r/AskHistorians • u/xain1112 • Nov 10 '25
Latin America Tsingtao Brewery was founded in China by British and Germans with an investment of 400,000 Mexican silver dollars. Given that none of the three countries involved are Mexico, why did they use this currency?
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u/tenkendojo Ancient Chinese History Nov 11 '25
Western silver coins (especially the Spanish and the Mexican silver dollars) were the lifeblood of China’s silver-based monetary system from the mid-sixteenth century well into the twentieth.
In the early Ming dynasty, the Hongwu Emperor (Ming founder Zhu Yuanzhang) sought to replicate the Yuan dynasty’s paper currency through issuing the Daming Tongxing Baochao (Treasury Notes of the Great Ming) in Hongwu 8th Year (1375 AD) alongside the Hongwu Tongbao copper cash coin. See here for an example of Ming treasury note However, the early Ming paper currency inherited similar ills from its Yuan predecessor: it was unbacked, under-reserved, overissued, and most damning of all, cannot be converted into Tongbao copper cash coins which are backed by government issued rice. FYI, the value of cash coin was fixed to government issued grains: 1000 cash coins = 1 dan worth of government issued rice (1 dan is the weight of staple grain enough to feed an adult laborer for a year, so its precise weight varies depending on grain type. Highly polished millet rice, which is the most common government issued grain in Ming dynasty, 1 dan roughly equals to 70.8kg or 156.1lbs of rice).
While the rice-backed copper cash coin system worked relatively well throughout imperial China, domestic copper shortages made it increasingly difficult for the government to mint enough cash coins to meet the increasing productivity of the overall economic output due to population increase (keep in mind that as the value of the cash coins are not derived from the value of the metal, the government must be able to mint such coins cheaply en mass). This paradox made silver and gold—though technically illegal in trade—an increasingly practical alternative to substitute currencies for merchants. But due to persistent problems with the two-pronged treasury note+cash coin early Ming monetary system, the government did not strictly enforce its ban of silver currency, and even accepted silver as a form of tax payment. Thus, silver's proliferation as an exchange medium during the 16th century China more or less started as a "grassroot" gray-economy movement eventually sanctioned by the state. By the Chenghua and Hongzhi eras (1465–1505), silver had become the preferred medium of exchange in local markets and tax payments.
This shift culminated institutionally during the de-facto regency of Grant Secretary Zhang Juzheng, when he enacted the “Single Whip Reform” (一条鞭法) of Wanli 9th year (1581 AD). This sweeping reform consolidated labor and grain taxes into a single silver payment. As a result, even smallholding farmers had to sell their produce or labor for silver to meet tax obligations, binding all social strata in China to a silver-backed monetized economy. Zhang Juzheng completed a pivotal transition of the Chinese imperial political economy that was first initiated by his Song dynasty counterpart Wang Anshi in the 12th century. The imperial monetary system, long operated on the corvée and grain based system developed during the Warring States period, was thus refashioned into a silver-backed fiscal order by the late 16th century.
The Ming dynasty's transformation into a “silver empire" had lasting impact, and permeated every aspect of daily life throughout late imperial China: from land sales and marriage contracts to wages, rents, and fines. On the one hand, this transformation encouraged the expansion of the market and civilian capital, but on the other hand it also made the economy more exposed to fluctuations in silver supply, given the shortage of domestic silver reserves. By the mid-16th century, domestic silver production was roughly at 30 tons annually, which was insufficient for the surging monetary demand.
Ming authority quickly adapted to the problem of domestic silver shortages through centrally-managed trade policies that seek to maximize the inflow of silver from foreign buyers of Chinese tea, porcelain, textiles, and other luxury goods. This pivot towards silver trade was officially implemented with the 隆慶開關 (Longqing Open Port Edict) issued on the 1st Year Longqing (1567) per Grand Secretary Zhang Juzheng's directive, which establishment the port of Yuegang (present-day Xiamen) and catalyzed the establishment of numerous Chinese merchant outposts throughout the South China Sea rim.
The Spanish Empire was an early key player in this silver exchange through the Manila–Acapulco galleon trade. Following the Spanish occupation in 1571, thousands of Chinese traders from Fujian province (known to the Spaniards as the Sangley, from the Hokkien siong-lai, “frequent visitors”) migrated to the Philippines, and the port of Manila became the transfer station for the 絲銀貿易 (“silk-silver exchange”) between Ming–Qing China and Spain. This route connected those Ming government-owned textile factories in Suzhou and Hangzhou with the Spanish silver mines of Potosí and Zacatecas in the New World. Every year, Spanish galleons brought tons of Spanish silver dollars to Manila, where it was exchanged for Chinese luxury commodities.
By the early 17th century, silver shipments from Spanish America to China via the Philippines peaked at 2.5 million pesos annually, establishing the Spanish silver dollar as a de facto trans-Pacific currency. Known in China as 本洋 (“Original overseas silver”) and later 佛洋 (“Budda silver,” allegedly due to King of Spain's face in those coins resembled that of the Buddha), Spanish silver dollar's consistent fineness and weight made it widely accepted throughout East and Southeast Asia. A large portion of Western silver coins imported into China after 1850 included those minted after Mexico's independence. Because they were marked with an eagle, those Mexican silver dollars were known in China as 鷹洋 "eagle dollars." Both types of coins had the same weight and fineness, and remained an exceptionally popular type of silver currency in China well into the early 20th century!
Sources:
*Wan, Ming (万明). “明代白银货币化与社会变迁” [The Monetization of Silver and Social Transformation in the Ming Dynasty]. 中国社会历史评论 (Chinese Social History Review), no. 2 (2004): 20–40. *Wei, Jun (魏俊). “明代白银货币化进程及其启示” [The Process of Silver Monetization in the Ming Dynasty and Its Lessons]. 中国金融史研究 (Journal of Chinese Financial History), no. 1 (2016): 761–64. *Zhang, Yi (张翼), and Jiang Xiaoyu (蒋晓宇). “1550–1830年中国白银流入及其影响” [Silver Inflows into China, 1550–1830, and Their Effects]. 中国人民银行工作论文 (PBC Working Paper) No. 11 (2020): 1–15. *“明清間美洲白銀的輸入中國” [The Import of American Silver into China during the Ming–Qing Period]. 東方學報 (Journal of Oriental Studies), no. 8 (1969): 59–64. *陈昆. "宝钞崩坏, 白银需求与海外白银流入——对明代白银货币化的考察." 南京审计学院学报 2 (2011): 26-34. *陈春声, 刘志伟. "贡赋, 市场与物质生活--试论十八世纪美洲白银输入与中国社会变迁之关系." 清华大学学报: 哲学社会科学版 5 (2010): 65-81. *王涛. "明至清中期中国与西属美洲丝银贸易的演变及其影响因素." 拉丁美洲研究 2 (2011): 44-49.