Silver and Modern Chinese Economy (1890-1935)

Author: Dai Jianbing
Publisher:
Publish Date: 2005-08-01
Features: Professor Dai Jianbing's doctoral dissertation, Silver and Modern Chinese Economy (1890—1935), as a special issue of Fudan University's Chinese Financial History Series, is about to be officially published. When Jianbing entered Fudan University's History Department in 2000 to pursue his doctoral degree, he was already a professor and department head of the Finance Department at Hebei University of Economics and Trade. He has published numerous works on numismatics and monetary history, as well as over a hundred professional articles, making him a well-known young scholar. Many people asked him in person whether his motivation for studying in Shanghai was solely to obtain a doctoral degree, questioning whether it was worth spending several more years as a student. But in my view, Jianbing is a simple northern man who came to Fudan to study and summarize his years of academic work in Shanghai, a center of modern Chinese finance. As he himself stated, writing his doctoral dissertation was not about simply repeating the patterns of others' and his own works, but rather about "using the logic of history, with numismatics as new historical materials and methodological support, supplemented by analytical tools such as monetary banking, international finance, and new institutional economics, to study the relationship between modern money and modern economy from a new perspective"; "according to the logic of economics, starting with the currency itself, after reviewing the development of modern Chinese currency, summarizing the essence of China's unique monetary system; second, exploring the relationship between currency and the financial industry from the perspective of modern finance, and deriving its relationship with the rise and fall of various financial institutions; then, discussing the relationship between currency and macroeconomic development, thereby aiming to grasp the relationship between modern currency and modern economy, and establishing criteria for evaluating modern Chinese monetary thought."
From the above perspective, the current manuscript has constructed a relatively complete system.
Chapter "A Silver-Core-Type Monetary System" discusses the modern Chinese monetary system itself, more accurately, the role of silver in the modern Chinese monetary system, and summarizes the characteristics of modern Chinese currency. This chapter first narrates silver taels and silver dollars, which is naturally essential; then discusses cash and copper coins, demonstrating considerable research in both historical materials and facts, but with the intention of revealing the inevitability of silver's central role in the monetary system; it then analyzes the relationship between silver and banknotes, and finally summarizes the characteristics of modern Chinese currency: imbalance in the value scale, lagging behind the world's monetary system, price failure, and increased social production costs.
Chapter 2 discusses the relationship between silver and the modern financial system. Its basic argument is that changes in the monetary system not only promote the establishment of new financial systems but also often eliminate existing traditional financial institutions. It then specifically discusses the relationship between foreign banks and silver, silver and money exchanges, domestic banks and silver, as well as the silver market, gold market, and exchange market derived from the silver-core-type monetary system.
Chapter 3 discusses the relationship between silver and the changes in modern Chinese macroeconomy, pointing out that China's lack of unified currency, the abundance of urban currency and the scarcity of rural currency, and the fiscalization and complexity of the financial system directly affect China's economy. It also analyzes cases of falling and rising silver prices separately.
Chapter 4 discusses the path of monetary system choices under different development trajectories, focusing on the relationship between the government and the development of banking, and the relationship between the government and the establishment of the monetary system, believing that this is an important means by which the old Chinese government influenced the development path of the economy.
The conclusion of the entire manuscript contains two noteworthy points: the rigidity of the modern Chinese government's finances often breaks the government's efforts to establish the monetary system and align with international monetary processes; the reform of the fiat currency ended China's adherence to the world's monetary system since modern times and completed the government's autonomy in macroeconomic management, making the 1935 fiat currency policy, from an economic perspective, a crucial turning point for modern Chinese economy from dependence on foreign powers to economic independence.
As is well known, the silver issue runs through all stages of modern Chinese financial history (after the implementation of the fiat currency policy in 1935, although silver was no longer legal tender, the conversion of silver reserves into foreign exchange reserves became an important aspect of government financial policy), and there is a significant connection between silver and the economy. Many previous studies have touched upon the relationship between the two in specific research cases. These individual case studies are indispensable in the past, present, and future; as case studies progress, the call for comprehensive research on the relationship between silver and the economy has become increasingly urgent. One of the contributions of Jianbing's manuscript is that it integrates existing achievements and combines the perspectives of history and economics to propose a research framework on the relationship between silver and modern Chinese economy.
However, this manuscript also reflects the following academic direction: Chinese academia must and can have its own economics. Jianbing has been engaged in theoretical teaching at Hebei University of Economics and Trade for many years. He has told me several times that current Chinese economics textbooks, including monetary banking and international finance, barely mention China's five thousand years of civilization or modern Chinese financial history, with some even failing to mention them at all. Before coming to Fudan, Jianbing was already writing a draft of the history of Chinese silver taels, which was inspired by the translation and publication of Frank's Silver Capital in China. To others, the draft of the history of Chinese silver taels already had over half a million words, and selecting and appropriately revising parts of it to submit as a doctoral dissertation could have been a relatively easy task. However, during the process of writing the draft of the history of Chinese silver taels, Jianbing had already clearly recognized that narrative alone was not enough; theoretical summary and advancement were also necessary.
Choosing the topic of the current doctoral dissertation outside of the draft of the history of Chinese silver taels was precisely to combine economics and history, allowing theory and methodology to intertwine. Extracting patterns from the rich content of Chinese economic history has a more direct and urgent relevance to the formation of Chinese economics or the sinification of economics. In a sense, we only have one science—historical science.
The current manuscript does not use the term "silver standard" but refers to "a silver-core-type monetary system"; discussing the silver boom, the inflation and depression in China in the 1930s—all reflect the intention to reveal the impact of money on macroeconomics. The latter part of the manuscript discusses different development trajectories, further emphasizing the importance of extracting China's own experience from the history of modern Chinese currency. The combination of Chinese monetary history and monetary banking is Chinese monetary banking.
The current manuscript cannot yet be said to have fully achieved this goal, but it is steadily moving toward it, demonstrating an academic spirit of perseverance. It is also safeguarding and elevating the academic spirit through critique. I believe that in the near future, Jianbing will achieve even greater academic accomplishments.