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 head of the Finance Department at Hebei University of Economics and Trade. He had published numerous works on numismatics and monetary history, as well as over a hundred professional articles, establishing himself as a well-known young scholar. Many people asked him in person whether his motivation for studying in Shanghai was simply to obtain a doctoral degree, questioning whether it was worth spending several more years as a student. But in my view, Jianbing is a straightforward 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 said, 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 methods, 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 money itself, after reviewing the development of modern Chinese monetary history, summarizing the essence of China's unique monetary system; then exploring the relationship between money and the financial industry from the perspective of modern finance, and deriving its connection with the rise and fall of various financial institutions; further discussing the relationship between money and the macroeconomic development, thereby aiming to grasp the relationship between modern money 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. The first chapter, The 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 coinage. The chapter first narrates silver taels and silver dollars, which is naturally essential; then discusses cash and copper coins, demonstrating considerable effort 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 paper money, and finally summarizes the characteristics of modern Chinese coinage: the imbalance in the value scale, lagging behind the world's currency, price failure, and increased social production costs. The second chapter 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. The third chapter discusses the relationship between silver and the changes in modern Chinese macroeconomy, pointing out that China's monetary unification, 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, and analyzes the cases of falling and rising silver prices. The fourth chapter discusses the path of monetary system choices under different development paths, 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 path of economic development.
The conclusion of the entire manuscript contains two points worth noting: 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's transition from external dependence 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 works have touched upon the relationship between the two through 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 grows increasingly urgent. One of the contributions of Jianbing's manuscript is that it integrates existing achievements and combines the perspectives of history and economics, proposing a research framework on the relationship between silver and modern Chinese economy.
However, the 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 omitting it entirely. Before coming to Fudan, Jianbing had already been writing a draft of the History of Chinese Silver Tael. He wanted to write the draft of the History of Chinese Silver Tael after the Chinese translation of Frank's Silver Capital was published in China. To others, the draft of the History of Chinese Silver Tael already had over half a million words, and selecting and revising parts of it as his doctoral dissertation could have been a straightforward task. But during the process of writing the History of Chinese Silver Tael, Jianbing had already clearly realized that narrative alone was not enough; theoretical summary and advancement were also necessary. The choice of the current doctoral dissertation topic outside the History of Chinese Silver Tael was to combine economics and history, allowing theory and methods 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 Chineseization of economics.
In a sense, we have only one science—historical science. The manuscript does not use the term "silver standard" but refers to the "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 later part of the manuscript discusses different development paths, further emphasizing the importance of extracting China's own experience from the history of modern Chinese money. The combination of Chinese monetary history and monetary banking is Chinese monetary banking.
The current manuscript has not yet fully achieved this goal, but it is steadily moving toward it, reflecting an academic spirit of dedication. It is also protecting and elevating the academic spirit through critique. I believe that in the near future, Jianbing will achieve even greater academic accomplishments.