MANUSCRIPT THESES Unpublished theses submitted Tor the master!s and doctorTs degrees and deposited in the Louisiana State University Library are available Tor inspection. Use of any thesis is limited by the rights of the author. Bibliographical references may be noted, but passages may not be copied unless the author has given permission. Credit must be given in subsequent written or published work. A library which borrms this thesis for use by its clientele is expected to make sure that the borrower is aware of the above restrictions. LOUISIANA. STATE UNIVERSITY LIBRARY 119-a THE DEVELOPMENT OF CHINA’S MONBTAHY SYSTEM A Dissertation Submitted to th© Graduate Faculty of th© Louisiana State University and Agricultural and Mechanical College in partial fulfillment of th© requirements for the degree of Doctor of Philosophy in Th© Department of Economics by Cheng-se Tseo B. S., Central Political Institute, Nanking, China, 1933 M* S-, Louisiana. Stat© University, 1939 June, 1942 UMI Number: DP69236 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. UMI Dissertation Publishing UMI DP69236 Published by ProQuest LLC (2015). Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106- 1346 ACJQfOm&KMEBT The candidate wishes to acknowledge his appreciation for the help given him by the various members of the Faculty of th© College of Com merce of Louisiana State University* Dr* James B* Trent, Dean of the College of Commerce, has supervised the work and offered many valuable suggestions* Dr* Harlan L* MoCraoken, head of the Department of Eco nomics, and Dr. Robert W* Bradbury, Director of the Division of Latin American Relations, have read the manuscript and given many helpful criticisms* Dr. Theodore H. Farris, Professor of Economics, has also given great assistance* Dr. Stanley W* Preston, Professor of Business Administration, has aided the candidate in overcoming his difficulties with the English language* TABLE OF CONTENTS Chapter Fag© I THE BSmOJMENT Of CHINA’S MONETARY SYSW PRIOR TO 1896 • 1 Copper Money • . . . . . . . . . . . 7 Silver Money • 12 Paper Money • 22 Gold in China.......................................... 27 II THE BACKGROUND OF THE SITUATIOK AROUND 1898 * * 32 Governmental Finance * • . . . . . . . . 32 Public Debt ..................... 36 Foreign Trade # • • * • » • • • • • • • .............. 3? State of Affaire with the Western Powers and within China 39 The Monetary Situation 44 Copper Money . . . . . . . . . . . . . . . . . . . . . 44 Silver Money . . . . . . . . . . . . . ........ . . . 50 Paper Money 65 China’s Banking around 1898 • • « . • * • • « » • • • • 66 Shansi Banks 66 Hative Banks ......... 6T Foreign Banks . . . .......... . . . . . . . . . . . 69 Others •« ....................... 70 III THE CURRENCY REFORM OF CHINA'S GOVERMIENT m> IMPORTANT PROPOSALS OF THE REFORM (BEFORE 1910) . . . . . . . . . 77 Factors Leading to the Preliminary proposals.......... 77 Proposals before 1900 77 Condition of 1900 and after • 80 Currency Reform of China’s Government . . . . . . . . . 88 Merits of the Gold Standard . . . . . . . . . . . . . . 121 17 THE MONETARY SITUATION BETWEEN 1911-1928 AND THE PROPOSALS FOR CURRENCY REFORM ................. 126 The Currency Situation from 1911 to 1928 . . . . . . . . 126 Situation of the Silver Dollar . . . . . . . . . . . . 127 Situation of the Paper Money . . . . . . . . . . . . . 129 The Capper Cents . . . . . . . . . . . . . . . . . . 130 Situation of the Subsidiary Silver Coins * . * . * • » 132 Monetary Policies of China’s Government and the Advo cates of Currency Reform • 134 G* Vissoring . . . . . . . . . . . . . . . . . . . . . 134 W. A» Roest . ... ... . . . . . . . . ........ . 143 Hsu Un-yuan 143 S. R. Wage! . . . . . . . . . . . . . . . . . . . . . 146 The Banking Situation and Demands for Positive Currency Reform .............................................160 ill Chapter Page V THE MONETARY REFORM AFTER 1928 AND THE MANAGED CURRENCY REFORM .......... 176 Monetary Policies and Currency Reform before 1936 • * • 176 Creation of the Central Bank of China • • • • • • • * 176 Central Mint at Shanghai * • • • • » • • • « * . * » • ' » 180 Abol is tenant of "Likin” * * * * * * . « , « . * * * • * • • 182 Establishment of the Customs Gold Unit * • « • » • • • 184 Abolishment of the "Tael” • • * • » » • ' » • • • • • 138 Rationalisation of Silver • * • • • • • • • • • * • » * 192 Silver Situation in 1934 « • • « » • < > « < » * » « • « * 192 Causes Leading to Nationalization * • . * * * « . * ♦ 200 Process of Nationalisation * • » • • • • • « • * • « * 206 The Managed Currency 216 Summary « • * » « • * • • » » • » « . » « 223 ¥1 SUMMARY AND CONCLUSION . . • ......... 226 APPENDICES.................... * .......... . * ■. 248 BIBLIOGRAPHY ............ 258 BIOGRAPHY ..................... . . . . . . . 266 Iv ABSTMGT This study Is designed to present a complete picture of the de velopment of China's monetary system from about 1122 .8* C* to 1957 A* D* However, th© main emphasis is on the recent development from about 1851 to 1S37• Therefore, the background of th® country around 1898, th© important creation of th© Government after 1898, and th© important proposals for currency reform, between 1895 and 1928 are traced in much greater detail than for earlier periods* The materials used are, in the main, col lee ted from the govern mental documents in this country, th© periodicals, and the books in the English language, sine© ther® is a lack of the original Shines© materials* Generally speaking, China, in the early period, had once used cowries, pearls, gems, and other articles as money, but she maintained th© system of copper coins for several thousand years* Th© Chow dynasty (1122 to 220 B* C*) first coined and the Tan dynasty (A* B* 618-917) improved th© round copper cash* The Tang copper coins re mained th© standard of coinage for many succeeding centuries until around 1900, when the modem copper cents took their place* Even though silver was used a® money as early as the days of th© Ssia dynasty (2205-1818 B. C*;, silver was not recognized as legal tender for th© payment of taxes until 1055 A* D, by the government of the Sung dynasty* After a considerable amount of silver bullion and foreign silver dollars had flowed into ^hina from Europe and Mexico after the nineteenth century, silver cam® into general us® as money v vl sid® by side with} copper coins * The Chinese started to coin their o*sa silver dollars at the Canton Mint in 1889* later on several provincial mints began to tuna out their owi local dollars* The first Chinese paper money, governmental notes, m s issued under the reign of Emperor Hien-tsun (A* B* 8G6-82Xj of the Tang dynasty* Later on each dynasty used paper money to finance m r or in times of extreme financial difficulty* Luring the last few decades of the Tslng dynasty (A* D* 1644*1911) native batiks, firms, and foreign banks issued notes freely* Bnminted gold was used in china as early as 1818 B* C* and gradually came to be used as a storage of value and as one of the minor mediums of exchange * But gold coin as a national currency has never yet been adopted in China* China* s monetary system after 1851 ran into serious difficulty* In the years around 1898 it became worse* The taels, the unit of silver, were counted differently, depending or places, business, and tradition* The seme was true regarding the "purity" of silver* Th© foreign dollars circulated by weight and discount* The Chines© provincial dollar, with different appearance, circulated by weight Instead of face value* Copper cash, worn and new, genuine and counterfeit, was accepted by the people* An un-uniform currency system had been existing in China at that time* China's political and social condition around 1898 had added more confusion to the complicated monetary situation* For instance, China's government was inefficient and decentralized, both from the standpoint of organisation and personnel* The financial difficulty forced China’s local governments to abuse the currency policy, and the huge amount of vii foreign g©14 loans directly exhausted the financial sources and in directly pat China In a position that w s dependent on foreign help to reform her currency system. Under the serious condition, China’s government from year to year took: various steps to reform the currency system* For various reasons these steps were unsuccessful* For instance, a movement of preliminary monetary reform to unify China’s currency occurred in 1395* From 1901 to 1904 some rain attempts were made to Improve the existing situation- The "Ten Peculations" and th© Act of "coinage of Taels" of 1905 were never put into effect* The "Ecgulatiens for the National Coinage” and th© supplementary articles of 1910 helped very little* The coinage of the Tuan Shl-kai dollar was the only tangible result of the "Bat i one. 1 Currency Hegulotions" of 1914* In 1918, although th© "Regulations of gold currency motes” were granted, they had never been put into act* From 1918 to 1928, a period of ten years, under the series of civil wars, both government and monetary reform virtually ceased* From 1895 to 1928 th© proposals devised either by China’s officers or by foreign experts piled mountain high, but non© of them had ever been put Into act* After 1928, under China’s mew National Government, the situation took a turn for th© better* For instance, in 1928 a Central Bank was set up; in 1950 the system of "Custom Gold Unit** was established; the abolishment of th® Haikwan tael began in 1930 and was completed in 19331 the Central Mint m s created at Shanghai in 19331 th© "tael” system ■was entirely abolished in 1953; and China’s standard dollar was coined in the Central Mint In 1933* These were the steps necessary for