COINS · SCULPTURE · JEWELRY · STORIESNew to silver? Start here
Collect Silver
Home/Silver Facts/In 1935, China Ordered Silver Money Swapped for Paper
Silver Facts

In 1935, China Ordered Silver Money Swapped for Paper

China’s government told people to exchange silver coins and bullion for banknotes. The change ended a silver-based monetary system, while the reasons behind it remain debated.

The metal itself had been money

Silver was part of China’s money system, not just a material for valuable objects. That changed under a government decree adopted on November 3, 1935 and effective the following day: silver dollars and bullion could no longer be used as currency.

Bullion means metal held for its precious-metal content. The decree required holders to hand over their silver coins and bullion in exchange for paper notes. Notes from three government banks became full legal tender, meaning legally recognized money for paying debts and taxes.

Three milestone cards distinguish the U.S. Silver Purchase Act of June 19, 1934 from China’s decree adopted November 3 and effective November 4, 1935. A legal-change panel does not draw a causal arrow.
Original selected-milestone diagram; spacing is not elapsed time or a causal model. China’s decree was adopted November 3 and took effect November 4, 1935. It changed the legal status of banknotes and silver currency, with transition rules for other authorized notes. U.S. silver policy forms part of the history, but the severity and causal explanation of the economic disruption remain debated. Original code-native illustration for Collect Silver. Evidence: Silver Purchase Act of 1934; FRUS 1935, volume III, document 613; reviewed economic-history literature. View full-size illustration ↗

Paper money was not new

China already used banknotes. The reform changed their legal standing and the system behind them, establishing the managed paper currency known as fabi. Other previously authorized banknotes could remain in circulation temporarily, with limits and a plan to replace them.

For a person holding silver money, this was a change in what could legally settle a debt. For the government, it changed how the country’s currency and silver reserves were controlled.

Why an American law enters the story

In June 1934, the United States had passed the Silver Purchase Act, directing Treasury purchases to increase silver’s share of the value of U.S. gold-and-silver monetary stocks. Chinese officials protested rising silver prices and reported large outflows of the metal. With Chinese money tied to silver, changes in the metal’s value had consequences far beyond the mining trade.

How much those American purchases drove China’s difficulties is disputed. Researchers have examined bank-issued money, domestic policy and other pressures, and challenged the simple claim that silver leaving China automatically caused its money supply to collapse. The legal change is documented; a single-cause explanation is not.

About this edition

Original source and editorial notes
An edited, source-checked edition

Adapted from original material by Rich Silver. Original source card: Silver fact: supplied original card (publication date not established).

Reviewed 2026-11-05. This edition distinguishes a documented chronology from debated economic explanations. China’s decree was adopted November 3 and took effect November 4, 1935; the reform is not attributed to one foreign cause. Reader-first revision starts with silver’s monetary role and the November 1935 decree, defines bullion and legal tender, and explains that banknotes were not new. Retains transition rules, the adoption/effective-date distinction, and disagreement over the economic effects of U.S. silver purchases. Reordered original anchors follow their matching legal/policy explanations; section-2 aliases the combined policy-and-causation section.

Sources & further reading

Share a good find.