The Ming Salt Certificate: A Public Debt System in Sixteenth-Century China?

Abstract

Throughout the Ming dynasty the government monopolized the salt trade. In return for delivering grain to border garrisons, merchants received salt certificates, which they then could use to draw salt from government salterns. The salt certificate system, known as the grain-salt exchange, or kaizhong, functioned as a public debt for the Ming government. Against the backdrop of a fiscal apparatus that still largely relied on tax-in-kind and labor service, the grain-salt exchange provided an unusual and efficient financial tool for the government. Buying and selling of the Lianghuai salt certificates, beginning in the sixteenth century, gave birth to a speculative market of the salt certificate in the early seventeenth century. However, since the speculation blocked the redemption of the salt certificates and paralyzed the operation of the salt monopoly, in 1617, the government turned the speculative market into a more restictive syndicate. This paper ends with a discussion on the possible impact the syndicate system had on the development of public credit market in China.