The Chinese University of Hong Kong Department of History Department of History
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Research Grants/Awards

Title of Project:
Debased Copper Coin Circulation and Monetary Policy in the Late Ming, 1500-1644

Total Fund Awarded:
HK$363,434

Principal Investigator:
Professor CHEUNG Sui Wai, Department of History, The Chinese University of Hong Kong

Funding Source:
RGC General Research Fund 2012/13

Abstract of Research:
         Long before the Ming Empire was established in 1368, copper coins were used as the medium of exchange in regional markets. In 1375 the imperial court began to print paper money and declared these notes the only legal form of state payment, but ordinary people continued to use copper cash as their preferred currency. Because the imperial government lacked the means to withdraw old coins as new ones were issued, and because debased counterfeits were common, at any time, many different types of coins circulated.

Cash was used in “strings”. It had been characteristic of Chinese coins, for centuries, to be made with a square hole in the middle so that they might be strung together. Such strings varied in value, local market custom governing the number of different coins each string might contain. Consequently, although copper coins issued by the government at any one time followed a common standard, Ming and Qing China did not have a unified currency.

In 1465, the Ming emperor made it acceptable for inland customs dues to be paid in copper cash. 1503, after paper money depreciated badly, the Hongzhi emperor reopened the state mints to cast copper coins. In 1576, the right to mint coins was extended to the provinces. But reverting to coinage immediately brought into play Gresham’s law of “bad money driving out the good”. In consequence, people dissembled their strings, hid the good coins for themselves or sold them to counterfeiters, and paid taxes in inferior coins. My first hypothesis is that copper cash were minted again in the Ming not only because it was convenient for small denomination purchases, but also very largely because it was the portion of the money supply that the government could issue at will.

My second hypothesis is that these changes in monetary policy caused high inflation in prices as calculated in copper cash. Since a major function of the copper cash was to pay inland customs duties, I expect that the affected areas were commercial cities along the Yangzi River and Grand Canal with customs houses, while places far from this long-distance trade route, such as Fujian, maintained the old habits of string composition, and the circulation of good-quality coins, throughout the Ming. If so, this project will show a pattern of late Ming coin circulation, and provide an essential framework for research on the regional diversities of economic growth in late-imperial China.