NAME

DATE

Economics of History Activity

CLASS

netw rks

Imperial China
Lesson 2 Chinese Society

Chinese Currency
Background Information

Copyright by The McGraw-Hill Companies.

In economics, currency is the system of money used by a particular

country. Coins and paper notes are assigned values by the countrys
government, and people use them to buy goods and services. China did not
always have an organized system of money. In the 300s B.C., the Chinese
used shells or small tools to barter, or trade, for the things they needed.
The Chinese government did not take steps to control the coins people
used until around 221 B.C. when the Han emperor first issued coins that
were the same size and weight. These coins were called pan-liang.
The appearance and weight of Chinese coins tended to change with each
dynasty. The Tang rulers, for example, altered the look and feel of Han
dynasty coins. They issued new coins in two different weights and metals.
After A.D. 621, the general shape and appearance of the Chinese coin was
established and remained the same until the 1900s. All Chinese coins were
small bronze circles with a square hole in the center. All were stamped with
the coins value and the date it was issued.
There were disadvantages to using coins as money, however. Coins are
made of metal and therefore can be heavy in large quantities. Traders and
merchants needed to have large amounts of money handy in order to
purchase goods. They were often at risk of being robbed or of losing track
of their coins. As you read, the Song dynasty solved this problem by
printing paper money, beginning in A.D. 1024. Paper currency is easier to
make than coins. It is also flat, lightweight, and easy to carry. People could
now carry money more easily and safely than before.
Paper money has disadvantages, too. Unlike paper money, coins are made
of actual precious metals, such as copper, lead, silver, or gold. The weight
and color of the coins reflect their real value. Coins can be melted down
and still have value. Paper money, on the other hand, is only paper. Its
worth comes from the value assigned to it by the government. It
represents the gold and other valuables in the national treasuries and
banks. The paper itself does not have value, though. As a result, paper
money can lose its value when the government loses its wealth. For
example, in the late A.D. 1200s, the Chinese empire began to lose its
territory and wealth after spending its resources to fight wars. Eventually,
the government had too little money to cover the value of the paper
currency. As a result, the paper money was worth less, so people needed
more of it in order to buy things.

NAME

DATE

Economics of History Activity Cont.

CLASS

netw rks

Imperial China

Directions Answer the following questions.

1. Identifying What is currency? Why and how do people

use it?

2. Describing What did early Chinese people use as money?

How did money change under the Han and Tang dynasties?

3. Explaining Why did China begin printing paper money in

A.D. 1024?

Critical Thinking
4. Analyzing What are the pros and cons of using paper
money?
Copyright by The McGraw-Hill Companies.

5. Evaluating Do you think that paper money is worth

having and using? Why?