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In reading about the historical Opium situation in China, the silver trade is mentioned again and again. I get the impression that China only accepted silver, even though I have never seen gold mentioned at all.

I am not a scholar, but to my knowledge gold has never been rejected as an exchange medium between large states conducting massive trade with each other, especially if they already accept silver.

At least, until I read about this. China seems to be a curious counter-example.

I read Wiki's article on Opium History in China, which led me to read about the Canton System. That article says:

This trade relationship, where Europeans paid for Chinese products with silver, and silver alone, formed the trade paradigm upon which the Canton System was built.

It has a source, but the wording is slightly different:

As a result, silver was the preferred, and eventually only medium of exchange.

Key-word "eventually". Are there exact dates known, or at least the year, when silver became literally the only accepted payment? This would imply something else was accepted before-hand. Was it gold?


Traditionally gold has been much more valuable than silver, pound for pound. If silver is accepted, then gold should be too, unless there is some significant reason. I am searching for that reason.

I learned that silver mining was very low in China at the time. Therefore silver would be relatively more valuable to the Chinese than to the Europeans. But what about gold mining? Did China somehow have more gold production than silver production, and thus silver was more valuable to them than gold?

I also read that Europe developed a major trade deficit of silver over time. This would imply they sought out and tried other mediums, and in fact is one reason for the Opium Wars. Did they at least try gold? And if so, why was it rejected?

If they never even tried, the question has to be "Would". Otherwise the question has to be "Did".

If necessary I will open related questions about the domestic silver-gold exchange rates that existed in Europe and China at the time.

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    You might include your sources so we don't just repeat research back to you that you have already done. – justCal May 28 '17 at 20:15
  • Maybe people not intend to pay with gold, anyway. – Greg May 28 '17 at 23:45
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    Some surface reading shows it to be a few factors: 1) China had moved to a fiat currency (not backed by precious metals) as early as the 12th century so gold or silver as an exchange medium was anathema within China, 2) the Spaniards had discovered a massive source of silver in the Americas and so it was readily available as a trade commodity, 3) oddly, the value of silver increased as supply increased. I don't have much better than wiki sources, though... – user13123 May 29 '17 at 4:49
  • @user2448131 I took some time to re-read things, linked to them, and made a massive overhaul of the OP, but the title question is essentially the same except for adding "why/why not?" – DrZ214 May 29 '17 at 7:04
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This article (emphasis mine) discusses the Canton System and its silver requirement:

But it wasn’t just any kind of trade: China deliberately (and exclusively) exported value-added, refined products (silk and porcelain) in exchange for exotic raw materials (they lacked sufficient domestic silver supplies)—this is called mercantilism.

Importantly, exporting cloth to Europe supported Chinese workers, and Chinese industries, while importing silver displaced no Chinese industry—

So they got a resource they needed, trading it for value-added items, and threatened no domestic industry.


Another essay here agrees that silver was the main focus of trade with China, though some goods were traded:

The original China trade was a simple bulk exchange of commodities. Until the mid 18th century, 90 percent of the stock brought to Canton was in silver, and the primary export was tea. In 1782, for example, ships carried away 21,176 piculs (1408 tons) of tea, 1,205 piculs (80 tons) of raw silk, 20,000 pieces of “nankeens” (cotton goods), and a small amount of porcelain. After the mid 18th century, the British began shipping large quantities of woolens from their factories to replace the drain of silver bullion, but this was not enough to balance the trade.

It again boils down to demand, the Chinese wanted silver (again emphasis mine):

the giant empire of China in 1800, as the Qianlong emperor boasted, in fact did have nearly all the products it needed within its own borders. It could feed itself, defend itself, and prosper without depending heavily on the outside world. The empire lacked, however, two key commodities: silver and horses. Horses, crucial for military campaigns, had to come from the pastoral nomads of Mongolia and Central Eurasia. The Qing solved this problem by conquering the Mongols in the 18th century and by purchasing large numbers of horses from the Kazakhs. After the mid 18th century, silver, the essential driver of the Chinese commercial economy, was the only scarce major article of trade in China. This was the one key product Westerners could offer, in exchange for tea, silk, and porcelain

Gold is not mentioned as a trade item in any of these sources.

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    Your source says nothing about gold. The article seems to focus on the economics and sustainability. My question is, would China accept gold payments in exchange for trade? – DrZ214 May 28 '17 at 19:17
  • Gold isn't mentioned. Silver only were the rules, as stated in both articles, and your question. – justCal May 28 '17 at 19:30
  • What does "value-added" mean exactly? (I'm just looking for clues as to why gold was not accepted.) If it means a Chinese citizen can buy silk for 1 pound silver, but a European trader must pay 2 pounds silver, that's essentially an export tax or tariff. BTW I rewrote the OP. – DrZ214 May 29 '17 at 7:06
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    @DrZ214, "value-added" means it was processed, and now it's value now is value of raw material + value of labor applied. – user28434 May 29 '17 at 8:45
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    @DrZ214 Insofar as China was indifferent to gold, why would any other power want to spend it there? – Aaron Brick Sep 13 '18 at 5:08
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My understanding is that the gold/silver value was different in Europe (~1:12) and in the Far East (~1:6), so it was quite beneficial for European traders to buy everything in Asia using silver and come back with gold and goods.

China was also peculiar in the sense that they wanted essentially nothing from Europeans, feeling they had superior goods in just about every ways. It wasn't until when the opium trade kicked off that Europeans had anything of value besides silver to offer the Chinese.

Source: J.M. Roberts, History of Europe (which has a big bibliography section, where you might find better sources).

  • This would certainly explain why gold was never tried. Do you have any source for the Chinese silver:gold ratio? The History of Europe book doesn't seem likely to have that one. – DrZ214 Jun 4 '17 at 4:32
  • I don't have my cope of History of Europe around, but here's another source that suggests the same. I'm pretty sure you'll find good references in either's bibliography. – Denis de Bernardy Jun 4 '17 at 4:41
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    I would mention that at least by the time of the Opium Wars, China did not see opium of value but rather had it forced upon them. I would not be surprised if this is remembered by China. – Jeff Jun 4 '17 at 5:18
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    By the time the opium wars started, Chinese authorities certainly viewed it as a plague enough to try to ban it. Plus, the opium demand in China had by then reversed the flow of silver, causing other local issues. But suggesting Europeans "forced" opium upon Chinese consumers is, I suspect, quite a stretch. – Denis de Bernardy Jun 4 '17 at 5:26

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