CopperSilver Exchange Rate and Prices in Northern China in 18001850: Evidences from Tong Taisheng Ac

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Copper-Silver Exchange Rate and Prices in
Northern China in 1800-1850 Evidences from Tong
Taisheng Account Books

• Debin Ma (LSE and Hitotsubashi)
• Yuan Weipeng (Beijing Academy of Social Science)
• A Presentation by Debin Ma
• At Hitotsubashi University
• July 2009
• This is part of Global Price and Income Project
  headed by Professor Peter Lindert. We thank
  specially Felipe Fernandes for his data
  assistance.

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The European benchmark the Greg Clark series (in
JPE) to tell a Malthusian story
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Can we construct long-term price and wages for
China?

• The Chinese anomaly
• We have almost seven centuries of grain or rice
  prices.
• We have grain prices at prefectural level for
  18th century (Wang Yeh-chien, Carol Shiue).
• But we still dont have widely accepted price
  indices even for the early 20th century.
• So there is a serious problem with other
  commodity prices.

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Why do we have such good grain prices

• It is associated with the granary storage and
  grain price reporting system.
• All grain prices are based on government reports
  using standardized silver tael unit.
• This raises the big questions
• can we trust these government reports?
• Are we correctly understanding the nature of
  Chinese market which operated largely on copper
  cash at the lower end?
• Is it possible to study prices from the end of
  copper cash?
• Some pessimist historians say it is simply
  impossible.
• Hans Ulrich Vogels exchange rate series show
  they go all over the place.

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North China Herald, 1889, p. 411

• Its (the Chinese currency) chaotic eccentricities
  would drive any occidental nation to madness in a
  single generation, or more probably such gigantic
  evils would speedily work their own cure. One
  hundred cash are not 100, and 1,000 cash are not
  1,000, but some other and totally uncertain
  number, to be ascertained only by experience. In
  wide regions of the Empire 1 cash counts for 2,
  that is, it does so in numbers above 20, so that
  when one hears that he is to be paid 500 cash he
  understands that he will receive 250 pieces, less
  the local abatement, which perpetually shifts in
  different places. There is a constant
  inter-mixture of small or spurious cash, leading
  to inevitable disputes between dealers in any
  commodity.
• The condition of the cash becomes worse and worse
  until, as in some parts of the Province of Honan,
  everyone goes to market with two entirely
  distinct sets of cash, one of which is the
  ordinary mixture of good with bad, and the other
  is composed exclusively of counterfeit pieces.
  Certain articles are paid for with the spurious
  cash only. But in regard to other commodities
  this is matter of special bargain, and
  accordingly there is for these articles a double
  market price.

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The Tong Taisheng Account Books

• Currently the most complete and well-preserved
  account books
• over 400 volumes
• Preserved in excellent good conditions.
• All account books are string-bound, handwritten
  with classical brush pens.
• Chinese numeric system as well specialized
  merchant numeric system (Suzhou numerals no
  longer in use today) were used to keep accounts.
• Period 1790-1850
• Location Daliu Town, Ninjing County of Shandong
  Province.

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Research Possibilities

• Existing studies by Yan Zhong-ping et al rough
  indices of copper-silver exchange rates and price
  indices with no information on the actual
  underlying data.
• Filling the gaps on commodity prices (so far most
  studies focus on grain prices). The compilation
  of price series books such as Mitsui Bunko.
• The efficiency of market in currency exchange,
  distribution margin, capital market.
• Business and accounting history of China

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Note the Suzhou Numeral System used
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This Would be the Street where Tongtaisheng was
located
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Todays DaLuiZheng
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Contents of the Account Book

• By categories
• Original accounts (transactions recorded at the
  time of buying and selling).
• Summarized Account (most plentiful)
• Accounts of inflows and outflows within the store
• Copper-silver account (copper silver transactions
  recorded on a daily basis, including different
  types of silver, the buying and selling rates)
• Transaction accounts (records of transactions
  which include the names of commodities, dates of
  transactions, prices and quantities, total
  amount, all recorded under the names of
  individual clients. Most transactions under
  individual accounts are not conducted on a
  cash-basis (period summing up of accounts of
  individual clients).
• Transaction accounts by branch stores at
  different counties
• Purchase accounts (wholesale prices)
• Interest rate accounts (rates of borrowing and
  lending)
• Expenditure accounts (of stores)
• Others

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Table 2. Volumes of Tongtaishen Account Books by
Years
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A The original accounts B the summary accounts
(copied afterward) C Subsidiary accounts
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Some Preliminary Findings ?6????(1830)?????????
?(??)
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More Preliminary FindingsA Comparison of Yan
et al Agricultural and Handicraft Price Indices
with our data set on rice and iron prices (in
wen/jin)
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Our data set offers actual prices on a monthly
basis
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Differences in buying and selling seem to be very
small (ranging from 0 to 3)
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We have data on a day basis
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Interesting and intriguing findings1. The law
of one price seems to be working trend looks
very similar after conversion. 2. Large retail
mark up (could be due to quality difference) and
a mysterious drop from 1816.Conversion used one
picul 160 jin
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Intriguing findings 2 1. Copper cash based
wages provide far more stability in trend than
silver converted wages2. The drop in real wages
towards mid-century is not as drastic in real
wages measured by copper cash
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Let us hope money keeps coming from
http//gpih.ucdavis.edu/