Great Qing Treasure Note
The Great Qing Treasure Note or Da-Qing Baochao refers to a series of Qing dynasty government notes issued under the reign of the Xianfeng Emperor issued between the years 1853 and 1859. These government notes were all denominated in wén and were usually introduced to the general market through the salaries of soldiers and government officials.
After the Taiping Rebellion had depleted the imperial treasury of the Qing dynasty the government reformed the cash coin system to include higher denominations with low intrinsic values essentially creating a fiat currency; this was a radical departure from China's past where the value of cash coins was dependent on their weight rather than any denominations. The same developments which lead to the creation of the new Xianfeng coinage had also necessitated the reintroduction of paper money in China after it was absent for two centuries. The new paper currency came in two forms, one was the copper-alloy cash coins-based Great Qing Treasure Note and the other was the silver sycee-based Hubu Guanpiao which were both introduced simultaneously with the new debased cash coinage.
However, the government did not keep adequate reserves of hard currency to back the new notes up. Many provincial governments didn't allow for taxes to be paid using paper money, and after a few years the government started refusing to convert the new paper money into hard currency; consequently, the Chinese people started to distrust it as a valid medium of exchange. In response to the ever more expensive military expenditures caused by the Taiping Rebellion, the government produced more and more high denomination notes, which were not convertible. This caused hyperinflation; by the year Xianfeng 9 the currency had become completely depreciated and was abolished.
History
Earlier Qing dynasty notes
During the transition from Ming to Qing the Manchu government-issued notes known as Hubu Guanpiao or Shunzhi Guanpiao or Shunzhi Chaoguan which were first issued in the year 1651 on initiative of the Minister of Revenue, Wei Xiangshu during the war with the remnants of the Ming dynasty to cover the more immediate expenses of the Manchus as the finances of the Qing during this period were in dire distress, these notes were declared void only a decade after their issued. An annual amount of 128,000 guàn of these early Manchu notes were issued, with a total sum of 1.28 million guàn being produced before they were abolished. The denominations of the Hubu Guanpiao followed the pattern of the Ming dynasty period paper notes, but as historiographical sources about the early Qing era paper money are scarce, not much can be known about them.Peng Xinwei suggested that the Manchu rulers of the Qing were very much atavistic towards the inflationary pressure that the earlier Jurchen Empire experienced after they had abused their ability to print Jiaochao notes. Modern scholars argue that the notes issued during the Shunzhi period, while only brief, likely entrenched the reluctance of the Qing dynasty to issue notes because this issue also proved inflationary confirming their fears.
It has been suggested by Taiwanese economic historian Lin Man-houng that Chinese money shops did not start with the production of their own private notes until the end of the Qianlong period, these shops were very likely to have been more developed in Northern China, where these money shops produced notes which were mostly denominated in cash coins while notes from Southern China tended to be denominated in taels of silver. It is also possible that private-order notes could have emerged earlier in the 18th century and that their presence would become very common by the 1820s.
Economic and monetary background
The precursor of paper money known as "flying cash" were issued by the Tang dynasty; however, these bills of exchange could in no way be considered to be a form of paper money as they weren't meant to be a medium of exchange and were only negotiable between two distant points. The first true paper money in the world was issued under the Song dynasty, these were promissory notes issued by merchants in Sichuan known as the Jiaozi, under the reign of Emperor Zhenzong the government of the Song dynasty granted a monopoly for the production of Jiaozi notes to sixteen wealthy merchants in Sichuan, as these merchants were slow to redeem their notes and inflation started affecting these private notes the government nationalised paper money in the year 1023 under the Bureau of Exchange. As these paper notes were backed by the government they were instantly successful and the people regarded them to be equally trustworthy as cash coins, other types of paper notes issued under the Song dynasty include the Huizi and the Guanzi. Before the Mongol Empire conquered China the Jin dynasty also issued paper money.Before the establishment of the Ming dynasty the Mongol Yuan dynasty had suffered from a severe case of hyperinflation which made the paper money issued by them worthless. Under the reign of the Yuan dynasty copper cash coins remained in circulation with the inscriptions Zhida Tongbao, Dayuan Tongbao, and Zhizheng Tongbao forming the majority of the circulating issues and "strings of cash coins" remaining a currency unit. Silver then started to occupy a paramount place in the Mongol economy and was supplemented by government issued paper money. Under the reign of Kublai Khan the Zhongtong Jiaochao was issued whose value was based on the fabric silk. Under the reign of Külüg Khan in the year 1308 the Zhiyuan Baochao was issued which was supplemented with the silver-based Zhida Yinchao, but these circulated only for a year. The final series of paper money issued by the government of the Yuan dynasty from 1350 were the Zhizheng Jiaochao. A major difference between how paper money was used under the Mongols and under the Song dynasty was that, in certain regions of the Yuan dynasty, paper notes were the only acceptable form of currency and could not be exchanged in either copper cash coins or silver sycees. Exchanging paper money into copper or silver was known as duìxiàn which was the main reason why earlier forms of paper money were deemed reliable. As these regions were completely dependent on paper money inflation hit them more severely as their notes could not be converted into a currency based on any intrinsic value, for this reason the Mongols allowed their subjects to continue using copper-alloy cash coins and issued new ones every now and then. During the last few decades of the Yuan dynasty the inflation caused people to lose their trust in paper money and barter became the most common means of exchange.
During the beginning of Manchu rule over China in the year 1644, the total imperial revenues of the Qing dynasty were an approximated 30,000,000 taels. Imperial Government expenditures at the time were correspondingly modest. During the balanced periods in Qing dynasty history of the 17th and 18th centuries imperial revenue consistently exceeded government expenditures, which resulted in a tidy cash surplus in the Imperial Chinese Treasury. The vastness of China created poor communications across government offices and a general looseness of administration encouraged all sorts of irregularities across the country. During the course of the Taiping Rebellion China would see a third of its people die utterly devastating its economy in the process. Of China's 18 wealthiest provinces 12 were left in ruins, this would put a heavy strain on the resources of the government of the Qing dynasty putting it near breaking point as the rebellion had sown the seeds for further calamities which would hurt the economy of China even more and ultimately led to the downfall of the Qing dynasty during the next century. The main source of income for the government of the Qing dynasty was taxation.
The Taiping Rebellion was the largest civil war that China had experienced up until that point. The Qing dynasty Army of the Green Standard and its bannermen had long since fallen into decay, revealing the decrepit state of the Chinese military. Near the end of the year 1851, the Ministry of Revenue in Beijing promulgated the Statutes for Raising Military Funds. After repeated defeats on the field of battle suffered by the Chinese government, new armies and new types of armies had to be raised. For this task the Emperor was forced to turn to the provinces. Eventually, the imperial Chinese government had no recourse other than to place full responsibility in these newly formed units led by local warlords and aristocrats. Zeng Guofan, the architect of eventual victory over the Taiping Heavenly Kingdom, was given unprecedented powers in this pursuit. By January of the year 1862 conditions had worsened. Zeng's troops now only received 40% of their pay, and even so, payment fell as much as 15 months behind. Desertions now began occurring for the first time in 9 years of fighting. The government withdrew from conventional modes of centralised war financing as it has been proven ineffective. In turn, it allowed the Chinese provinces a greater flexibility in raising revenues than before, mainly by greatly expanding office selling, a time-honored Chinese fiscal emergency measure of the Ministry of Revenue in the capital city but this was never used on such a scale by provincial and military administrations. The offices being sols were those of jiansheng and gongsheng.
Silver ingots known as sycees have been a part of the Chinese monetary system since around the Tang and Song dynasties, but due to the natural scarcity of silver in China were rare and the use of silver currency was limited to the upper classes of Chinese society and their use was to be given as tribute, to pay bribes, to give away as gifts, silver sycees were also used as a method of transporting large funds over long distances as well as for hoarding wealth, and was used by the government to pay military expenses. This all changed when the Ming dynasty started trading with the Portuguese during the 16th century, large amounts of European silver would enter the trading port of Guangzhou leading to a large surplus of the metal in China as merchants began using silver to pay their taxes with. The amounts of silver flowing in increased dramatically after the Qing dynasty was forced to open more ports following the Opium Wars. Since the circulating silver sycee in China was rarely of the same degree of fineness, a standard unit of account had to be devised, this unit of exchange for accounting silver came to be known in English as the "tael".
The tael itself was not a form of currency, but rather a weight used to represent one pure ounce of commercial silver. As China was a rather large country where local customs tended to vary widely, an ounce would oftentimes in one place not necessarily be an ounce in another part of China. Consequently, a large variety of different scales were employed all over China by different trades, each of these scales varying somewhat from the other scales that were used in different fields of commerce.
The Xianfeng Emperor can't be completely blamed for the monetary crisis the Qing dynasty experienced during this era. The monetary policy of the Qing government had been effective for over 160 years, yet under the Daoguang Emperor's reign, which preceded that of Xianfeng, inherent problems to the system were becoming evident. 3 principal issues with the system arose. First, cash coinage became debased due to dishonest officials and the failure of the copper supply dependent on the copper mines of Yunnan which had been interdicted by the rebels. Secondly, the Chinese silver sector, with its system of Loofang, was never able to adequately fulfil the demands of Chinese commercial sector; and thirdly, the Qing dynasty was ruled by a government which proved incapable of enforcing the monetary policy which had worked so well for previous dynasties. All these factors reached a climax around the year Xianfeng 3. By this time the rebel armies of the Taiping Heavenly Kingdom had conquered the city of Nanjing and established their capital there. Which called for measures beyond traditional solutions.
By the time of this occurrence the imperial Chinese treasury was as good as empty. Zeng Guofan realized that his army could not survive off the land in rebel infested Anhui, Jiangsu, and Zhejiang provinces. Since the around the end of the year 1858 Jiangxi province had been molested very little by the Taiping rebels, Zeng became dependent upon the province of Jiangxi for his military supplies and made its defense an essential part of his counter-rebellion strategy. The main sources of income of the province at the time were agriculturally based; however, the collection of statistical data collected by the bureaucratic apparatus upon which the taxation system was based was often completely disrupted during Taiping incursions into the area, thus depriving the Ministry of Revenue of its base upon which to collect these taxes. This resulted that land taxes and grain tributes which were the 2 principal sources of revenue, were in large measure not paid to the central government in Beijing. additionally, taxes that were collected were often diverted to the local provincial treasuries to defray provincial military expenses. To make up in part for these losses, the lijin tax was introduced. During the entire Taiping Rebellion there were never sufficient funds to run the Chinese government and pay the army to crush the rebellion.
These taxes collected by the imperial Chinese government took many different forms; the most important of which were the land tax system, the grain tribute, the imperial customs revenue system, the tax on the salt monopoly, lijin, and miscellaneous taxes and duties imposed on the people. From ancient times the land tax had produced up to two-thirds of the Chinese government's total revenue. In China, historically all land within its territory was considered to be the property of the Emperor, the monarch having acquired it through conquest. How this land was used, however, was left to those that occupied and lived on it in return for a yearly tax based upon the rental value of the land in question. In the year 1713 the Kangxi Emperor had fixed the rent collected by the imperial Chinese government at tael per 6 mou of land and issued a decree that this ratio should stand for all time unchanged. From time to time however the actual land tax collected by the Chinese government was reduced in some areas where necessary as a result of natural disasters such as floods and earthquakes and human disasters such as rebellions and insurrections.
The Chinese provinces most devastated by the Taiping Rebellion which were Anhui, Zhejiang, Henan, Jiangxi, Jiangsu, Guizhou, and Sichuan enjoyed a governmental sanctioned "tax break" for decades due to the destruction that was wreaked upon them by the Taiping Rebellion. This "tax break" accounted for much loss of imperial government revenue which it had previously gained from those provinces. The proceeds of the land tax money collected during this era at the provincial level were substantially decreased. Severe irregularities and mass extortion commonly took place on the part of local tax collectors.
The second most important tax collected by the imperial Chinese government was the grain tribute. Yearly quotas were set, but these quotas were limited to only the 15 provinces with fertile soil which were all situated along the basin of the Yangtze River. The quotas set up by the Imperial Chinese government were assessed based upon local grain productivity in these provinces.
The Chinese government levered duties on customs and goods which entered China since ancient times dating to the same era as the land era. With the forced opening of the Qing dynasty's doors after the Opium Wars and the following increase in maritime trade with foreign nations, the customs duties took on a vastly expanded level of importance in the Chinese taxation system. Before the year 1854 the same rather lax administration and sleight of hand was practiced with the collection of the import customs as the Chinese government exercised with the land tax. In September 1853 an event happened which would change the way these customs were collected forever, and in the process, this event resulted transforming the Chinese maritime customs into a competent and highly efficient force for acquiring tax revenue for the Chinese government. In September of the year 1853 the Taiping rebels, fighting their way down the Yangtze valley while leaving a lot of destruction in their wake, threatened the port city of Shanghai. The loyal Chinese government officials lost no time in fleeing to Shanghai's International Settlement which was protected by guns of foreign warships stationed there. The Customs House of Shanghai by this time had been abandoned. Foreign traders and businessmen, refusing to pay duties to unauthorized Chinese officials, came to declare their imported goods instead to their representative consulates in the city until the Chinese Customs House could be reopened. This resulted to a considerable amount of workload for these foreign consulates, as the funds raised through customs duties were based upon a 5% ad valorem tax on all imports and exports in Shanghai. The foreign consular officials, who were unable to cope with this high volume, set up the Maritime Customs Service to be run by British, American, and French consular representatives and gave this office the task of collecting all customs duties on traded goods. As at the time only the British inspector was able to speak Mandarin Chinese, he was handed the office of the Inspector General. It was very rare for contemporary Chinese merchants who came into the Shanghai International Settlement to have had any prior contact with Western people. These people now could now observe western business practices and their administration at very close quarters. Some of these refugees who fled into the International Settlement were quick to realise that their country would benefit if China was to follow the West's example. These impressions of foreign business acumen gained during this era, together with cooperation arising out of need in this chaotic time in Chinese history, would lead to the creation of the first native Chinese modern shipping companies and similar business enterprises. The Imperial Maritime Customs was organised so well that it would become a model of efficiency, so efficient in fact that the British would never relinquish their control of this system during imperial China, the Manchus would continue this arrangement to the end of the Qing dynasty.
Since ancient times in China, the salt trade was treated as a government monopoly. John E. Sandrock described the administration of this commodity to be "so complicated, that by comparison, it would make a Rubik's cube look like mere child's play." As the commodity of salt was not uniformly distributed throughout Chinese territory, China was divided into many districts in an attempt to equalise natural conditions in various places. A timetable of tax collection was composed such as the Chinese salt traffic would bear. Consumers near the sea were taxed much higher, for example, this fact would be motivational to everyone to inspire them to evaporate their own salt, while in places where no salt was produced too high a tax would drive consumption down thereby reducing the revenues made. By this act of fine tuning the Chinese salt tax the Imperial Treasury of China kept up a steady flow of income of significant proportions.
The 5th of the imperial revenue sources was also by far the most diversified. These were the "miscellaneous taxes and duties", this category included everything imaginable to be taxed. There were separate taxes on deeds, wine, tobacco, tea, sugar, and timber to list a few. Operating a business was taxed. There was a mining tax mining, a butcher tax, a pawnshop tax, and a fishing tax. In reality, only very little has actually changed over the years. Duties were levied on goods such as grain, silk, cattle, wagons, oil, cotton, camels, bamboo, sulfur, cloth among others. Despite the large range of the above taxes and duties, each tax in and of itself was very minor and of small consequence to the individual in China, however in the aggregate, it was of great significance to the Chinese government. Collecting and accounting for this diverse revenue constituted a real nightmare of administration for imperial Chinese government tax agencies.
As a way to enhance the revenue the Chinese government introduced the Lijin tax which would prove to be very successful; however, this tax severely hampered trade and commence. The lijin was a tax imposed upon traded commodities. Lijin collection points were established along all highways and waterways in China. Additionally, the lijin tax was collected at every border crossing between Chinese provinces and at all city gates. Lumber originating on the upper Yalu River and bound for the capital city of Beijing has to pass through no less than 68 inspection stations to be taxed. The lijin collected added no less than 17% to the cost of this material. The lijin tax limited the amount collected in any one province to 10%. The tolls collected on passing commodities substantially slowed the flow of business within China. The lijin system would survive the fall of the Qing dynasty as it was a major source of revenue. The lijin tax would constitute the principal source of income for the Chinese provinces and was most essential to the military operations conducted by Zeng Guofan. The Ministry of Revenue assigned which funds had to be sent to the central government in Beijing and which could be retained for local provincial use. The fact that, at times, the military payment of provincial troops was 8 to 9 months in some areas established that the money more often went to Beijing than to the coffers of the provincial governments.
One scheme the imperial Chinese government introduced to raise funds was to allow provincial governments to sell Imperial Academy degrees, the profits from this were collected into a fund known as the jiansheng silver fund. Under the reign of the Daoguang Emperor, provincial treasuries kept approximately 48% of the money made from this scheme in provincial grain reserves known as Changpingcang and provincial silver reserves known as fengzhuyin, the Ministry of Revenue was attempting to get their hands on a third of these reserves, factually borrowing against the predicted income of the provincial Jiansheng silver funds which was feeding these reserves. This scheme was only functional if the imperial Chinese government had status awards which people would actually want to purchase using real economic capital, the imperial government would have to be able to arbitrarily dictate the prices for these symbolic awards, and would also have maintained complete control over the selling process for these awards. Chinese censor Huashana was highly critical of the Ministry of Revenue's profit-generating plan to start selling provincial examination degrees and titles, this had in the history of China never been allowed to be sold before showcasing how desperate the Ministry of Revenue was at the time for generating money to continue fighting the expensive war. Huashana praised the idea of producing paper money as a far better alternative to selling offices and degrees, but despite his anti-office selling stance he did not advocate for it to be abolished.
During the 19th century, Chinese trade in commodities such as tea, silk, and grain was of such a large volume that this trade actually taxed the capabilities of the copper-alloy cash coins-based currency system of China. During this period imperial Chinese revenues had to be remitted to the capital city of Beijing and provisional salaries paid. At the time the transportation of large sums of precious metal bullion was both expensive and risky to undertake. However, with the outbreak of the Taiping rebellion the business of transacting funds and revenue became even more dangerous. In order to overcome these new difficulties the existing Shanxi banks were greatly expanded to accommodate this demand. The principal function of the Shanxi banks under normal circumstances was that to send currency to more distant places in payment for traded goods and services. For this service the remittance banks charged a fee which ranged from 2% to 6%. During the usual course of business, these banks also held Qing Chinese government funds for disbursement. As the Shanxi banks were strongly represented in the north of China, the Chinese government saw it as only natural that these banks would be chosen to disburse the Hubu Guanpiao tael notes through their services. The Shanxi banks were often active in the assigned treaty ports cultivating the business of both Chinese merchants and foreigner traders alike. The Shanxi banks tended to be very competitive in their nature and cooperated extensively with other branches of banking corporations within their own sphere, they would often send crucial banking-related news to member banks by carrier pigeon. Prior to the introduction of the railroad to China, the Chinese economy relied heavily on Shanxi banks to finance inter-city commerce. In Northern China the preferred method of land transportation was the camel due to the fact that these animals could cope with the conditions of Northern China while many other animals couldn't, and the Shanxi banks employed camels in the north for transportation. The Shanxi banks and other Chinese banking companies were essential in connecting the various monetary systems that circulated in China at the time by facilitating interregional trade and commerce, providing credit for merchants, and cooperating in times of crisis. It was customary for example for the Shanghai banks to make advances to junk owners who were engaged in the trade of carrying tribute rice to the north, holding their vessels as collateral. These junks after having unloaded their rice in the port, would return with shipments of oil, peas, bean cakes, and other products for trade.
In the year 1858, a crisis occurred when the Shanghai banks would let the merchants borrow money to pay for the import of various foreign products and merchandise with the expectation that the tribute junks would return with oil and foodstuffs with a value that would be sufficient to offset the advance paid by the Shanghai banks. However, at this time the Second Opium War was being fought with the United Kingdom and France in the northern parts of China. The tribute junks were sunk on their voyage back to Shanghai. Had bullion in precious metals such as gold and silver have been demanded immediately to cover the loss that had occurred during this crisis, then the Shanghai banks would have gone bankrupt. Being allied with the Shanxi group, the local Shanghai banks were given time by the holders of the notes to obtain the necessary funds from other Chinese cities and the crisis which could have severely affected the economy of Shanghai negatively was thereby averted.
The Taiping Rebellion had caused the government of the Qing dynasty to fall into an extreme debt spiral which forced it to reconsider introducing paper money as a medium for exchange. This was advertised by the imperial government as a necessary evil because of a shortage of bronze which meant that the production of cash coinage had to be heavily scaled down. The pauperised Chinese public was for centuries uncompromisingly minded against the idea of paper money emissions in any way, shape, or form and would not accept it for any reason. Half a century earlier in the year 1814, when Cai Zhiding, who was a high official in the Ministry of State, petitioned to the court of the Jiaqing Emperor advocating the resumption of a paper money currency, this request was denied. Cai was later severely rebuked in the Jiaqing Emperor's memorial in which he pointed out that neither the Chinese government nor any individuals in the past had experienced benefits from the circulation of a paper money. The Jiaqing Emperor was not fully without justification in asserting his stance against paper currency, as the Ming era government notes from their introduction had been inconvertible into metal currencies. With no government backing into any other forms of currency these notes were swiftly depreciated. While this may seem only logical today the Chinese had to learn this lesson the hard way.
The first radical change to the Chinese monetary system involved the authorization and introduction of "big cash coins". This measurement was seen as one of the only remaining options left, and simultaneously the Qing government decided to reintroduce paper currency. Xianfeng's paper money consisted of two types of paper bank notes, the first of which was denominated in qian, or copper cash; and the second type, in silver taels.