ABSTRACT
This chapter focuses on the period between the 1430s, when silver was finally formally accepted as a monetary standard by the government, and the start of the twentieth century when the silver standard was abolished. It explores why silver acted for a period of well over half a millennium as an anchor for the Chinese monetary system notwithstanding all forces trying to change this. The chapter describes the development in the real economy. During periods of stagnation, ceteris paribus the real economy declines, implying that too much money is in circulation. The chapter looks at monetary arguments brought forth in the literature. To stabilize a monetary system, one might link, in case of a multimetallic system to a precious metal, most often silver or gold, without counting in that metal, or even having access to it. The chapter also looks at the assumption that, even with a massive influx of silver in the economy, the price of silver nevertheless increased.
