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Concurrent but non-integrable currency circuits: complementary relationships among monies in modern China and other regions

Published online by Cambridge University Press:  04 April 2008

Akinobu Kuroda
University of


The coexistence of a number of monies with fluctuating exchange rates in modern China and other Asian regions appeared chaotic to foreign observers. However, behind this apparently confused situation lay a multiplicity of currency circuits, each of which consisted of pairing a trade zone with a particular currency. Their concurrence resulted from the difference of temporality and space in monetary usage. The difficulty of matching heterogeneous demands for money to uneven supplies of currencies made for multiple currency circulation. Such a multiplicity caused some merchants to make use of imaginary units which were alive only in account books. Though complementary relationships between incompatible monies prevailed in China, India and other regions, a combination of a remittance system and local credit supply in some societies happened to synchronise currency streams to make a compatible monetary system. This comparative study suggests that currency streams often had to pass through multiple market layers, and that some friction in the streams meant that the market required plural monies.


La coexistence d'un certain nombre de devises avec des taux de change fluctuant dans la Chine moderne et dans d'autres régions asiatiques a semblé chaotique aux observateurs étrangers. Il existe cependant derrière cette situation apparemment confuse une multiplicité de circuits de devises, chacun consistant à marier une zone commerciale avec une devise particulière. Leur concomitance résultait de la différence de temporalité et d'espace dans l'usage monétaire. La difficulté d'assortir les demandes hétérogènes d'argent aux réserves inégales de devises eut pour résultat la circulation de devises multiples. Une telle multiplicité a entraîné des marchands à utiliser des unités imaginaires qui n'existaient que dans les livres de comptes. Bien qu'en Chine, en Inde et dans d'autres régions des relations complémentaires prévalaient entre des devises incompatibles, il s'est trouvé qu'une combinaison du système de remise de fonds et de la fourniture de crédit local dans quelques sociétés a synchronisé les courants de devises pour en faire un système monétaire compatible. Cette étude comparative suggère que des courants de devise ont souvent eu à passer par des couches de marché multiples, et que des frictions dans certains courants ont impliqué la nécessité de devises diversifiées dans le marché.


Die Koexistenz einer Reihe von Geldsorten mit fluktuierenden Wechselkursen im modernen China und anderen Regionen Asiens erschien ausländischen Beobachtern chaotisch. Hinter dieser auf den ersten Blick verwirrend wirkenden Situation verbarg sich jedoch eine Vielzahl an Währungskreisläufen, von denen ein jeder eine bestimmte Handelszone mit einer bestimmten Währung verband. Ihre gleichzeitige Existenz ergab sich aus den Unterschieden in zeitlicher und örtlicher Geldverwendung. Die Schwierigkeit, einen heterogenen Geldbedarf mit einer ungleichmäßigen Währungsversorgung in Einklang zu bringen, machte den Umlauf mehrerer Währungen erforderlich. Die dadurch bedingte Währungsvielfalt führte dazu, dass sich einige Händler imaginäre Währungseinheiten zunutze machten, die lediglich in den Rechnungsbüchern existierten. Obwohl die komplementären Beziehungen zwischen inkompatiblen Geldsorten in China, Indien und anderen Regionen die Oberhand behielten, so führte eine Kombination aus Überweisungssystemen und lokaler Kreditversorgung in einigen Gesellschaften zu einer Synchronisierung der Währungsströme und somit zu einem kompatiblen Währungssystem. Diese Vergleichsstudie legt nahe, dass Währungsströme oft multiple Marktschichten durchdringen mussten, und dass gewisse Spannungen innerhalb dieser Ströme es notwendig machten, dass der Markt mehrere Geldsorten erforderte.


La coexistencia de diferentes monedas con cambios fluctuantes en la China moderna y otras regiones asiáticas parecía caótica a los observadores internacionales. Sin embargo, tras esta situación aparentemente confusa yacía una gran diversidad de circuitos monetarios, cada uno de los cuales consistía en emparejar una zona comercial con una moneda en concreto. Su concurrencia resultó de la diferencia temporal y espacial en uso monetario. La dificultad de adecuar demandas heterogéneas de dinero a suministros desiguales de monedas produjo la circulación monetaria múltiple. Tal diversidad hizo que algunos comerciantes hicieran uso de unidades imaginarias que sólo tenían vida en los libros de contabilidad. Aunque en China, India y otras regiones prevalecieron las relaciones compatibles, una combinación de sistema de pago y suministro de crédito local en algunas sociedades casualmente sincronizó corrientes monetarias para hacer un sistema monetario compatible. Este estudio comparativo sugiere que las corrientes monetarias a menudo tenían que pasar a través de múltiples capas del mercado, y que cierta fricción en las corrientes provocó que el mercado requiriera una pluralidad de monedas.

Copyright © European Association for Banking and Financial History 2008

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1 North China Herald, 1889, fol. 411, cited in E. Kann, The Currencies of China (Shanghai, 1927), p. 415.

2 G. Vissering, On Chinese Currency, vol. 1 (Amsterdam, 1912).

3 Kann, Currencies of China, pp. 416-17.

4 H. B. Morse, The Trade and Administration of the Chinese Empire (London, 1908), p. 166.

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6 Imperial Maritime Customs, China, Decennial Reports, 1902–11, vol. 1 (Shanghai, 1912), p. 283.

7 ‘The exchange value between local dollars and local taels fluctuates considerably, and into this fluctuation many elements quite apart from the intrinsic value of either currency enter.’ Vissering, On Chinese Currency, p. 152.

8 D. B. Mitra, Monetary System in the Bengal Residency (Calcutta, 1991), p. 54.

9 J. C. Sinha, Indian Currency Problems in the Last Decade (1926–1936) (Delhi, 1938), p. 4.

10 Mitra, Monetary System, p. 81.

11 Ibid., p. 176.

12 P. R. Mahapatra, ‘Currency system in medieval Orissa’, Quarterly Review of Historical Studies, 9.2 (1969–70).

13 Mitra, Monetary System, pp. 72-3.

14 Shanghai Yinhang Diaochabu, ‘Shinianlai shanghai xianjin liutong zhi guancha (Observation of silver circulation in Shanghai during this decade)’, Yinhang Zhoubao, 16–43 (1932), pp. 22-5.

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16 P. Grierson, Numismatics (Oxford, 1975), p.134.

17 K. Suzuki, Shutsudo Senka no Kenkyū (Study of unearthed copper coins) (Tokyo, 1999); T. Miyake, Chūgoku no Umerareta Senka (Buried copper coins in China) (Tokyo, 2005).

18 A. Kuroda, Chūka Teikoku no Kōzō to Sekai Keizai (The structure of the Chinese empire and the world economy) (Nagoya, 1994), p. 303.

19 W. Wolters, ‘Southeast Asia in the Asian setting: shifting geographies of currencies and networks’, in P. H. Kratoska, R. Raben and H. S. Nordholt (eds.), Locating Southeast Asia (Singapore, 2005).

20 Reserve Bank of India, Report on Currency and Finance for the Year 1937–38 (Bombay, 1938), p. 49.

21 J. M. Keynes, A Treatise on Money, vol. 1 (London, 1971), p. 130.

22 A. Kuroda, ‘The Maria Theresa dollar in the early twentieth-century Red Sea region: a complementary interface between multiple markets’, Financial History Review, 14.1 (2007).

23 Kuroda, Chūka Teikoku, pp. 35, 108.

24 M.-T. Boyer-Xambeu, C. Deleplace and L. Gillard, Private Money and Public Currencies, trans. from the French by Azizeh Azodi (New York, 1994).

25 L. Einaudi, ‘The theory of imaginary money from Charlemagne to the French Revolution’, trans. Giorgio Tagliacozzo, in Frederic C. Lane and Jelle C. Riemersma (eds.), Enterprise and Secular Change (London, 1953), p. 237.

26 P. T. Hoffman, Growth in a Traditional Society: the French Countryside 1450–1815 (Princeton, 1996); E. Ōtsuka, Nihon Kinsei Nōson Kinyūshi no Kenkyū (Study of rural financial history in early modern Japan) (Tokyo, 1996); N. Lamoreaux, Insider Lending: Banks, Personal Connections and Economic Development in Industrial New England (Cambridge, 1994).

27 I. Habib, ‘The system of bills of exchange (hundi) in the Mughal empire’, Proceedings of Indian History Congress, Patiala Session (1967).

28 M. Iwahashi, ‘Kinsei sanka seido no seiritsu to hōkai (Formation and collapse of the tri-monetary system in the Tokugawa period)’, Matsuyama Daigaku Ronsyū, 11.4 (1999).

29 T. Takizawa, Nihon no Kahei no Rekishi (History of Japanese currencies) (Tokyo, 1996), p. 142.

30 S. Nakagawa, Osaka Ryōgaeshō no Kin'yū to Syakai (Financial activities of the Osaka exchangers and society) (Osaka, 2003), pp. 352-3.

31 G. Rozman, Urban Networks in Ch'ing China and Tokugawa Japan (Princeton, 1973), p. 102.

32 After the latter half of the eighteenth century, rural markets in Japan either changed to perform the specific function of collecting local special products for central cities like Osaka or Edo, or otherwise went towards extinction. Y. Ito, Kinsei Zaikata-ichi no Kōzō (Structure of the rural market in Tokugawa Japan) (Tokyo, 1967), pp. 117-19.

33 G. W. Skinner, ‘Marketing and social structure in rural China’, Journal of Asian Studies, 24.1, 2, 3 (1964-5).

34 See J. B. Dai, Zhonguo Qianpiao (Beijing, 2001).

35 M. Tsurumi, Nihon Shin'yōkikō no Kakuritsu (The establishment of Japanese credit system) (Tokyo, 1991).

36 One institutional study assumes transaction costs caused by asymmetry of information as a friction. O. E. Williamson, The Economic Institutions of Capitalism (New York, 1985), pp. 18-19. Unlike the cases of making contracts among individual traders with different knowledge, the frictions appearing in monetary circulation suggested here are caused by currencies’ own movements beyond personal perceptions.

37 Current institutional approaches put too much stress on reducing uncertainty to decrease transaction costs. D. C. North, Institutions and Institutional Change and Economic Performance (Cambridge, 1990), pp. 3-4.

38 Part of Figure A1 is modified from R. Ishiwata, Ryūtai Rikigaku Nyūmon (Introduction to fluid dynamics) (Tokyo, 2000), p. 101.

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