Silver During the Qing Dynasty

The Qing relied on silver coins from the Americas

Since a tax reform during the Ming Dynasty, many taxes by their subjects needed to be paid in silver.

When the Qing defeated the Ming, the new regime also took taxes in silver. But their territory did not mine sufficient silver and it did not officially mint silver coins. The government therefore demanded silver, without controlling much silver production or any of its coinage.

There were copper coins, which the Qing did mint. Those were usually in smaller denominations and used for ordinary transactions.

So, there was a large demand for silver in the Qing dynasty.

Where did the silver come from? Some came from mines in Burma. But the integration of the Americas into world trade was very significant.

The Spanish were shipping large amounts of silver from the Spanish Americas. Spain also conquered the Philippines and controlled Manila by around 1571. It was the trade of silver through its Manila port was an important factor in lubricating trade between the European powers and Guangzhou, the port that the Qing allowed foreign trade to pass through.

Silver, relative to gold, was worth twice as much there as in Europe at that time. So, it made sense for traders in the Americas to ship silver to Guangzhou and gold to Europe as their value would be maximized that way.

More than half of the silver that was coming to that port originated from the Spanish Americas. The Spanish crown had regulated silver coinage and the quality of its coins. Initially the silver for coins had come from Peru. By the early 1800’s that had changed to Mexico.

The Carolus silver Spanish pesos, featured the head of either Charles III or after him, Charles IV. They ruled over Spain and the Spanish Americas from 1759-1808, and those coins were particularly valued in the Qing state.

With the king’s head, it was well recognized, and the quality of its silver value was well understood and consistent. That made it a recognized sign and store of value. Unlike other coins, or bullion, it did not need to be weighed or assessed for its value. A knowledgeable trader could simply recognize the face on the coin and know its value. That was true even far from the coast.

Some have argued, that the Carolus coins acted like the US dollar does today in countries without reliable currency, such as Zimbabwe or Argentina. The Carolus silver peso was in demand throughout the Qing realm and there is evidence that some long-term contracts insisted in future payment in Carolus coins, perhaps as a hedge against inflation.

The issue of inflation came up in the Qing dynasty, especially in the 1800s because in 1808, Napoleonic France invaded Spain and control over its American holdings were impacted. The process was gradual. Over the next two decades, many former Spanish territories in the Americas, like Peru and Mexico, gained independence. During the independence struggle and after, various regimes issued coins of different looks and qualities.

In the first years after 1808, this didn’t cause much trouble for the Qing subjects as there were still plenty of Carolus coins circulating. There were even some more minted in the Americas as that is what the coinage facilities were used to producing. But as supply was disrupted and as less reliable coins began circulating, Carolus coins became scarcer.

Those particular coins became scarcer, in part because no more were coined, but also because as they became scarcer, people began hoarding them and their value increased. They had already been worth more than their weight in raw silver and now the premium increased even more.

A foreign trader could make money trading silver for silver, as long as it was Carolus coins going to Guangzhou in exchange for higher value pure silver in its rawer forms like ingots or irregular coins.

Foreign traders weren’t only trading silver. Tea and silk were in big demand elsewhere. And as we will see, opium along with Carolus coins, was in demand in the Qing’s lands.

When the western traders couldn’t supply enough Carolus coins, they brought in more opium.

Interruption of Carolus coins was an influence that contributed both to the Opium War and the Taiping Rebellion. Those will soon be the topics of podcast episodes in this series.

The Qing economy suffered an external monetary shock and did not control its own coinage.

When the supply of those particular coins dried up, their value increased relative to all other goods, including copper coins used for daily purchases and for food. With the shortage of reliable silver coins and the trading of them for increasing amounts of pure silver, which left the country, there was a reduction in overall silver in China. There was an increase in the relative cost of other items like copper coins and rice, as calculated in silver. This seems to have created both a recession or depression and the amount of rice or copper coins it took to buy a silver coin increased dramatically.

Unrest and mass protests were recorded specifically based on the rising costs of silver.

So, this is an underlying economic and political situation in the Qing dynasty around the 1830’s.

Soon, we’ll see what trouble this brought.

Image: "SPANISH PILLAR DOLLAR, PIECE OF EIGHT, CHARLES IV of SPAIN 1803 a" by woody1778a is licensed under CC BY-SA 2.0.