Ming China enters world market following monetization of silver
(Left) A note issued by the Ming authorities between 1368 and 1399, approximately 30x20 cms, printed in black on paper with red seal impressions for extra security Photo: CHINASAGE
(Right) A copper coin (Upper left) and silver taels from the Ming Dynasty (1368–1644) Photo: BAIYINTOUZI
In China’s history, silver underwent a complicated evolution from a valuable commodity to a major currency. As the silver tael evolved from an illegal currency to the de facto legal currency in the Ming Dynasty (1368–1644), it not only fueled social changes, but also propelled China’s overseas trade.
Ni Yuping, a professor from the Department of History at Tsinghua University, said that in the long and complicated history of China’s currency, the copper coin served as the main means of circulation for a long time, although it was not the only currency. Copper coins are not the best choice for storing wealth. In most cases, gold and silver are preferred.
In fact, the monetization of silver originated in the Southern Song Dynasty (1127–1279), Ni continued. After several centuries of brewing, the development of the commodity economy in the Ming Dynasty and commodity trading required the monetization of silver. Especially with the authorities’ decision to expand foreign trade in the mid-Ming Dynasty, a large volume of silver was imported from Japan and South America, which created favorable conditions for the official monetization of silver.
In the early Ming Dynasty, gold and silver were banned as currency, said Du Xuncheng, a professor from the School of Economics at Shanghai University of Finance and Economics. At that time, a monetary system of notes and coins was introduced.
The Chinese were the first in the world to introduce paper currency. Starting with the official issuance of jiaozi in 1023 until the official monetization of silver in the middle of the Ming Dynasty, paper money had been used for more than five centuries, Du said. Due to the lack of an effective system to limit the issuance of banknotes, however, the Ming authorities would flood the market with paper money from time to time, triggering ruinous inflation.
As the monetary system’s drawbacks became increasingly serious, silver was gradually accepted by the market and the government.
In 1567, the first year of the reign of the Longqing Emperor in the Ming Dynasty, the state recognized the status of silver as a legal currency, and silver was fixed as the main currency. Silver also became the major currency for national levies in the Ming Dynasty.
The Yi Tiao Bian Fa (Single Whip Law), a fiscal law first instituted in the 1530s and then promulgated throughout China in the 1580s, stipulated that all tax payments were to be made in the form of silver. As such, the status of silver as the standard currency was further established. All within the Ming Dynasty, silver was first banned as currency, then permitted, and finally recognized as the standard currency for fiscal revenue and expenditure. All of this was the result of society’s rethinking of the monetary system, Du concluded.
In the late Ming Dynasty, silver had become the most important means of circulation, covering all areas of the national economy, Ni said.
Externally, the amount of silver had increased dramatically since the Western price revolution between the 15th and 17th century, Du said. Western countries needed to find new destinations for the export of silver. Although China was not fully integrated into the world trade system at the time, Western silver was still able to flow into China through limited channels such as an official tributary trade alongside smuggling. European and American countries used the Philippines and Japan as channels to buy Chinese silk and porcelain products in silver. Exporting silver to China affected China’s monetary system.
There were two major ways to obtain silver in the Ming Dynasty, Ni said. One was domestic mining and smelting. For example, there were silver mines in Yunnan, Zhejiang and Fujian, and several other provinces. The other more important way was overseas trade. A policy prohibiting maritime trade started from 1368, which deliberately interdicted China’s own people from sailing abroad and prevented foreigners from entering China unless they were part of an official tribute mission. After this was abandoned in 1567, a large amount of silver flowed into China as a world currency, and a unified domestic market was gradually formed. Through the ports of Guangzhou and Macao, China was closely linked with Japan, Europe and Latin America.
China’s exquisite silk, porcelain and other commodities were exported. Silver from the world’s major silver producers, first Japan then the Americas, was continuously imported to China. A global trade network centered on silver was gradually formed, and the world market system was initially established. At that point, China became an inseparable component of the global economy, Ni said.
The formation of a unified domestic market and interaction with the world economic system would inevitably lead to changes in China’s social structure. In the Ming Dynasty, Chinese society began to slowly transform from a relatively single agricultural social structure to a more balanced social structure of agriculture, industry and business. This profound social transformation also had a tremendous impact on literature, art, scholarship and thought, revealing the dawn of China’s transition from tradition to modern times.
While the Chinese society was undergoing major changes in the late Ming Dynasty, the world also saw the beginning of globalization, said Wan Ming, a research fellow from the Chinese Academy of Social Sciences. With its voracious appetite for silver, China actively expanded the Maritime Silk Road through its world-renowned silk and porcelain products, connecting itself with the emerging world market system.
The monetization of silver proves that China had a strong internal driving force to engage with the world. When China joined the world system in the late Ming Dynasty, it was active rather than passive, Wan observed. In the Ming Dynasty, China was consistent with the global trend of modernization. China’s interaction with the world made an important historical contribution to the beginning of globalization.
edited by JIANG HONG