I’ve been reading Woo-keun Han’s The History of Korea recently, and am now up to the section on the late 1800’s, dealing with some of the consequences of the one-sided trade agreements they were forced to sign with Europe, America, Japan and China, and the eventual annexation of the country by Japan. Anyway, I came across this curious passage on page 402:
And again on page 421:
I’d never heard of this special status of Mexican dollars in East Asian trade (actually, I never knew that Mexico’s currency had been called the dollar), and the book makes no mention of how it became so popular. It seems especially strange since the book doesn’t mention any Mexican trade, military or diplomatic presence in the region. Does anyone know what it was about the Mexican dollar that made it the currency of choice for so many countries?
If you don’t mind my WAGging, I think a big issue in the East Asian trade must have been the use of hard currency, e.g., silver. Since I believe Mexico was a big source of silver at the time, its currency might have been the most readily available at the time.
I do recall that some of the “unequal treaties” that the Western powers forced on China stipulated that the Qing dynasty pay indemnities in the form of Mexican silver.
The “dollar” originated in the Spanish colonies. The U.S. Dollar is of course based on the Spanish “piece of eight” or “Spanish dollar” (The word dollar comes from the German ‘thaler’). “Dollars” were coined in Mexico (then New Spain) and were spread all over the American colonies, and thanks to Spanish trade to Asia via the Philippines and Guam, east Asia.
One must keep in mind, in those times, a coin was valuable in itself, and would circulate for many decades after being minted.
When Mexico became independent, old Spanish dollars circulated for a long time afterward. The Mexican government continued to coin similar “dollars”. Of course the Mexicans called them “pesos”, but foreigners continued to call them Mexican dollars. I am pretty sure this is what was being referred to.
Mexico had big silver mines for a couple of centuries. On the Pacific side, they would send ships via the westerlies to the Orient (the Philippines for instance which were held by Spain at the time), buy and load up with silks and other luxury goods, and come back along the northerly route to Mexico. I suspect some of the Oriental goods ended up being trans-shipped to Spain.
So the dollars in question were silver coins? That would make sense then, I guess. I think the line about Korean money only being accepted for its metal content gave me the impression that the Mexican dollar had some special additional value above and beyond its metal worth.
Yep, Spanish silver specie ( originally Peruvian and Mexican in the 16th century, then mostly Mexican Zacatecas after the Bourbon reforms of the 18th ) was one of the great engines that drove the East Asian trade. Indeed the Europeans found it pretty alarming how fast China sucked up silver, as they literally produced next to nothing else China ( a quite self-sufficient economic collosus to which even foreign trade was a pittance compared to internal revenues ) wanted in trade. It is estimated that of 400 million silver dollars imported into from South America and Mexico into Europe between 1571 and 1821 half was used for the purchase of Chinese products by the western countries. No one profited more from the discovery of Am,erica than China. Buoyed by trade imports and increased internal mining, silver became genralized in China for all financial transactions from the 16th century until the early 20th.
Opium reversed that flow. From 1800-1820 ten million liang of silver enetered the country. From 1832-1833, ten million left the country and the outward drain continued throughout the 19th century, helping to badly destabilize the Chinese economy.
Quoted sentence from A History of Chinese Civilization by Jacques Gernet ( 1982, Cambridge University Press ).
The U.S. also produced a “trade dollar” that competed with the Mexican coin in Asia for a time. It contained slightly more silver than the standard domestic U.S. silver dollar, but slightly less than the Mexican coin. See this page.
Tamerlane, that was very illuminating. Where did the silver go after it left China? I believe India produced some opium, who else did? How much silver went to the British Raj, I wonder?
China Guy and I think Doghouse Reilly ( you were referring to the massive indemnities after the Opium Wars? ) got it right. It mostly went to the British ( with some being reinvested back into the Raj I’m sure, as technically the East India Company controlled the trade until it was finally fully disbanded and merged into the British government ).
The Portuguese are mentioned as having imported the stuff into China ( Fukien ) starting as early as the 17th century. But by 1773 the British essentially held a monopoly. The bulk of the opium was initially produced in Bengal ( modern Bangladesh, more or less ), then later central India ( Malwa ), with Turkey being a much smaller secondary source. The demand in China was elastic and more than offset the burgeoning British/European demand for tea ( and secondarily high-quality cotton-goods, silk, laquer-ware, and porcelains ). Annual shipments ( smuggled illegally until the end of the First Opium War in 1842 ) went from ~400 cases ( 65 kilos a case ) in 1790, to ~4,000-5,000 cases 1817-1820, to ~20,000 cases by 1830, to 30,000 by 1836, 40,000 by 1838, almost 70,000 by 1850, to nearly 100,000 by 1873. After 1893 imports began to slow as domestic production finally began to catch up and stopped altogether by 1917 when China became self-sufficient in opium production.
The amount of hard currency leeched by opium was staggering. Interestingly enough, as I alluded to above, if there had been no opium trade the British tail would have been in a crack. During this period their own trade addiction, tea, mostly imported from China during this period, grew very rapidly as well and they had nothing else to offer the Chinese ( cheap cotton imports from America flooded into the Chinese market at the end of the 19th century, but by then China was already economically moribund - the earlier British Indian textile industry failed to make a dent in China’s market ).
It seems that it was common until at least the early XXth century to refer to the Mexican unit as a dollar, in English.
Until some time in the 30’s, I think, the peso was about 70% silver and between a half dollar and silver dollar in size. Afterwards they switched to a mostly nickel-based compound which is strongly magnetic.
You can tell the real silver pesos because they always have the fineness and weight stamped on them.
From here:A coin called Peso
Trade between New Spain (Mexico) and the Philippines began and soon was a real institution. People used to say " … the Manila galleon carries, eastbound to Acapulco, porcelains and silks; westbound, friars and silver Pesos …"
From here:
The Far East became a very important customer for Mexican silver coins. All the oriental countries asked for more silver coins from Mexico. From the Philippines, the Mexican pesos passed to India, Siam, Indochina, Japan and many other countries, but specially China. This was due, primarily, to the fact that the Mexican peso always maintained its silver fineness. This is also the reason why it was nicknamed: AN HONEST DOLLAR. Last century and even at the beginning of this, the Mexican peso was also referred to, in business transactions, as the Mex-Dollar in the Far East.
For nearly three centuries the Philippines, as part of the Spanish empire, used coins minted in Spanish America, primarily from the Mexico mint. It is only natural, therefore, that the Philippines should use the name Peso when referring to the Ocho Reales coin. Today they still use the denomination PISO (sic) for their present monetary unit, an obvious reminiscence of the long-time-used Mexican peso.