliance on silver lead to weakness? Why? The book has a lot to say about this, most of which suggests that yes, silver made a difference and it was not generally good.
This brings up the larger question of the relationship of the currency and monetary system to the broader social, economic, and political arrangements. The short answer here is - it’s complicated. To make strong currency systems work, politics and administration need to be rationalized and centralized in important way. Decentralized and disorganized polities are more open to corruption and fractional arrangements, which keep the monetary system from being as effective as possible. The operation gets bogged down when there are too many intermediaries that complicate even the most routine transactions. This issue also comes up in the shift away from money based on commodities and towards paper money. Without controls, this can lead to serious inflation, especially in wartime, when governments have to pay a lots of bills while the survival of the regime is at stake. So the monetary system has its own effects but is also strongly linked to the broader political and economic system. The author does a good job of summing up these issues at the end of the book.
Then the are the historical oddities. I had not known that during the Ming Dynasty, the Chinese court became increasingly dependent on silver obtained from the Spanish territories, especially the Potosi silver mine in Peru. This silver was shipped to the Philippines from which it went to China. That is an example of an early globalization.
This was a fairly straightforward read and was enjoyable.
December 5, 2024
A good book providing a monetary history of China. The author, journalist Jin Xu, delivers both a financial history and a detailed commentary on the role of commerce and finance in the development of the Chinese state. Mixing rich historical narratives with insightful commentary, the book offers a detailed account of how monetary practices and policies influenced China's growth and political stability. One of the most interesting aspects of the book are the comparisons between Renaissance Venice and Ming era China, and then between Meiji era Japan and late Qing China. These assessments highlight the different approaches to banking and commerce, offering a unique perspective on the interaction between economic systems, societies, and political structures. The author demonstrate the diverse strategies employed by different cultures to manage and sustain economic growth. The analysis not only provides a deep understanding of China's financial evolution but also sheds light on broader economic principles and their application across different cultures and eras. There is even a deep discourse on the dangers of bimetallism and the inevitability of fiat currency. A great book for understanding the dynamic role of money and finance in China's history. Highly recommended for anyone interested in the historical intersection of commerce, finance, and social development.
April 24, 2025
Recommend for those interested in how monetary policy shapes the fate of nations.
Daily tariff headlines made this a timelier read than I expected…
Moving chronologically, the book makes an expertly researched reference for pre-19th century China monetary policies. Things can feel repetitive as successive dynasties go through the same cycle of boom, paper currency printing, and silver-addicted bust. Would’ve been useful to read a book or two on Chinese history beforehand. Much googling is needed as the book rarely slows down to explain the goings on or key figures of particular dynasties.
Things get more interesting from the mid-1800s through the fall of the Kuomintang. Jin provides great detail on the interplay of China’s monetary policy and global/national politics.
Jin stops short of addressing the current day, but the last several hundred years beg the question: is it “capitalism with Chinese characteristics” or China with capitalist characteristics?
Daily tariff headlines made this a timelier read than I expected…
Moving chronologically, the book makes an expertly researched reference for pre-19th century China monetary policies. Things can feel repetitive as successive dynasties go through the same cycle of boom, paper currency printing, and silver-addicted bust. Would’ve been useful to read a book or two on Chinese history beforehand. Much googling is needed as the book rarely slows down to explain the goings on or key figures of particular dynasties.
Things get more interesting from the mid-1800s through the fall of the Kuomintang. Jin provides great detail on the interplay of China’s monetary policy and global/national politics.
Jin stops short of addressing the current day, but the last several hundred years beg the question: is it “capitalism with Chinese characteristics” or China with capitalist characteristics?
July 19, 2021
Fascinating
A fascinating story of Chinese monetary and fiscal history, and the role played by silver throughout the centuries. China was ahead of the world in many aspects – but not in finance. Yes, they used banknotes before anyone else; but these repeatedly failed and caused a return to commodity money. Every dynasty has struggled with its finances, and everyone of them failed. This eventually played a major role in China 19th and early 20th century weakness. In fact, it can be argued that monetary stability was absent for more than 4000 years, and was only achieved after 1949 – in a fashion.
A fascinating story of Chinese monetary and fiscal history, and the role played by silver throughout the centuries. China was ahead of the world in many aspects – but not in finance. Yes, they used banknotes before anyone else; but these repeatedly failed and caused a return to commodity money. Every dynasty has struggled with its finances, and everyone of them failed. This eventually played a major role in China 19th and early 20th century weakness. In fact, it can be argued that monetary stability was absent for more than 4000 years, and was only achieved after 1949 – in a fashion.
June 1, 2021
This history of China's use of silver for currency is long and detailed, replete with Chinese terms for all things economic and monetary. From the 1400s through the 1940s, China backed its currency with silver, mostly ingots, and paper money.
If you are interested in an economic or financial study of China, this book is for you.
The audio book is 12 hours long and expertly narrated by Nancy Wu who handles the Chinese terms with aplomb.
For a description of the audio performance, see AudioFile Magazine http://www.audiofilemagazine.com
If you are interested in an economic or financial study of China, this book is for you.
The audio book is 12 hours long and expertly narrated by Nancy Wu who handles the Chinese terms with aplomb.
For a description of the audio performance, see AudioFile Magazine http://www.audiofilemagazine.com
June 4, 2021
A lot of this book went over my head. But I think I understand the general thesis. Like with many things, China was way ahead in currency innovation then fell way behind Europe. That was very bad. It was influenced by global factors and also had global effects. China got shoehorned into a silver standard while the rest of the world was on a gold standard and didn’t even mint silver coins until the 19th century. If you want to learn about how many dynasties successively screwed up monetary policy, pick it up!
March 28, 2022
Fascinating in parts - how different economies transitioned to create modern banking and the choice of gold/silver to back paper money. China for historical reasons adopted silver rather than gold
Needed better editing - repetitive in many places - the point being made was not as clear as could have been with better writing
The content deserves a 4 star but the writing/editing lets the book down a bit
Needed better editing - repetitive in many places - the point being made was not as clear as could have been with better writing
The content deserves a 4 star but the writing/editing lets the book down a bit
April 24, 2024
Terrible. Convoluted, jumps back and forth in time so that any piece of information just hangs in the air without any context, repetitive, bad writing to round it off. Extensive quotes from both fiction (often misplaced or cringe) and academics (without any context on the debate) made it worse.
Surprised by how many positive reviews this has gotten. I really wanted to learn something about Chinese monetary history but had to rely on wikipedia and other books on this topic to make sense of 90% of this. I have read student essays that were better than this.
Surprised by how many positive reviews this has gotten. I really wanted to learn something about Chinese monetary history but had to rely on wikipedia and other books on this topic to make sense of 90% of this. I have read student essays that were better than this.
July 5, 2021
More of a 2.5 than a full 3. The information contained appears to be well-researched and there are some good overarching arguments about the monetary policy and politics, but the organization is extremely odd. It is neither truly thematic nor chronological.
December 19, 2022
A good bargain-bin read, despite itself. Its underlying text, 《白银帝国》, rambles and repeats — the chapter on the late Qing is especially a slog. The awkward translation seems at points to have been written by someone who doesn't understand economics. However, the subject matter is endlessly fascinating, and touches on pertinent questions about the governance and governability of China. Could benefit from some plates.
July 9, 2025
A fascinating and ambitious book that explores the role of money in Chinese history, with a particular focus on silver as a central pillar of the empire’s economy. Jin Xu offers a sweeping narrative, tracing the development of China’s monetary systems from ancient times through to the Qing dynasty and into the modern era.
The book shows how China’s monetary history was shaped by a preference for silver over gold, how this influenced trade with the West, and how monetary policy often reflected deeper political and philosophical currents. It also explores how inflation, counterfeiting, hoarding, and the failure to adapt monetary structures contributed to economic crises and political instability.
Although the topic is compelling, I found it difficult at times to follow, as the book assumes the reader has a good grasp of Chinese history, particularly the sequence and context of the dynasties. Without that background, some of the arguments and transitions feel disjointed or overly dense.
Still, for readers with at least a basic familiarity with Chinese history, this is a rewarding and eye-opening study. It offers a fresh perspective on the central role of money in shaping the fate of empires and gives long-overdue attention to the Chinese case.
The book shows how China’s monetary history was shaped by a preference for silver over gold, how this influenced trade with the West, and how monetary policy often reflected deeper political and philosophical currents. It also explores how inflation, counterfeiting, hoarding, and the failure to adapt monetary structures contributed to economic crises and political instability.
Although the topic is compelling, I found it difficult at times to follow, as the book assumes the reader has a good grasp of Chinese history, particularly the sequence and context of the dynasties. Without that background, some of the arguments and transitions feel disjointed or overly dense.
Still, for readers with at least a basic familiarity with Chinese history, this is a rewarding and eye-opening study. It offers a fresh perspective on the central role of money in shaping the fate of empires and gives long-overdue attention to the Chinese case.
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