Posted Jul 19, 2014 by Martin Armstrong
QUESTION: Mr. Armstrong; I recently read that China issued gold and silver coins. I cannot find any such listing in any catalogue. Is this another story made up by goldbugs claiming money is only gold? Who really printed the first paper money, China or Sweden?
Thanks so much
ANSWER: China always issued fiat bronze and iron coins. There never were any gold or silver coins whatsoever until modern times. The Emperor issued the first actual paper money. That is distinguished from banknotes, which were not actually money but were slips of paper that merely reflected assets in the bank. That is totally different from the China notes of the 13th century. These were issued by the government China and were actually simply government issues as legal tender, which is why the Mongols had to continue accepting them when they conquered China. .
If we consider deposit slips as money (banknotes) the first is really ancient Egypt. They never issued any coinage whatsoever from at least 3000BC until the conquest by Alexander the Great in 334BC. That was the longest running system of such deposits slips (banknotes), which were grain, not gold or silver. Gold did not come into use as a medium of exchange until about the 7th century BC. It had to become common enough for circulation. Previously, gold was reserved only for ornamentation by kings – never the common man.
The China sycee was a type of silver or gold ingot currency that was used in China until the 20th century. The name “sycee” is derived from the Cantonese words meaning “fine silk” because it was bolt of silk that was really money. Silk is what the world wanted from China first and second its porcelain from which people in the west called them Chinese because the sold china to the West. These ingots formed a two tier monetary system whereby they really facilitated international trade. The only circulating coins were bronze or iron.
Two tier monetary systems are very common. In Florence, Italy, gold was used only in international trade. Silver was used for local domestic circulation – not gold. Local bills were denominated in silver whereas international transactions were exclusively gold.
The US issued trade dollars to trade exclusively with China, which was on a silver standard during the 19th century – not gold. The US silver Trade Dollar was heavier than the domestic silver dollar and clearly marked its silver weight and content. This marking demonstrates its value was for international trade rather than domestic.
Such systems of international trade whereby there is a domestic currency and an international currency have also taken place in denominational structure. Ancient Athens used drachms and the maximum denomination for local used was 4 drachms. The extremely rare denomination of 10 drachm coins (Decadrachm) are found along the shores of the Mediterranean Sea illustrating that these were large denominations used in trade. Typical wages at the time would be 10 drachms for a month. A sailor in war would be paid 1 drachm per day. Clearly, these Decadrachms would be something in the area of nearly a $10,000 note today.