[This Document is the Property of His Britannic Majesty's Government.
CHINA TRADE
CONFIDENTIAL.
238
31709 [August 15.]
Ad 4 SEP 05
SECTION
No. 1.
Sir,
Treasury to Foreign Office.--(Received August 15.)
Treasury Chambers, August 14, 1905. THE Lords Commissioners of His Majesty's Treasury have had under considera- tion Sir E. Satow's report of his conversation with the Chinese Minister of Finance concerning Chinese currency reform, which accompanied Mr. Campbell's letter of the 26th June, and also the representations which have been made to the Secretary of State for Foreign Affairs by the China Association and by several Chambers of Commerce concerning the undertaking by China to provide for a uniform national coinage.
lu reply, their Lordships direct me to signify their concurrence in the proposal of the Secretary of State to transmit a copy of the letter of the China Association to His Majesty's Minister at Peking, au request him to remind the Chinese Government of their undertaking under Article II of the Treaty of 1902.
As regards that undertaking, my Lords observe that Mr. Townley's despatch of the 29th May, 1903, reported the issue of an Imperial Decree for the establishment of a uniform coinage and the steps which were being taken to carry out the measure with the co-operation of Sir Robert Hart. It does not appear that any practical result has followed from the intentions then expressed. My Lords are not aware how far this may be, owing to the subsequent advocacy of the scheme for a silver currency on a gold basis, which is now stated to have no chance of adoption.
The scheme of the Chinese Board of Revenue, as described by the Finance Minister, contemplates in the first instance the regularizing of the currency of copper cash, to be followed by the issue of a Government silver dollar, intended to be the equivalent of 1,000 cash, and finally by the transition of this dollar from its silver basis to a fixed gold value.
As regards the merits of this scheme, I am to observe that, so far as it applies to the reform of the copper currency, it is a desirable step to take in the interest of the internal trade of the Empire. It will provide the masses of the people with a uniform roinage, much more convenient to handle than the present cummbrous cash, and it will have the educational value of familiarizing them with the use of coins of various denominations bearing a fixed relation to one another.
But my Lords cannot regard this measure as a practicable means of arriving at a standard of value which will be of service to China in her dealings with other nations. The proposed Government dollar, if it is to be the equivalent of 1,000 copper cash, can As the Chinese have no fixed relation to the silver or gold standards of other countries. Government has decided, for reasons the force of which is fully apparent to my Lords, to abandon the idea of proceeding at once to the adoption of a gold standard, the only means of complying with the Treaty obligation is the introduction of silver standard roin of uniform weight and fineness.
The precise amount of fiue silver to be contained in this coin is a matter of minor importance. The essential thing is that the proscribed amount shall be adhered to at whatever mints it may be coined. But silver dollars bave long been current in the most active trading centres. They are known and trusted, and there would be con- siderable practical convenience in the adoption of a coin corresponding as nearly as possible to the weight and fineness of existing dollars. The relation of the dollar to the Haikwan tael could at once he fixed, and would remain permanent. Its relation to the copper currency would be liable to variation, but could be fixed provisionally from time to time. When the dollar had become established in circulation, steps should be taken for the definite fixing of its relation to the copper coins, the issue of those coins from the mints being controlled so as to render the ratio effective. If these steps could be carried out-and with efficient and determined effort on the part of the central Government they should present no insuperable difficulty---China would the be in the possession of a uniform silver currency with a token currency of cop regulated like the subsidiary currencies of other countries. Thereafter the pr
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