Currency in The Shanghai International Settlement
The currency situation in China generally was very complicated in the 19th century. There was no unified system. Different parts of China operated different systems, and the Spanish pieces of eight that had been coming from Mexico for a few hundred years on Manila Galleons taken root along the China coast. Until the 1840s these silver dollar coins were Spanish coins minted mainly in Mexico City, but from the 1840s these gave way to Mexican republican dollars.
In Shanghai, this complexity represented a microcosm of the complicated economy existing elsewhere along the China coast. The Chinese reckoned in weights of silver, which did not necessarily correspond to circulating coins. One major weight was a tael, which came in a variety of types depending on the amount of silver they equalled. These included: Customs Taels (for foreign trade), Cotton Taels (for cotton trade), etc. Shanghai had its own tael, which was very similar in weight to the Customs Tael and therefore popular for international business. China also had a mixture of coins, including Chinese Copper Cash coins and Mexican dollars. Paper money was first issued by European and North American colonial banks (one British colonial bank known as the Chartered Bank of India, Australia, and China at one time issued banknotes in Shanghai that were denominated in Mexican dollars).
European and North American currencies did not officially circulate in the International Settlement, except Yen in the Japanese district of "Little Tokyo". Until the year 1873, however, US dollar coins would have reasonably corresponded in size, shape and value to Mexican dollars. Between 1873 and 1900, all silver standard dollars had depreciated to about 50% of the value of the gold standard dollars of the USA and Canada leading to a rising economic depression.
The Chinese themselves officially adopted the dollar unit as their national currency in 1889, and the first Chinese dollar coins, known as yuan, contained an inscription which related their value to an already existing Chinese system of accounts. On the earliest Chinese dollar (yuan) coins it states the words 7 mace and 2 candareens. The mace and candareen were sub-divisions of the tael unit of weight. Banknotes tended to be issued in dollars, either worded as such or as yuan.
Despite the complications arising from a mixture of Chinese and Spanish coinages, there was one overwhelming unifying factor binding all the systems in use: silver. The Chinese reckoned purely in terms of silver, and value was always compared against a weight of silver (hence, the reason large prices were given in tael). It was the strict adherence of the Chinese to silver that caused China and even the British colonies of Hong Kong and Weihaiwei to remain on the silver standard after the rest of the world had changed over to the gold standard. When China officially began producing official Republican yuan coins in 1934, they were minted in Shanghai and shipped to Nanking for distribution.
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