The Xianfeng era Hubu Guanpiao (戶部官票) tael-based government notes were created out of
the same situation that created the
Great Qing Treasure Note (大清寶鈔)
cash coins-based notes, with the main difference being in what form of currency these notes could be redeemed in. The first true paper money in the world was issued under the
Song dynasty, these were
promissory notes issued by merchants in
Sichuan known as the
Jiaozi, under the reign of
Emperor Zhenzong (997–1022) the government of the Song dynasty granted a monopoly for the production of Jiaozi notes to sixteen wealthy merchants in Sichuan, as these merchants were slow to redeem their notes and inflation started affecting these private notes the government
nationalised paper money in the year 1023 under the Bureau of Exchange. As these paper notes were backed by the government they were instantly successful and the people regarded them to be equally trustworthy as
cash coins, other types of paper notes issued under the Song dynasty include the
Huizi and the
Guanzi. Before the
Mongol Empire conquered China the
Jin dynasty also issued paper money. Before the establishment of the Ming dynasty the
Mongol Yuan dynasty had suffered from a severe case of
hyperinflation which made the paper money issued by them worthless. Under the reign of the Yuan dynasty
copper cash coins remained in circulation with the inscriptions Zhida Tongbao (至大通寶), Dayuan Tongbao (大元通寶), and Zhizheng Tongbao (至正通寶) forming the majority of the circulating issues and "
strings of cash coins" remaining a currency unit.
Silver then started to occupy a paramount place in the Mongol economy and was supplemented by
government issued paper money. Under the reign of
Kublai Khan the Zhongtong Jiaochao (中統交鈔) was issued whose value was based on the fabric
silk. Under the reign of
Külüg Khan in the year 1308 the Zhiyuan Baochao (至元寶鈔) was issued which was supplemented with the silver-based Zhida Yinchao (至大銀鈔), but these circulated only for a year. The final series of paper money issued by the government of the Yuan dynasty from 1350 were the Zhizheng Jiaochao (至正交鈔). A major difference between how paper money was used under the Mongols and under the Song dynasty was that, in certain regions of the Yuan dynasty, paper notes were the only acceptable form of currency and
could not be exchanged in either copper cash coins or silver sycees. Exchanging paper money into copper or silver was known as
duìxiàn (兌現, "convert into specie") which was the main reason why earlier forms of paper money were deemed reliable. As these regions were completely dependent on paper money inflation hit them more severely as their notes could not be converted into a currency based on any intrinsic value, for this reason the Mongols allowed their subjects to continue using copper-alloy cash coins and issued new ones every now and then. During the last few decades of the Yuan dynasty the inflation caused people to lose their trust in paper money and
barter became the most common means of exchange. During the beginning of
Manchu rule over China in the year 1644, the total imperial revenues of the Qing dynasty were an approximated 30,000,000
taels. Imperial Government expenditures at the time were correspondingly modest. During the balanced periods in Qing dynasty history of the 17th and 18th centuries imperial revenue consistently exceeded government expenditures, which resulted in a tidy cash surplus in the Imperial Chinese Treasury. The vastness of China created poor communications across government offices and a general looseness of administration encouraged all sorts of irregularities across the country. During the course of the
Taiping Rebellion China would see a third of its people die utterly devastating its economy in the process. Of China's 18 wealthiest
provinces 12 were left in ruins, this would put a heavy strain on the resources of the government of the Qing dynasty putting it near breaking point as the rebellion had sown the seeds for further calamities which would hurt the
economy of China even more and ultimately led to the downfall of the Qing dynasty during the next century. The main source of income for the government of the Qing dynasty was taxation. The Taiping Rebellion was the largest civil war that China had experienced up until that point. The Qing dynasty Army of the Green Standard and its bannermen had long since fallen into decay, revealing the decrepit state of the Chinese military. After repeated defeats on the field of battle suffered by the Chinese government, new armies and new types of armies had to be raised. For this task, the Emperor was forced to turn to the provinces. Eventually, the imperial Chinese government had no recourse other than to place full responsibility in these newly formed units led by local warlords and aristocrats.
Zeng Guofan, the architect of eventual victory over the
Taiping Heavenly Kingdom, was given unprecedented powers in this pursuit. By January of the year 1862 conditions had worsened. Silver ingots known as
sycees have been a part of the
Chinese monetary system since around the
Tang and
Song dynasties, but due to the natural scarcity of silver in China were rare and the use of silver currency was limited to the upper classes of
Chinese society and their use was to be given as tribute, to pay bribes, to give away as gifts, silver sycees were also used as a method of transporting large funds over long distances as well as for hoarding wealth, and was used by the government to pay military expenses. This all changed when
the Ming dynasty started trading with the Portuguese during the 16th century, large amounts of European silver would enter the trading port of
Guangzhou leading to a large surplus of the metal in China as merchants began using silver to pay their taxes with. The amounts of silver flowing in increased dramatically after the Qing dynasty was forced to open more ports following the
Opium Wars. Since the circulating silver sycee in China was rarely of the same degree of fineness, a standard unit of account had to be devised, this unit of exchange for accounting silver came to be known in
English as the "
tael" (which is pronounced the same as the English word "tail"). All these factors reached a climax around the year Xianfeng 3 (1853). In September 1853 an event happened which would change the way these customs were collected forever, and in the process this event resulted transforming the Chinese maritime customs into a competent and highly efficient force for acquiring tax revenue for the Chinese government. In September of the year 1853 the Taiping rebels, fighting their way down the Yangtze valley while leaving a lot of destruction in their wake, threatened the port city of
Shanghai. The lijin was a tax imposed upon traded commodities. Lijin collection points were established along all highways and waterways in China. This scheme was only functional if the imperial Chinese government had status awards (which were symbolic capital) which people would actually want to purchase using real economic capital, the imperial government would have to be able to arbitrarily dictate the prices for these symbolic awards, and would also have maintained complete control over the selling process for these awards. Chinese censor
Huashana (花沙納) was highly critical of the Ministry of Revenue's profit-generating plan to start selling provincial examination degrees and titles (舉人), this had in the history of China never been allowed to be sold before showcasing how desperate the Ministry of Revenue was at the time for generating money to continue fighting the expensive war. Huashana praised the idea of producing paper money as a far better alternative to selling offices and degrees, but despite his anti-office selling stance he did not advocate for it to be abolished. (蔚盛長), one of the
Shanxi banks. During the 19th century, Chinese trade in commodities such as tea, silk, and grain was of such a large volume that this trade actually taxed the capabilities of the copper-alloy cash coins-based currency system of China. During this period imperial Chinese revenues had to be remitted to the capital city of Beijing and provisional salaries paid. At the time the transportation of large sums of precious metal bullion was both expensive and risky to undertake. meanwhile, foreigners in China called these institutions "native banks" to describe both the Shanxi banks and large
money lenders whose businesses had accumulated a sufficient of capital to make loans) were greatly expanded to accommodate this demand. The principal function of the Shanxi banks under normal circumstances was that to send currency to more distant places in payment for traded
goods and services. The Shanxi banks were often active in the assigned
treaty ports cultivating the business of both Chinese merchants and foreigner traders alike. The Shanxi banks tended to be very competitive in their nature and cooperated extensively with other branches of banking corporations within their own sphere, they would often send crucial banking-related news to member banks by
carrier pigeon. This was advertised by the imperial government as a necessary evil because of a shortage of bronze which meant that the production of cash coinage had to be heavily scaled doen. The pauperised Chinese public was for centuries uncompromisingly minded against the idea of paper money emissions in any way, shape, or form and would not accept it for any reason. The Jiaqing Emperor was not fully without justification in asserting his stance against paper currency, as the era Ming government notes from their introduction had been inconvertible into metal currencies. With no government backing into any other forms of currency these notes were swiftly depreciated. While this may seem only logical today the Chinese had to learn this lesson the hard way. Xianfeng's paper money consisted of two types of paper bank notes, the first of which was denominated in qian, or copper cash; and the second type, in silver taels. In response to the ongoing turmoil the Xianfeng Emperor issued a degree which made three promises, the first promise was that all debates about implementing merchant contributions (商捐), a merchant tax (商稅), or issuing levies per household (按戶收錢) should cease, the second point stated that middle- and low ranking officials should continue to receive their salaries, and thirdly that government paper money (鈔) should be issued, while at the same time privately produced notes would continue to be accepted. In the summer of the year 1853, the use of the Hubu Guanpiao was extended to all other government expenditures in order to replace actual silver. Not all exceptions were positive for the people, while in theory, 50% of all taxes could be paid using Hubu Guanpiao tael notes, some provinces and some local magistrates accepted only 30% or would even reject payments made in Hubu Guanpiao altogether. In the summer of 1853 the military headquarters and various provincial treasures were given 2,000,000 taels in Hubu Guanpiao notes from the Ministry of Revenue, this was a change from the failed plan by the Ministry of Revenue to borrow the silver against provincial contribution funds. The new plan was to use the silver saved by not paying out portions of the statutory salaries, this would serve as a cash reserve to back the Hubu Guanpiao. Scholarly studies surrounding the effects around the introduction of these many new types of monies and what effect they had all played into the new monetary system, however, while the Great Qing Treasure Note cash notes and Hubu Guanpiao tael notes were not actually convertible into hard currency they had a fixed rate to each other and did circulate throughout the Machu Empire. During the ninth month of the year 1853, official government banks were established by the Qing to exchange the Hubu Guanpiao tael notes. Wang Maoyin also criticised the plan by the Ministry of Revenue to take funds from the jiansheng silver fund (監銀) early in 1853, his largest objection was the lack of control the ministry had over the contributions which would later be necessary to refund the capital. The total emission of Hubu Guanpiao tael notes proposed by the Ministry of Revenue was 2,000,000 taels. The majority of the appropriated funds would come from bank deposits of provincial governments of which the imperial Chinese government planned to appropriate one-third to finance these emissions. At the time the bank deposits of provincial governments in China proper amounted to 6,114,000 taels of silver and 710,110 strings of standard cash coins in total (a third of this would be 1,833,000 taels of silver and 213,033 strings of standard cash coins). The newly introduced Hubu Guanpiao tael notes circulated alongside preexisting local currencies as well and was traded with them from the beginning, this changed after 5 months when the imperial Chinese government decided to suspend making them convertible into real silver sycees effectively making them a
fiat currency. According to
Frank King the Hubu Guanpiao tael notes were still theoretically convertible into copper-alloy cash coins and Great Qing Treasure Note cash notes, this convertibility could not actually be enforced. There is in reality very little evidence which suggests that the Hubu Guanpiao was actually used in any private transactions for business, they were even likely to have ever been used in retail transactions which were dependent on cash coins. In the year 1856 the Great Qing Treasure Note cash notes had replaced the Hubu Guanpiao in land tax payments, this was done in order to avoid exchange rate losses for poorer peasants as generally their tax obligations were often calculated to only be fractions of taels making the Hubu Guanpiao disadvantageous for them to use. Before their value had dropped as significantly as it did, the Ministry of Revenue had already given the orders to cease the production and distribution of the Hubu Guanpiao in the year Xianfeng 7 (1857). A total of 9,780,000 taels in Hubu Guanpiao notes had been printed by the time that they had been officially deprecated. After this point, all further emissions of official Chinese paper money were the Great Qing Treasure Note denominated in copper-alloy cash coins as the tael notes started slowly disappearing from the market.
Jerome Ch'ên meanwhile suggested that the Ministry of Revenue made the rampant inflation a lot worse by insisting that no more than half of individual tax remittance could be made with either Great Qing Treasure Note cash notes or Hubu Guanpiao tael notes with the remainder of the taxes being demanded in either cash coins or silver.
Niv Horesh suggests that the reason the Qing dynasty suffered from hyperinflation during the reign of the Xianfeng Emperor was not only because the notes issued by the government at the time were inadequately backed up by
hard currency, but that the Xianfeng Emperor approved the issuance of heavily debased and ill-fated Daqian. Horesh blamed the 9,200,000 taels in war indemnities imposed on the Qing by foreign powers following the Opium Wars that were demanded from the Qing in March of the year 1850 as a strong motivation for the Xianfeng regime to start debasing its currency despite the fact that high denomination low intrinsic value cash coins has had a tainted reputation throughout Chinese history.
Aftermath There was a gradual return to the bimetallic traditional currency system and by the year 1861 all new currencies of the Xianfeng era were given up, with the notable exception being the 10
wén Daqian which continued to be produced until the abolition of cash coins themselves. According to a memorial issued by the Ministry of Revenue, the total amount of Hubu Guanpiao tael notes issued during the years 1853 until 1860 was 9,781,200 taels. The Ministry of Revenue established a
central bank, the
Da-Qing Bank, in 1905. This bank would issue the last government notes of the Qing dynasty until it was overthrown. == List of government notes denominated in silver taels issued during the Xianfeng era ==