CHAPTER XIII.

CHINESE FINANCE FROM THE HAN TO THE TANG DYNASTY.

THE leading ideas and recurring difficulties of Chinese financiers did not undergo any material change between the Han and the Tang Dynasties. One of the chief difficulties of the Government, the prevalence of illicit coining, was mainly owing to the simplicity of the mode, still in use, of casting money-a process which was easily imitated. Some ancient moulds, as well as coins, have been found, and in some cases the forger actually renders a service to the antiquary by preserving a piece which is ancient in everything except the date of casting. A curious bird-headed piece in the British Museum is a forgery of this kind,' representing a rare issue, dated between the T'sin and the Han. The legend has some reference to measures of corn, and it may possibly have been more like the tea or salt bonds of later times than a regular money.

Another curious, half scarab-shaped piece is known only from Chinese works. Members of the Han-lin College, towards the end of the Tang Dynasty, deciphered, but did not interpret, the characters on it. The collector must have begun his work in China with the literary revival of the Han. Quotations from native catalogues of collections made in the 6th century A.D., are met with in recent native works, and M. Terrien de la Couperie refers to five such of the present century which "are remarkable for the accuracy of their reproductions of coins, engraved from actual rubbings." Indeed, it is probable that coins have been regarded as historical records, and consequently of value as such, for nearly as long as they have been in use.

Twenty years after the establishment of the Han Dynasty, another attempt at an enlarged issue was made with eight-tchu pieces; eleven years. later Han-wu-ti issued cash of four tchu again; but free trade in coin was already permitted (177 B.C.) in the hope of putting down illicit coining. It was only stipulated that private mints should conform to the official standard of weight, shape, and purity.3 Under the Chow, kings and princes had coined money in such quantities as suited themselves, leaving traders and towns to provide for their own needs as they pleased. It was not till the central authority was powerful enough for its issues to be generally preferred that the temptation to fraudulent coining began; and the toleration 1 Catalogue of Chinese Coins, p. xxi.

2 lb., lxviii.

3 Mémoire sur le Système monétaire des Chinois, par E. Biot, Journ. As., 1837, p. 447.

of free trade in money, which seems so paradoxical, all through the financial history of China, is really to be explained by this early experience, that it would not pay to counterfeit the money of the State, if there were a number of equally popular mints open.

About the middle of the 2nd century B.C., a prince of Wei issued a successful round money with rimmed edges; and a coinage, of which no specimens remain, was cast at the same time in North Sz'chuen, by Teng T'ung, the inan whose name stands as a proverb, like that of Croesus, for the uttermost possibilities of wealth. He had a concession to work the copper mines of Ya-chu-fu in that province; and, while his money was preferred on account of its purity to that of the Government, the great wealth he had accumulated was regarded as a warning against the toleration of such monopolies in private hands. In the year 135 B.C., free coining was again forbidden, and ancient coins, knife, leaf, saddle, and other old currencies were demonetized. In 119 a white metal currency of tin and silver was tried, and in the following year Han-wu-ti issued the favourite tchu coinage, which remained a standard down to the Tang Dynasty. The new cash were made with a rim to prevent forgery. The edict of 135 must have been disregarded, for Wu-ti issued another in 112 B.C., suppressing private mints, and ordaining that the most skilful of the coiners should be employed in the Imperial Mint. He at the same time appointed three officers to watch over the currency, and the money issued at this period became, and long continued, exceedingly popular. It must be admitted that the Chinese Government was hardly dealt with in the matter of coining, for if it issued good money it was clipped, and base coin made of the clippings, while if it issued bad coins the people declined to use them, multiplying instead imitations of the earlier issues it preferred. In 190 A.D., coins were cast like those of Wu, only without the rim, which used to be clipped off.

It is almost incomprehensible that the nation which first invented. letters of credit, exchequer bonds and bank notes, should have been so slow to adopt the use of money at all, and should have continued to limit its currency to the tiny copper coins of which a hundred pounds worth weighs a ton. Yet if the question is looked at, as the advisers of the best emperors always sought to look at it, from the point of view of the small cultivator's interest, it is not so evident what this class had to gain by the introduction of a gold or silver coinage. So long as the Government allowed the taxes to be paid in kind, the villagers only needed money to effect occasional exchanges of produce, or for small marketings, both of which might at times take the form of simple barter. The value of the coins could hardly be too trifling when their chief function was to enable one villager to pay another for a handful of seed or a pair of sandals.

The transactions of the merchant, who bought the produce of one district in order to sell it in another, were normally upon something the same scale. The primitive merchant is little more than a carrier, and it is only in the case of exceptional commodities, like rare drugs and precious stones or metals, that the load, personally convoyed by a single dealer, can re

present much wealth. Any rudimentary tendency amongst traders to convert their whole store of useful commodities, i.e. their private capital into coin, to be spent in buying up commodities for sale at an advanced price, would have seemed to the legislators of the period as a diversion of industry from its proper functions, which should, as far as possible, be discouraged and deprived of all convenient implements. As la petite culture has been advocated by modern economists in the West, la petite commerce would have been deliberately defended, by all the generations of Chinese statesmen, whose policy has actually resulted in making every other Chinaman a little trader.

If the coinage was scarce, inconvenient, or unpopular, the people readily improvised standards of value, and used handfuls of grain for small change, and lengths of silk for larger values, as, to this day, salt is used in Yunnan and brick tea in Mongolia. Additional taxes, however oppressive, did not increase the demand for coin, as salt, iron, wine, and other articles, on which duties were from time to time imposed, were all as acceptable to the treasury as the normal payments of grain. A small token coinage seemed to meet the practical needs of the people, and the ideal of the Government thenceforward seems to have been, more or less consciously, to bar the way to accumulation by not recognising money as a commodity at all.

The Chinese emperor had less to gain than most European princes by tampering with the currency, because there was no public debt, and most Government expenses were borne locally, while salaries still consisted partly in allowances of grain. And provided the Government were honestly intent on doing so, it would have no more difficulty in limiting the issue of a token coinage, which represented the circulating surplus of silk and grain, than in limiting the issue of a token coinage representing the proportion of gold or silver available as money. The functions of such a token coinage are necessarily limited; but it is admitted by economists. that a community, which agreed to use the tokens as machinery for the exchange of commodities, would not find the comparative value of the goods themselves affected by its substitution for metal.

Some of the economic heresies of the Chinese seem to have been on the whole original and peculiar to themselves. The words used to describe money as cheap or dear have reference to weight, not price or scarcity. Money is "heavy," i.e. dear, when a coin of fixed nominal value will buy a larger weight of commodities than usual, and it is "light," or cheap, when the reverse is the case. But by a confusion of ideas, such as abound in the history of economic speculation, it seems to have been thought that the value of the money, or its purchasing power, could be increased by the simple increase of its weight;1 in fact, it was proposed to aim at the desirable result of cheap commodities and "heavy" money by raising the value of the money issued. The quantity of copper coin

It is recorded that in 524 B.C. the emperor was desirous of having "large money' cast, and was dissuaded from doing so by his council, so currency questions were evidently discussed at an early period.

in circulation remaining the same, of course, the people suffered inconvenience from not having money small enough to serve for trifling transactions; but the error of the Government was not more gross, and certainly more disinterested, than the far more common mistake made in the opposite direction, by rulers who have expected to enrich themselves, without impoverishing their subjects, by issuing "light" money at the nominal price of "heavy." In the "Rites of Chow," one of the recognised methods of regulating prices is for the State to issue money when prices are high, and to withdraw from circulation the cash received in payment of taxes when they are low. One of the arguments urged against free coining is based on the inexpediency of surrendering this part of the supreme power. "Riches are the handle held by the rulers of men," and to give up the handle is to endanger the rule.

The currency continued to be a source of great embarrassment, and from time to time the Government was on the point of reverting to the use of silk and grain as a medium of exchange instead of copper, though a very short experience showed that it was as easy to tamper fraudulently with the natural weights of these substances as to manufacture copper money with an undue proportion of alloy. One of the nameless emperors, whom history knows only as "the Deposed," in 465 A.D., reverted to the experiment of Wen-ti, and allowed the people to cast their own money; the result was seen in the production of diaphanous tokens, fit, according to the contemporary phrase, to "float on water or fly in the wind," of which it took ten thousand to pay for a bushel of rice. This license was nominally withdrawn in 494; but there was still no uniformity, and each district did the best it could for itself, using silk and grain whenever the copper money was hopelessly depreciated.

The Leang Dynasty issued iron money, which was open to all the same objections as the copper; and, for a short time, tin was used in addition to grain and silk. This dynasty has also the credit of a curious device for testing the value of the coin in circulation in different districts. It was proposed to send silk worth two hundred good copper coins for sale in different parts of the country, which in some places fetched as much as three hundred coins, "not because the silk was higher valued, but because

the money was debased.” 4 In the Northern Empire at the same time the salaries of officers were paid alternately in silk or copper, while private coining was allowed, providing the Government standard of purity was adhered to.

The short-lived Souy Dynasty set itself seriously to do away with the multiplicity of coins of every degree of worthlessness. Payment for

1 As the Bank of England raises the rate of discount when money is scarce. W. Vissering, On Chinese Currency, p. 36. This useful essay consists of translations from Ma-twan-lin's great work, in which the very words of ancient speakers or memorialists are reproduced for the instruction of posterity. Reviewed by Sir John Lubbock, Nineteenth Century, Nov. 1879. 3 Journ. As. (Aug.), 1837, p. 100. Vissering, p. 91.

Catalogue of Chinese Coins, p. 425.

officers' salaries, taxes, octroi and market duties were accepted in the old money, which, as it came in, was broken up and the metal appropriated by the administration. Five of the old issues were tolerated, but any other money found in circulation was confiscated. Unfortunately for the success of these reasonable measures, the trade of the coiner was always briskest when the copper coinage was unadulterated; and it was in vain that the State prohibited the working of tin and lead mines, which had hitherto been free, so as to monopolize the illicit as well as the lawful materials used. Before the fall of the dynasty, things were as bad as ever, and the people practically used for purposes of exchange any articlecloth, grain, paper, or metal—which was in common demand and easily divisible.

The fact that the copper tsien had always been cast, instead of stamped or hammered, of course made the coiners' work easier; but this would not of itself make the work so profitable, as to explain why the offence continued for ages to be so common, that the Government was again and again compelled to condone it. In 713 A.D. a million bushels of grain were issued from the public storehouses and sold to the people, payment being accepted in the counterfeit coins, which it was desired to call in and destroy, an end which could not be secured by penal measures.

The explanation of the forgers' persistency is so simple that nothing but force of habit can have prevented its discovery by Chinese financiers. The State charged 25 per cent. for manufacture. The copper coinage was never really adequate to the commercial requirements of the people, so that private coiners of good money were meeting a real want while realizing a satisfactory profit to themselves. The trade was therefore not regarded as essentially discreditable, and to allow private issues of copper coin was no more considered as a concession to the criminal classes than the license given to bankers to issue private notes. But the mistaken habit of charging 25 per cent. on the cost of the metal and labour 1 clung to the private mints, and hence free competition did nothing to put down forgery.

The total supply of copper was not materially increased by the abolition of the Government monopoly, and the comparative scarcity of good money made the manufacture of bad money always a possible source of profit, till the competition of private debasers forced other private issuers to lower their standard of quality. So that an increase of the currency, which was not excessive in quantity, led to its depreciation, because needlessly associated with its debasement. It seems simply not to have occurred to any one that the whole difficulty would disappear, if the State issued at cost price as much money as was required for circulation, and allowed free trade in copper for other purposes.

As it did neither, the two mistakes aggravated each other. Copper was largely in demand for the construction of Buddhist images, and increasingly so for the manufacture of various domestic utensils. As the 1Journ. As., l.c., p. 118.