Financial History 144 Winter 2023 | Page 30

In Spanish America , 929 million coins — representing 22,860 tons of silver — were minted with the image of the Spanish kings from 1772 to 1808 . Significant numbers of them were exported to China before 1799 . China imported 42 % of the total production of 1799 – 1806 and 26 % of the total mintage from 1807 – 1813 .
A Contemporary Account
A contemporary source from the 19th century , Zheng Guangzu , writing in circa 1844 , discusses the advent of circulating silver coins :
After 1775 , foreign silver coins began to appear in Suzhou and Hangzhou . At that time in my native prefecture of Suzhou coin-denominated remittance notes ( qianpiao ) were widely used along with fine sycee silver . Afterwards the price of silver rose steadily , and foreign coins gradually displaced sycee silver . Among them were the “ Horse-riding Swordsman ” [ i . e ., the “ Silver Rider ” dukaton of the Dutch Republic ]. From 1785 onward the “ Buddha Head ” coin was used exclusively . Subsequently foreign coins predominated because they were convenient to carry and exchange .
During the 18th century , the Taiwanese commonly used the “ Silver Rider ” dukaton for land transactions . Further evidence , found in a shroff ’ s ( moneychanger ’ s ) handbook in Taipei , provides an illustration of the Dutch three gulden from the 18th century . This shows it likely arrived in significant numbers , probably from the Dutch East Indies ( modern day Indonesia ).
Early American Coins in the China Trade
The first US coins arrived in China in 1796 : the Flowing Hair ( 1794 – 1795 ) and Draped Bust dollars ( 1795 – 1803 ). Even though they were modeled upon the Carolus dollars , after arriving in Canton they were discounted and melted down to make sycee . That was due to their lower silver content : American silver dollars had 371.25 grains of pure silver , while the Spanish dollars had 377.25 grains . Production of US silver dollars ended in 1803 , for the lion ’ s share of them were being shipped to China and not
The Hong Kong Mint ( 1866 – 1868 ) and its garden in Causeway Bay , Hong Kong .
being used in American commerce . The US Capped Bust half dollars ( produced from 1807 – 1836 ) were sent to China is substantial quantities to replace the dollar . However , as with the dollars before them , they were discounted and melted .
The Chinese greatly preferred the Carolus , for they had developed a reliability , familiarity and acceptability that no other international coin could match . The US dollars , and later the US half dollars , were unfamiliar and drew suspicion among shroffs . All coins — especially unknown issues — were chopmarked by merchants as a check on debased and counterfeit coins . Chopmarks are also similar to an endorsement on a check and guaranteed the coin ’ s authenticity . F . M . Rose writes , “ The Chinese would take anything which was a coin made of silver , but if they did not like it , or were unfamiliar with it , they would only take it at a discount from its true bullion value , and then be likely to toss it into a melting pot .”
Dramatic Drop in Chinese Silver Specie Imports
In 1808 , a Napoleonic army invaded Spain and imprisoned King Carlos IV and the crown prince Ferdinand VII . The Peninsular War ( 1807 – 1814 ) brought about upheavals in Spain ’ s American colonies . The Spanish American wars of independence ( 1808 – 1833 ) brought about both territorial and monetary fragmentation in the Spanish empire . Those wars were the cause of the collapse of mining and coin production in Spanish America . They caused a dramatic contraction of Chinese silver imports .
Dr . Alejandra Irigoin , associate professor at the London School of Economics , writes , “ The root at the halt of silver [ specie ] imports , and later the outflow of the metal , lies in the quality of the standard silver [ coins ] in circulation in the international economy . Indeed , the problem was not the quantity of silver but the quality of silver coin .” Traditionally , the shortages of silver have been explained by excessive opium imports from British India and extensive outpouring of silver to pay for it .
In contrast to the Carolus dollars , the coins issued by Mexico and other Latin American republics varied widely in quality over the years . The increasing variety of republican coins — with their different sizes , fineness and appearances — and with it the regular debasement of such , resulted in the collapse of the silver standard of the most successful world coin of its day . The Chinese learned of changes in Latin American republican coinage immediately .
Beginning in the 1820s , the arrival of debased republican coinage confounded shroffs and merchants , creating a problem that had never existed in the time of the Carolus dollars . In order to determine and establish a new silver standard , republican coins were chopped and marked with every single transaction , thereby further
28 FINANCIAL HISTORY | Winter 2023 | www . MoAF . org