Economics of History Activity

Question

Imperial China
Lesson 2 Chinese Society
Chinese Currency
Background Information
In economics, currency is the system of money used by a particular country. Coins and paper notes are assigned values by the country’s 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.E., 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.E., 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 621 C.E., 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 coin’s 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 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 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.

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 1024?
Critical Thinking
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4. Analyzing What are the pros and cons of using paper money?
5. Evaluating Do you think that paper money is worth having and using? Why or why not?

answer like a 12 year old would

Answer 1

1. Identifying: Currency is basically the money that people use in a country to buy things. It can be coins or paper notes, and it's important because it helps people trade for goods and services easily. Instead of swapping items directly, like trading a toy for a snack, they can just use currency to buy what they want.

2. Describing: In the early days, Chinese people used things like shells or small tools as money to trade. Then, under the Han dynasty, they started using coins called pan-liang that were all the same size and weight, which made trading easier. Later on, during the Tang dynasty, they changed the way the coins looked and created new ones that came in different weights and metals.

3. Explaining: China began printing paper money in 1024 because they wanted to solve the problem of carrying heavy coins around. It was way easier to have flat, lightweight paper instead of lots of heavy metal coins. This made trading and buying stuff a lot more convenient for everyone.

4. Analyzing: The good things about using paper money are that it's light and easy to carry, making it simple for people to buy things without getting weighed down. But the bad side is that paper money doesn’t have real value like coins do, which are made from valuable metals. If the government gets into trouble and loses wealth, the paper money can lose its value too, which can make it hard for people to buy things.

5. Evaluating: I think paper money is definitely worth having and using! It’s super convenient because you can carry a lot of it around without it being heavy. Even though it's not made of precious metals, as long as the government is stable and manages it well, it's pretty reliable. Plus, if I lose some coins, it's easier to lose a few pieces of paper than a bunch of heavy coins!