On the Two Conditions for Legal Money: A Study of the Monetary Policy of Ming China during the Jiajing Era.

This paper documents the coinage during the Jiajing reign (1522-1566) with the objective of showing why the Ming government issued copper cash, but instead ultimately used silver bullion as its unit of account. Throughout the long reign of forty-five years, the Jiajing government attempted to establish a single form of legal money. As early as 1527, when the government cast the Jiajing coins, it considered the money as merely one of many forms of legal tender. Besides the Jiajing coin, the government also accepted tax remittances paid in various kinds of coins produced in different reigns and dynasties. This policy brought into play Gresham's law of "bad money driving out the good." Inferior coins from earlier dynasties and outlaws prevailed. As a solution, in 1552 the Jiajing emperor ordered that taxpayers should pay the government with only Jiajing coins. However, the effort to drive those inferior private coins, now in the shape of Jiajing coins, out of market was still in vain. In 1565, at last, the government gave up collecting tax payment in copper cash. It accepted silver bullion originally paid in coins. From then onwards, silver bullion played a prime role in the fiscal policy of the Ming government. [ABSTRACT FROM AUTHOR]