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← The Silver Problem
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Question
Why did Britain's trade with China create a silver drain in the early 19th century?
1
Britain purchased large quantities of Chinese goods (tea, silk, porcelain) but China bought almost nothing British, requiring silver payment for the difference
2
China required all foreign merchants to pay a 50% tariff in silver on imported goods
3
British silver was undervalued relative to Chinese silver standards, creating arbitrage that drained British reserves
4
The East India Company was secretly converting its silver reserves into Chinese real estate
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