Debin Ma (LSE and Hitotsubashi) Yuan Weipeng (Beijing Academy of Social Science)

1. Copper-Silver Exchange Rate and Prices in Northern China in 1800-1850: Evidences from Tong Taisheng Account Books Debin Ma(LSE and Hitotsubashi) Yuan Weipeng (Beijing Academy of Social Science) A Presentation by Debin Ma At Hitotsubashi University July 2009 This is part of Global Price and Income Project headed by Professor Peter Lindert. We thank specially Felipe Fernandes for his data assistance.

2. The European benchmark: the Greg Clark series (in JPE) to tell a Malthusian story

3. Can we construct long-term price and wages for China? • The Chinese anomaly: • We have almost seven centuries of grain or rice prices. • We have grain prices at prefectural level for 18th century (Wang Yeh-chien, Carol Shiue). • But we still don’t have widely accepted price indices even for the early 20th century. • So there is a serious problem with other commodity prices.

4. Why do we have such good grain prices: • It is associated with the granary storage and grain price reporting system. • All grain prices are based on government reports using standardized silver tael unit. • This raises the big questions: • can we trust these government reports? • Are we correctly understanding the nature of Chinese market which operated largely on copper cash at the lower end? • Is it possible to study prices from the end of copper cash? • Some pessimist historians say it is simply impossible. • Hans Ulrich Vogel’s exchange rate series show they go all over the place.

5. North China Herald, 1889, p. 411 • Its (the Chinese currency) chaotic eccentricities would drive any occidental nation to madness in a single generation, or more probably such gigantic evils would speedily work their own cure. …One hundred cash are not 100, and 1,000 cash are not 1,000, but some other and totally uncertain number, to be ascertained only by experience. In wide regions of the Empire 1 cash counts for 2, that is, it does so in numbers above 20, so that when one hears that he is to be paid 500 cash he understands that he will receive 250 pieces, less the local abatement, which perpetually shifts in different places. There is a constant inter-mixture of small or spurious cash, leading to inevitable disputes between dealers in any commodity. • The condition of the cash becomes worse and worse until, as in some parts of the Province of Honan, everyone goes to market with two entirely distinct sets of cash, one of which is the ordinary mixture of good with bad, and the other is composed exclusively of counterfeit pieces. Certain articles are paid for with the spurious cash only. But in regard to other commodities this is matter of special bargain, and accordingly there is for these articles a double market price.

7. The Tong Taisheng Account Books • Currently the most complete and well-preserved account books: • over 400 volumes • Preserved in excellent good conditions. • All account books are string-bound, handwritten with classical brush pens. • Chinese numeric system as well specialized merchant numeric system (Suzhou numerals: no longer in use today) were used to keep accounts. • Period: 1790-1850 • Location: Daliu Town, Ninjing County of Shandong Province.

8. Research Possibilities • Existing studies by Yan Zhong-ping et al: rough indices of copper-silver exchange rates and price indices with no information on the actual underlying data. • Filling the gaps on commodity prices (so far most studies focus on grain prices). The compilation of price series books such as Mitsui Bunko. • The efficiency of market in currency exchange, distribution margin, capital market. • Business and accounting history of China

10. Note the Suzhou Numeral System used

11. This Would be the Street where Tongtaisheng was located

12. Today’s DaLuiZheng

13. Contents of the Account Book • By categories: • Original accounts (transactions recorded at the time of buying and selling). • Summarized Account (most plentiful) • Accounts of inflows and outflows within the store • Copper-silver account (copper silver transactions recorded on a daily basis, including different types of silver, the buying and selling rates) • Transaction accounts (records of transactions which include the names of commodities, dates of transactions, prices and quantities, total amount, all recorded under the names of individual clients. Most transactions under individual accounts are not conducted on a cash-basis (period summing up of accounts of individual clients). • Transaction accounts by branch stores at different counties • Purchase accounts (wholesale prices) • Interest rate accounts (rates of borrowing and lending) • Expenditure accounts (of stores) • Others

14. Table 2. Volumes of Tongtaishen Account Books by Years

15. A: The original accounts; B: the summary accounts (copied afterward); C: Subsidiary accounts

16. Some Preliminary Findings: 表6：道光十年（1830）统泰升商号借贷情况表（节录）

17. More Preliminary Findings:A Comparison of Yan et al Agricultural and Handicraft Price Indices with our data set on rice and iron prices (in wen/jin)

18. Our data set offers actual prices on a monthly basis

20. Differences in buying and selling seem to be very small (ranging from 0 to 3%)

21. We have data on a day basis

22. Interesting and intriguing findings:1. The law of one price seems to be working: trend looks very similar after conversion. 2. Large retail mark up (could be due to quality difference) and a mysterious drop from 1816.Conversion used: one picul = 160 jin

23. Intriguing findings 2: 1. Copper cash based wages provide far more stability in trend than silver converted wages2. The drop in real wages towards mid-century is not as drastic in real wages measured by copper cash

24. Let us hope money keeps coming from: http://gpih.ucdavis.edu/