Currency Reform and Special Tendencies of Currency Movement

This chapter examines China’s currency reform and the special tendencies of currency movement that followed it. Currency functions, I argue, are rooted in domestic social relations and cannot be transformed simply by changing monetary forms. Hence the belief that “currency reform” can by itself modernize the whole commodity economy is an illusion, refuted by experience since the mid-1930s. The new system established in 1935 did unify issuance and give currency a modern appearance, yet wartime and postwar conditions showed that it increasingly served fiscal expedients and intensified inflation. Because other prerequisites for production were deficient, expanded issuance was largely captured within circulation, strengthening commercial and usurious capital rather than transforming production. I then summarize three linked tendencies: fiscally driven issuance becomes ever more commercial in its effects; congestion in circulation exposes backward functions beneath superficial unity; and speculative price making by merchants further subordinates producers, pushing them toward commerce. These tendencies frame the questions at the chapter’s end.