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Abstract In the last half of the nineteenth century, northern Taiwan experienced a boom in tea exports. This led to a large trade surplus accompanied by large inflows of silver money. The increase in the money supply did not have much effect on rice prices or consumption, but did lower interest rates. The lower interest rates and higher real money balances caused a large increase in real estate prices. This local financial glut lasted more than 20 years. Along the China coast, the banking system allowed businesses to move funds easily in and out of areas, such as northern Taiwan, but once silver reached Taiwanese farmers in the village economy, it did not flow so easily. Studies of early finance that focus on commercial networks generally overlook such problems.