Proposal preview

Between Gold and Silver: Asia in the Age of Two Standards, 1871–1935

Research on the monetary and financial history of modern Asia has surged in recent years, and the region is no longer the blank space it was in the international monetary histories of a generation ago. Nonetheless, these research results have yet to be incorporated into most accounts of late nineteenth- and early twentieth-century globalization. Moreover, as elsewhere in the world, historians have given most attention to the gold standard; there has been much less exploration of how the gold standard operated as part of a larger monetary ecology. Questions involving the interworking of gold and silver standards were especially salient in Asia, where most standard money (for long-distance trade, for banknote issue) was silver at the beginning of the period, where silver became the basis for modernized unitary currency systems in several countries, and where silver persisted as the standard of the largest country, China, until 1935. Other connected questions come to light here. What was the role of money creation in imperial projects, particularly the invention and regional salience of gold-exchange standards, in which silver remained the mainstay of circulation? What was the role of Asian monetary flows and reserves in stabilizing the London-centered world monetary order (and in destabilizing Asian economies and societies at several decisive moments)? Finally, how did the international gold and silver standards work together as a single system, from the time of their conjoined origins in the 1870s to their conjoined demise in the 1930s? Panelists approach these questions by examining regionwide macro-level effects of the first great appreciation of gold after 1873; Japan’s first, unsuccessful attempt to adopt a gold standard after 1871 (which would have made Japan a very early gold-standard adopter); Japan’s successful adoption of a silver standard and central banking system in the 1880s; the mediating role of exchange banks between the gold and silver standards; the silver standard in China compared with the silver standard in Mexico; the Kemmerer mission to China and its attempt to institute a gold-exchange standard there; the long contestation over colonial currency transitions; synthetic commentary on some lessons of these experiences.

Panelists:

Gopalan Balachandran, Professor of International History and Politics at the Graduate Institute of International and Development Studies, Geneva, is the author of _John Bullion’s Empire: Britain’s Gold Problems and India between the Wars_ (London, 1996/2015); _The Reserve Bank of India, 1951-1967_ (Delhi/Oxford, 1998); and _Globalizing Labour? Indian Seafarers and World Shipping, c. 1870-1945_ (Delhi/Oxford, 2012).

Simon James Bytheway, Professor of Financial History at Nihon University, is the author of _Investing Japan: Foreign Capital, Monetary Standards, and Economic Development, 1859–2011_ (Harvard, 2014), and co-author (with Mark Metzler) of _Central Banks and Gold: How Tokyo, London and New York Shaped the Modern World_ (Cornell, 2016).

Steven J. Ericson, Associate Professor of History at Dartmouth College, is the author of _The Sound of the Whistle: Railroads and the State in Meiji Japan_ (Harvard, 1996) and co-editor of _The Treaty of Portsmouth and Its Legacies_ (Univ. Press of New England, 2008). He is currently writing a book on the Japanese financial reform of the early 1880s.

Marc Flandreau, Howard Marks Professor of Economic History at the University of Pennsylvania, is the author of _The Glitter of Gold: France, Bimetallism and the Emergence of the International Gold Standard, 1848-1873_ (Oxford, 2004); _The Making of Global Finance 1880-1913_ (with F. Zumer; OECD, 2004); and _Anthropologists in the Stock Exchange: Science, Empire and White Collar Criminality in the Age of Victoria_ (Chicago, 2014).

Niv Horesh, Visiting Professor in China Studies at Durham University, is the author of _Shanghai’s Bund and Beyond: British Banks, Banknote Issuance, and Monetary Policy in China, 1842-1937_ (Yale, 2009), and of _Chinese Money in Global Context: Historic Junctures Between 600 BCE and 2012_ (Stanford, 2013).

Mark Metzler, Professor of History and International Studies at the University of Washington, is the author of _Lever of Empire: The International Gold Standard and the Crisis of Liberalism in Prewar Japan_ (California, 2006) and of _Capital as Will and Imagination: Schumpeter’s Guide to the Postwar Japanese Miracle_ (Cornell, 2013).

Tomoko Shiroyama, Professor of Economic History at the Graduate School of Economics of the University of Tokyo, is the author of _China During the Great Depression: Market, State, and the World Economy, 1929-1937_ (Harvard, 2008). She is currently co-editing a volume on _Intra-Asian Trade and the Rise of Regional Economy during the Long Nineteenth Century_.

Organizer(s)

  • Mark Metzler University of Washington mmetzler@uw.edu
  • Niv Horesh Durham University niv.horesh@gmail.com

Session members

  • Niv Horesh, Durham University
  • Gopalan Balachandran, Graduate Institute of International and Development Studies
  • Simon Bytheway, Nihon University
  • Steven Ericson, Dartmouth College
  • Tomoko Shiroyama, University of Tokyo
  • Mark Metzler, University of Washington

Discussant(s)

  • Marc Flandreau University of Pennsylvania mfl@sas.upenn.edu

Papers

Panel abstract

Research on the monetary and financial history of modern Asia has surged in recent years, and the region is no longer the blank space it was in the international monetary histories of a generation ago. Nonetheless, these research results have yet to be incorporated into most accounts of late nineteenth- and early twentieth-century globalization. Moreover, as elsewhere in the world, historians have given most attention to the gold standard; there has been much less exploration of how the gold standard operated as part of a larger monetary ecology. Questions involving the interworking of gold and silver standards were especially salient in Asia, where most standard money (for long-distance trade, for banknote issue) was silver at the beginning of the period, where silver became the basis for modernized unitary currency systems in several countries, and where silver persisted as the standard of the largest country, China, until 1935.

1st half

The First Great Appreciation of Gold: Effects in Asia, 1870s–1890s

Mark Metzler

The great increase in the purchasing power of gold--an approximate doubling from the 1870s to the 1890s--meant depressed conditions and severe pressure on agricultural and other producers in the gold-standard countries. What were the effects in Asia, where silver remained the standard trade currency? This paper presents a region-wide picture by summarizing the variety of monetary transformations in Japan, China, Indonesia, and India across the second half of the nineteenth century. These monetary changes had enormous real and structural consequences, generating booms in some places and depressions in others.

The great increase in the purchasing power of gold--an approximate doubling from the 1870s to the 1890s--meant depressed conditions and severe pressure on agricultural and other producers in the gold-standard countries. What were the effects in Asia, where silver remained the standard trade currency? This paper presents a region-wide picture by summarizing the variety of monetary transformations in Japan, China, Indonesia, and India across the second half of the nineteenth century. These monetary changes had enormous real and structural consequences, generating booms in some places and depressions in others.

Golden Aspirations: Japan’s First Gold Standard, 1871–1878

Simon James Bytheway

By issuing an Imperial Ordinance on 10 May 1871, the new Meiji regime had apparently adopted gold as its official monetary standard. From the outset, however, a number of fundamental problems challenged the viability of the legislation. First, silver in the form the Mexican dollar was the de facto trade currency of Asia. The initial “unequal” treaties had been hammered out by the Great Powers on the assumption that Japan’s international trade would proceed on the basis of a silver currency. Secondly, questions arose as to how Japan could procure gold for the operation of its own monetary gold standard. Were Japan’s new leaders planning to find goldmines; or was Japan preparing to create a gold reserve through the acceptance of huge foreign loans? In order to answer these questions, my paper explores the significance of gold, silver, and bimetallic standards in Japan vis-à-vis the emerging global economy.

By issuing an Imperial Ordinance on 10 May 1871, the new Meiji regime had apparently adopted gold as its official monetary standard. From the outset, however, a number of fundamental problems challenged the viability of the legislation. First, silver in the form the Mexican dollar was the de facto trade currency of Asia. The initial “unequal” treaties had been hammered out by the Great Powers on the assumption that Japan’s international trade would proceed on the basis of a silver currency. Secondly, questions arose as to how Japan could procure gold for the operation of its own monetary gold standard. Were Japan’s new leaders planning to find goldmines; or was Japan preparing to create a gold reserve through the acceptance of huge foreign loans? In order to answer these questions, my paper explores the significance of gold, silver, and bimetallic standards in Japan vis-à-vis the emerging global economy.

'A Silvery World': Japan's Adoption of the Silver Standard in the Mid-1880s

Steven J. Ericson

In this paper, I examine the process by which Japan went on the silver standard at the end of the Matsukata financial reform of the early to mid-1880s. In the lead-up to the reform, Japan had lurched from a bimetallic monetary system to a de facto silver standard--but, in practice, no metal standard--until Finance Minister Matsukata put Japan on track toward a formal silver-backed currency. Nonetheless, in Matsukata’s view, silver was strictly a nominal standard, for he planned from the start to move Japan from a “silvery world” to one in which “golden flowers bloom again.” I investigate the methods that the government used to accumulate specie in preparation for the issuance of silver-convertible paper money by the Bank of Japan beginning in 1885. I also look into the consequences for trade with gold-bloc nations--and the consequences for borrowing from them--of Japan’s establishment of a silver-currency system.

In this paper, I examine the process by which Japan went on the silver standard at the end of the Matsukata financial reform of the early to mid-1880s. In the lead-up to the reform, Japan had lurched from a bimetallic monetary system to a de facto silver standard--but, in practice, no metal standard--until Finance Minister Matsukata put Japan on track toward a formal silver-backed currency. Nonetheless, in Matsukata’s view, silver was strictly a nominal standard, for he planned from the start to move Japan from a “silvery world” to one in which “golden flowers bloom again.” I investigate the methods that the government used to accumulate specie in preparation for the issuance of silver-convertible paper money by the Bank of Japan beginning in 1885. I also look into the consequences for trade with gold-bloc nations--and the consequences for borrowing from them--of Japan’s establishment of a silver-currency system.

2nd half

Conundrums of the Bimetallic Standard: Late 19th-Century Mexico and China Compared

Niv Horesh

From the middle of the eighteenth century better-quality Western coinage could enhance trade benefits as a result of the relocation of metal to places where it had greater monetary utility. Then, in the 1870s, wealthier economies began joining the gold-standard bloc. Yet, Mexico, the world’s largest producer of silver, would only join the bloc in 1905, whilst China clung to silver-based currency right up to 1935. Both countries had in large measure similarly relied on copper subsidiary coinage alongside silver. This presentation will aim at a comparative evaluation of the late 19th-century bimetallic standard based on the Chinese and Mexican experience.

From the middle of the eighteenth century better-quality Western coinage could enhance trade benefits as a result of the relocation of metal to places where it had greater monetary utility. Then, in the 1870s, wealthier economies began joining the gold-standard bloc. Yet, Mexico, the world’s largest producer of silver, would only join the bloc in 1905, whilst China clung to silver-based currency right up to 1935. Both countries had in large measure similarly relied on copper subsidiary coinage alongside silver. This presentation will aim at a comparative evaluation of the late 19th-century bimetallic standard based on the Chinese and Mexican experience.

The Landscape of Money in Modern China: Edwin. W. Kemmerer’s Investigation and Analysis in 1929

Tomoko Shiroyama

By the 1920s, China was virtually the only country still on the silver-standard in an international monetary system predominantly on the gold-standard. However, China had not been indifferent to the monetary reforms of abandoning the silver standard for the gold-exchange standard that had been introduced to other countries in Asia. In fact, before China’s currency reform in 1935, thirteen reform proposals by Chinese and foreigners had been submitted. Edwin W. Kemmerer’s mission in 1929 was the final one of those attempts. Being a “Money Doctor” serving as advisor to many governments, Kemmerer investigated the local monetary situations in China and compared them with the reforms of other Asian countries, including the Philippines, the Strait Settlements, and India. Focusing on Kemmerer’s analysis of China’s monetary system, this paper investigates the key dynamics of the silver-standard economy in relation to the gold-standard international monetary system.

By the 1920s, China was virtually the only country still on the silver-standard in an international monetary system predominantly on the gold-standard. However, China had not been indifferent to the monetary reforms of abandoning the silver standard for the gold-exchange standard that had been introduced to other countries in Asia. In fact, before China’s currency reform in 1935, thirteen reform proposals by Chinese and foreigners had been submitted. Edwin W. Kemmerer’s mission in 1929 was the final one of those attempts. Being a “Money Doctor” serving as advisor to many governments, Kemmerer investigated the local monetary situations in China and compared them with the reforms of other Asian countries, including the Philippines, the Strait Settlements, and India. Focusing on Kemmerer’s analysis of China’s monetary system, this paper investigates the key dynamics of the silver-standard economy in relation to the gold-standard international monetary system.

Alchemy of Conquest: Colonial Expansion and Money in the Indian Ocean, c. 1880s – 1930s

G. Balachandran

Until a generation ago, currency was a problem of administration in the colonies, with states, colonial officials, and settler interests central to its histories. While administrative concerns are naturally enough not absent, recent studies devote more attention to how colonial currency projects worked or failed, and to the resistances, adaptations, negotiations and compromises through which they unfolded. Projects to introduce unique, sovereign territorial currencies in plural currency settings could be complex and prolonged, necessitating several intermediary steps and negotiations with different affected groups and interests who were not merely passive or reactive, but who could also drive the process. Despite some notable recent advances our knowledge of colonial ‘currency transitions’, for want of a better term, remains patchy. The existing literature nevertheless highlights some interesting puzzles justifying further speculation with reference to the material, discursive, and political realization of the project of universal money in colonial settings.

Until a generation ago, currency was a problem of administration in the colonies, with states, colonial officials, and settler interests central to its histories. While administrative concerns are naturally enough not absent, recent studies devote more attention to how colonial currency projects worked or failed, and to the resistances, adaptations, negotiations and compromises through which they unfolded. Projects to introduce unique, sovereign territorial currencies in plural currency settings could be complex and prolonged, necessitating several intermediary steps and negotiations with different affected groups and interests who were not merely passive or reactive, but who could also drive the process. Despite some notable recent advances our knowledge of colonial ‘currency transitions’, for want of a better term, remains patchy. The existing literature nevertheless highlights some interesting puzzles justifying further speculation with reference to the material, discursive, and political realization of the project of universal money in colonial settings.

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Marc Flandreau