My purpose in giving a resume of the process by which gold and silver came to be used as the mediums of currency in other parts of the world is to enable my readers to grasp the significance of the history of currency in China. But for centuries in the past, almost since the dawn of history, the, real basis of currency in China has been copper. Even to-day, when practically every transaction with the outside world has to be done in gold and every local transaction has to be done in silver, the basis of prices remains in cash, or, to be precise, in multiples of cash. For thousands of years China has been using gold and silver, although there has been no continuity in the use of either one of the metals or both as currency. But unless one clearly grasps that gold or silver were only currencies in so far as they were multiples of cash value, the question of the standard of value in China would prove almost impossible of understanding. It is understood, of course, that China has had a very ancient civilization. Money was in circulation in this country as early as the reign of T'ai-hao (2953 to 2839 B.C.); during the dynasties of Hsia (1990 to 1558 B.C.) and Shang (1558 to 1050 B.C.) gold, silver and copper money were in circulation besides the well known cowrie shells. Even in those times a very elementary process of minting was in vogue; and the coins were known as the round money, bell-shaped money, and the knife-shaped money. It is understood that during the early periods of China's history the cowrie shell constituted practically the only medium of exchange. In the Chow dynasty or about 1032 B.C. gold money unit was the Chin or Catty, 1 cubic inch in size; and the copper money was round with a square hole in the centre. The monies or coins that were in daily use and popular, were the Ch'an or spade-shaped money, the Pu or bell-shaped money and the Tao or knife-shaped money; these were popular because they resembled the implements in daily use and were freely circulating up to the third century B.C. in practically the whole area of what was then known as China. During this period gold, pearls, and precious stones formed the upper two grades of currency. At about the close of the third century B.C. important political changes took place and the Prince of Ch'in unified the country by gradually subduing all the rival principalities; he extended the circulation of the round money by prohibiting the use of cowrie shells, pearls, gems and precious stones as currency. The units of the gold coin were the Yi, twenty taels in weight and the Chin, sixteen taels in weight; these were used as currency quite extensively. Further, the lower grade or common currency consisted of the round money, Pan-Liang, half a tael in weight. During the Han dynasty there was a slight change in the weight of the gold unit. But the most notable event was the adoption of the copper cash about 1/5 of a tael in weight as the standard - although, however, frequent alterations were made in the weight of this unit. For various reasons the Emperor Wen-ti thought it best to allow free private coinage; in the next reign this right was abolished. Wang Mang's decree introduced three new varieties of cash besides the one mentioned above; large coin, which was two inches in diameter, about half a tael in weight, bearing the inscription meaning "large cash, worth 50", secondly, the Ts'i Tao, worth 500 units the nature of which is not known at present, and thirdly Tuo Tao, worth 50 units. When Wang usurped the throne he made further changes, and during his reign from 7 to 22 A.D. there were 28 different kinds of money; there were gold, silver of two qualities, four grades of tortoise shell, five grades of cowrie shell, ten grades of Pu or bell-shaped money and six grades of copper coinage.

* I must acknowledge my indebtedness for several of the facts in this and the next Chapter to "The Currency Problem in China" by Wen Pin-wei. "Chinese Currency" by J. Edkins, and "The Trade and Administration in China" by H. B. Morse.

For nearly 600 years after this period there was a jumble of currency, although the use of metallic money was quite common. Frequently, efforts were made to abolish the use of metallic coins and return to the use of commodities as mediums of exchange. In about 220 A.D. an Imperial decree was issued abolishing metallic money and substituting measures of grain and rolls of silk as circulating media. Attempts like this often failed, simply because a substitution of commodities in frequent use as currency led to deterioration in value; and time and again copper money as well as other kinds of money had to be restored again. During the Tang dynasty efforts were made to standardise currency. The first regulations were promulgated in the fourth year of the reign of Wu-te, 620 A.D. The standard coin was arranged to be 1/10 of a tael in weight, 8/10 of an inch in diameter, and one thousand of such coins to weigh six catties and four taels. Mints were established in several important cities and placed under the supervision of government officials; counterfeiting was made punishable by confiscation of property and death. At the same time the right to coin money was granted to the Emperor's favourites.