VI. An illustration of the growth of Chinese consumption of an article which now forms an important and valuable export from British India, the manufacture of which has stimulated the production of cotton, and led to the establishment of industries there in which considerable capital has been invested, is cotton yarn. This trade has developed within the last ten years on a silver basis, the currency common to producer and consumer alike; and if that common currency be disturbed this important trade will, for reasons shown in paragraph X, be lost to India, probably without benefit to Great Britain.
VII. The statistics following are taken from the Chinese Imperial Maritime Customs Returns, the separation of Indian and English imported yarn not being shown prior to 1889.
Total Imports, 1882 to 1888 Piculs Value 1882 184,939 Taels 4,505,000 1884 261,457 5,584,000 1885 387,820 7,971,000 1886 384,582 7,868,000 1887 592,687 12,547,000 1888 688,468 18,427,000 From Great Britain 1889 50,144 1,077,000 1890 88,849 1,797,000 1891 78,058 1,507,000 From India 1889 628,413 11,884,000 1890 998,145 17,507,000 1891 1,138,088 19,397,000Those statistics show that the import of Indian yarn alone in 1891 exceeded the total import of all cotton yarn in 1882 by 515 per cent. in quantity and 331 per cent. in value.
The value of the 67,000 tons weight of yarn imported from India into China in 1891, at the low rate of exchange of 220 rupees per 100 dollars, is 653 lakhs of rupees; and there are indications of further increase year by year.
Japan is also a large consumer of Indian-made yarn.
VIII. Although the consequence of closing the Indian Mints and establishment of a gold standard may be to raise in India the sterling equivalent of a rupee to 1s. 6d., the purchasing power of the rupee within the Indian territory will not be increased; as a symbol of native value its quality will be unchanged.
IX. While the rupee will remain as a coin in India with the same purchasing power as before, beyond India it will have an artificial value ranging from 20 to 50 per cent. to be made good in exchange. The effect will be the same as if an export duty of 20 to 50 per cent. were levied on yarn, to be borne by the producer.
Example. The Indian spinner can now sell 10,000 dollars worth of yarn for 22,000 rupees; and the Chinese consumer is prepared to pay 10,000 dollars, plus charges, because he cannot manufacture for himself on equal terms. If the exchange value of the rupee be artificially raised to 1s. 6d. and the spinner still receives 22,000 rupees as before, the Chinese consumer must provide 12,000 dollars, plus charges, to meet the fall in exchange between China and India. This difference of 20 per cent. enables him to supply his own wants by home manufacture; and if the Indian producer cannot compensate for the difference in exchange in the price of his yarn, he must forego the sale to China.
X. China is already a large producer of cotton, the cultivation of which can be considerably extended should the demand increase. A gold standard in India will most probably operate to close the China market to Indian-made yarn, by stimulating production of the raw material and the establishment of manufactories in China for the supply of domestic requirements.
XI. The creation of a gold standard for the silver rupee currency is equivalent to the establishment by the Imperial Government of a bimetallic ratio within the boundaries of the Indian Empire; while beyond, consequent upon the unwillingness of the Imperial Government to accept international bimetallism, the rupee is merely silver bullion. This seems to be an admission by the Imperial Government, but confined to India only, of the bimetallic principle.
XII. It is to be noted that the Indian producer asks and receives no more for his yarn than 22,000 silver rupees; that is 7,562 ounces of silver; and that can be made the cost to consumer, equally, by international extension of the bimetallic principle involved in creating a gold standard for a nation having its currency in silver.
XIII. From the foregoing paragraphs it has, the Local Committee believe, been made abundantly clear that the trade between India and China will be greatly disturbed in the event of a gold standard being adopted in India, solely on account of the relative effect such a radical change on the currency would have on exchange between the two places. It is equally certain that all other places further east than India would suffer in like manner in any exchange transactions between such places and India: while the effect generally on the value of silver and on the exchange between China and countries with a gold standard, in event of silver being practically demonetized in India, is too apparent to require any further remark in this letter; whilst under existing circumstances the advantages, if any, would probably be entirely to the Chinese as against Europeans or European capital invested in China.
XIV. Generally, the Local Committee believe that any exclusive action in relation to Indian finance, such as that supposed to be in contemplation, must affect most injuriously the trade which has been built up in China, more especially in connection with Great Britain. Already the disturbance which has resulted from want of combined action, and as a consequence of spasmodic speculation, in connection with the precious metals, has seriously discredited China trade. The tendency of late has been to withdraw funds from the Far East, on account of the depreciation in the relative value of the local currency. Business is consequently hampered; and the ever-widening difference between the cost of production of fabrics such as, for instance, those manufactured in Lancashire and Yorkshire, and the price required in silver to meet that cost, threatens to make such trade impossible.
XV. The effect of a marked further depreciation in the value of silver, such as must inevitably follow upon Imperial legislation favourable to India alone, will be seriously detrimental to the export trade to the Far East in cotton and woollen fabrics, among other merchandise; and it deserves earnest consideration. For the reasons here given, therefore, the Local Committee request the China Association to take such action as may seem to them expedient and prudent for the protection of British mercantile interests in the Far East which at present are greatly imperilled.
We are,
Sir,
Your obedient servants,
JOHN MACGREGOR, Chairman.
R. M. CAMPBELL,
CHARLES DOWDALL,
G. J. DUDGEON,
J. W. HARDING,
E. B. SKOTTOWE,
W. H. TALBOT, Hon. Secretary,
Forming the Committee of the CHINA ASSOCIATION IN SHANGHAI
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