ABSTRACT
The precocious development of paper money during the Song dynasty was an integral part of a medieval ‘commercial revolution’ marking the definitive emergence of a money economy in China. By the middle of the Yuan era, the practice of expressing the value of paper currency in silver units of account had become widely diffused. In the wake of the collapse of the Yuan monetary system in the 1340s, scholars and statesmen swiftly abandoned cartalist principles to affirm practical metallism. In contrast to Song policymakers, for whom paper money was one component of a multiple currency system, the Mongols sought to eliminate bronze coin and silver specie entirely. The cartalist views of the Guanzi gave birth to the fundamental axiom of Chinese monetary theory: ‘the purchasing power of the medium of exchange was solely a result of its quantity, in the form of money, in relationship to the supply of all other commodities.'.
