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Andre Gunder Frank

Review of Richard von Glahn's Fountain of Fortune

A Review of
Richard von Glahn
Fountain of Fortune: Money and Monetary Policy in China, 1000 - 1700.
Berkeley: University of California Press 1996. 338 pp.
for the Journal of World History

This book has far-reaching implications for world history although its title and most of the text refer only to money in China. The importance is not only that of China per se, but also its largely unrecognized place and role in the development of the global economy. Indeed, the author ends his magistral tour de force through China's monetary history: "To fully appreciate the dynamics of the silver economy we must train our gaze on the infinite numbers of daily transaction in markets throughout China as well as the macrohistorical trends in global bullion movements." Even that is still an understatement, for these markets in China and their analysis by the author put all global development itself at issue.

Von Glahn begins with a review of classical Chinese monetary analysis and proceeds to the Song and Yuan "Transition to the Silver Economy, 1000-1435." However, he concentrates his own analysis on the "Age of Silver" during Ming and Qing times until the early eighteenth century, with a brief excursion even to the nineteenth. The author makes reference to a plethora of contemporary Chinese and later Japanese authorities on monetary analysis and policy; and he marshals masses of previously largely unknown primary sources and data, particularly on the ubiquitous market role of copper-bronze "cash" coin and its debasement by tin and zinc alloy in competition with silver bullion, cowry, rice, textile and other commodity currencies. Indeed, his central chapters 5 and 6 that analyze the public issue and debasement, and private counterfeiting and circulation of copper coin offer the heretofore most incisive look into how the Chinese economy 'really worked'.

Von Glahn draws on these sources and data to construct his own analysis, which combats and replaces two major lines of received wisdom: One is the "early modern" model "of sprouts of capitalism" that compares China with Europe, whose own two variants either neglect or affirm the monetization of China. The other is the Chaunuu-Adshead-Reid thesis that a "seventeenth century crisis" originated in the silver based European world economic and monetary "center" and spread around the world also to engulf China, among other parts of Asia. On the evidence in this book and many others, the extensive and intensive monetization of China can no longer be disputed. Moreover for me, von Glahn's evidence and analysis clinch my already prior disposition to reject both theses. As I also argue in Frank (1997), China/Europe comparisons [a la Prazniak, Wong, Pomeranz] enlighten us, but tying them to where and how "capitalism" sprouted is a snare and a delusion. The real issue is how China, Europe and the rest of the world were RELATED by a single global economy, about which FOUNTAIN OF FORTUNE supplies ample evidence. However, on the evidence there was no generalized "seventeenth century crisis" and certainly none in China; and it could not have spread from Europe, because its place and role in the global economy was far too small to produce any such impact.

So far, I would take issue with von Glahn on only four "minor" matters: 1. Silver imports were probably somewhat higher, and other researchers estimate them as significantly higher, than the ones von Glahn proposes. I suggest that calculating their increasing tonnage as a constant 80 percent share of registered maritime commodity exports results in an underestimate of real silver imports, including those that came overland. 2. Von Glahn, like Molougheny and Xia, explicitly denies a significant decline in silver FLOWS to China around 1640. Yet that abrupt decline by nearly half is confirmed by these authors' and also von Glahn's own data [eg. Table 23 and Figure 10]. More solid but to me still unconvincing is his argument that the resulting decline in the STOCK of silver could not have been more than four percent and therefore could not have produced monetary, fiscal, and political problems [eg. non-payment of their troops] that Atwell, Wakeman and I argue contributed significantly to the fall of the Ming Dynasty in 1644. [My own analysis and rebuttal of von Glahn regarding items 1 and 2 is in Frank (1997)]. I would also dispute 3. von Glahn's claim that the Kangxi depression lasted all the way from 1660 to 1690, which is not entirely supported by the evidence, including some in his own book. 4. I dispute his page 239 reference to Seville as the alleged "center" of a world monetary system and global economy based on silver, and his related claim [pp. 243 ff.] that China did not and could not participate in "an integrated international market," whose existence he denies for that time.

This last disagreement speaks to what I regard as the real issue: Is the alternative analysis that von Glahn so well advances the only possible one or even the most fruitful avenue to replace the deservedly rejected received wisdom? I believe not. For however much we are in debt to von Glahn for his landmark study of the role of money in China itself, his own analysis of the same also shows - and in his above quoted last sentence of his book underlines - that we need to complement this kind of analysis of China by extending it also to China's relations with the rest of the world. Indeed, to understand China we also require a global economic analysis; and to understand what happened elsewhere, we need to know what impact decisions and events in China had around the globe. Within the confines of a short review, only a couple of examples must suffice.

Von Glahn demonstrates the wide-spread and deep-going effects of the foreign supply of silver in and on the Chinese economy and society, even if not on the Ming/Qing transition. But as he repeatedly and rightly insists, that was possible only thanks also to Chinese DEMAND. It was supported by the state's imposition of a "single-whip" tax that had to be paid in silver; but as von Glahn rightly insists, this demand for silver was generated primarily through private production and commerce in the Chinese market itself, which overrode all attempts at state regulation.

However, this growing Chinese market demand for silver, copper and other money including credit was also the reflection of the rapid growth of production and trade and their support in turn of population increase. Indeed, Von Glahn's analysis of China also casts doubt on the Goldstone thesis that population increase was a major cause of the inflationary 'price revolution' in Europe. For population in China grew nearly twice as fast as in Europe; yet von Glahn and others show that prices in Europe increased about three times more than in China (Frank 1997). Thus although the big increase in the supply of silver drove down ITS price, contrary to many allegations the general European "price revolution" had no parallel in China [nor in India as Om Prakash and others show].

He and von Glahn both ask why, if so much silver entered all three economies, prices did not also rise in these two countries [except against cheaper silver and less so in terms of debased copper coin] as they did in Europe. Both authors' reply is simply that in Asia demand for money increased concomitantly with its supply, as it apparently did not in Europe. Yet both authors curiously neglect also to pose and answer the still more crucial question: Why did and could Chinese [and Indian] demand for silver money expand so fast and much? Precisely because production and population also expanded in China and India to generate and absorb this demand for money, as they could and did NOT in Europe, where too much money generated inflation instead. That is, von Glahn's demonstration that the supply and circulation of money expanded in China without generating an inflationary increase in prices also reflects the important increase of PRODUCTION in China.

That brings us to the truly world historical implications of von Glahn's analysis of money in China: Europe was not only far too weak and marginal to have much impact on China, other than to pay for the efficient Chinese production and competitive exports with American silver. Yet China's [and to a lesser extent India's] economy WERE big, strong, productive, competitive and fast growing enough to have a, nay THE, major impact on the global economy and its monetary system as a whole. Indeed, as Dennis Flynn and Arturo Giraldez have remarked, if it were not for China's insatiable demand there would have been no world wide demand for Spanish American silver, and Europe would have continued out of business as it had been throughout the Middle Ages. In other words without China's huge demand for silver, WORLD history would have been entirely different than it was. But I insist again that this demand was generated and supported by China's outstanding productivity at home and competitiveness in the world economy, which permitted China to export so much, to "demand" payment in silver money, and to use it for its own purposes [as analogously the by then also most productive United States did after World War II].

Thus contrary to von Glahn, "an integrated international market" existed and functioned very well indeed in the early modern global economy. Moreover, if it had any 'center' at all it was certainly not in Seville, Amsterdam or London, but in China, whose 'Middle' Kingdom really was at the 'center' of far more than only the 'East Asian Tribute/Trade System,' studied by Hamashita. So contrary to von Glahn's en passant remarks about Seville and the alleged non-existence of an integrated world market, he has himself masterfully dissected and analyzed the FOUNTAIN OF FORTUNE not only in China, but of the world as a whole.

Andre Gunder Frank


Adshead, S.A.M. 1973. "The Seventeenth Century General Crisis in China" Asian Profile I,2, October, pp. 271-280.

Atwell, William 1982. "International Bullion Flows and the Chinese Economy circa 1530-1650" Past & Present 95:68-90.

------ 1986. "Some Observations on the 'Seventeenth-Century Crisis' in China and Japan" Journal of Asian Studies XLV,2: 223-243.

------ 1988. "The T'ai-ch'ang, T'ien-ch'i, and Ch'ung-chen Reigns, 1620-1640" in The Cambridge History of China Vol. 7.The Ming Dynasty, 1368-1644, Part I, edited by Frederick W. Mote and Denis Twitchett: 585-640.

------ 1990. "A Seventeenth-Century 'General Crisis' in East Asia?" Modern Asian Studies 24,4: 661-682.

Chaunu, Pierre 1959. Seville et l'Atlantique (1504-1650). Paris: S.E.V.P.E.N.

Flynn, Dennis 1996. World Silver and Monetary History in the 16th and 17th Centuries, Aldershot: Varorium [collected mostly previously published articles].

Frank, Andre Gunder 1997. ReOrient: Global Economy in the Asian Age. Berkeley: University of California Press, forthcoming.

Goldstone, Jack 1991. Revolutions and Rebellions in the Early Modern World. Berkeley: University of California Press.

Hamashita, Takeshi 1988. "The Tribute Trade System and Modern Asia" The Toyo Bunko.Tokyo: Memoires of the Research Department of the Toy Bunko, No. 46: 7-24.

------ 1994a. "The Tribute Trade System and Modern Asia" [revised] in Japanese Industrialization and the Asian Economy, A.J.H. Latham and Heita Kawakatsu, Eds. London and New York: Routledge.

Molougheney, Brian and Xia Weizhong 1989. "Silver and the Fall of the Ming: A Reassessment." Papers on Far Eastern History 40: 51-78.

Pomeranz, Kenneth 1996. A New World of Growth: Markets, Ecology, Coercion and Industrialization in Global Perspective. Unpublished Ms.

Prakash, Om 1994. Precious Metals and Commerce. Aldershot, UK: Variorum.

----- 1995. Asia and the Pre-modern World Economy. Leiden: International Institute for Asian Studies.

Prazniak, Roxann 1996. Dialogues Across Civilizations: China and Europe.

Reid, Anthony 1990. "The Seventeenth-Century Crisis in Southeast Asia" Modern Asian Studies 24, 4: 639-659.

Wong, R. Bin 1997.

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Personal and Professional
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Recent Publications ReOrient: Global Economy in the Asian Age Essays on NATO and Kosovo, 1999 On-line Essays  

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