Familiarity, Convenience, and Commodity Money: Spanish and Mexican Silver Dollars in Qing and Republican China
Shanghai Advanced Institute of Finance; Shanghai Jiao Tong University (SJTU); China Academy of Financial Research (CAFR)
June 22, 2009
Using the available monthly and annual data from 1866 to 1928, we study the premiums at which foreign silver coins and silver-backed currency circulating in China sold relative to melt value, at both Shanghai and San Francisco. Silver-backed Chinese currency typically sold at a slight premium to its melt value, while Mexican and particularly Spanish silver dollars often sold at substantial premiums above melt value, averaging 2.25% and 16.09% respectively. Silver money premiums appear related to several measures of Chinese and global trade, competitiveness, and prosperity, including the extent of opium imports. We also offer potential psychological and cultural explanations for the observed premiums.
Number of Pages in PDF File: 37
Keywords: China, silver, silver dollar, Spanish piece of eight, international trade
Date posted: June 28, 2009