(This Document is the Property of His Britannic Majesty's Government.]
637
(December 2.] 1
CHINA TRADE.
CONFIDENTIAL,
No. 1.
SECTION 2.
Rect 2 JAN 06
(No. 336.) My Lord,
Sir E. Sutow to the Marquess of Lansdowne.--(Received December 2.)
Peking, October 13, 1905. I HAVE the honour to inclose a copy of the note which, in accordance with the instructions conveyed to me in your Lordship's despatch No. 185, I have addressed to the Chinese Government on the subject of currency reform,
My despatches Nos. 252 of the 17th July and 301 and 307 of the 8th and 17th September will have informed your Lordship already of the steps which the Chinese Government are taking with the object of introducing an uniform currency, and that they are alive to the Treaty obligations in this respect which they have contracted towards Great Britain, Japan, and the United States.
I have, &c. (Signed) ERNEST SATOW.
Inclosure in No. 1.
Sir E. Satow to Prince Ch'ing.
Your Highness,
Peking, October 12, 1905. REPORTS have recently reached His Majesty's Government with regard to the unlimited issue of the new copper coins by the provincial mints. It is represented that these coins are not uniform in quality or value, the discs from which they are struck containing a proportion of alloy varying from 5 to 20 per cent. They are being issued in immense quantities, and, being a source of great gain to the provincial When this treasuries, their issue is likely to continue as long as any profit accrues. profit decreases through the coins falling to their intrinsic value, then temptation to debase them still further by the addition of larger proportions of alloy will begin to be felt. It is further reported that a rate of exchange between the provinces is already apparent, the 10-cash pieces of one province being worth only 8 cash in an adjoining province, which is itself proof that the coins are not considered a national coinage of uniform value throughout the Empire. It is feared by the best-informed merchants and bankers that a serious financial crisis will result unless this state of things is speedily and energetically remedied.
Besides the unlimited issue of the new copper coinage, the attention of His Majesty's Government has been drawn to the coinage by different mints of silver dollars of varying values and designs, and to these there is apparently an intention to add a new coin in the shape of a tael piece to be issued by the Hupei Mint. This last measure will but increase the existing confusion.
His Majesty's Government observe that by Article II of the new Commercial Treaty of 1902 China agreed to take the necessary steps to provide for a uniform national coinage which shall be legal tender in payment of all duties, taxes, and other obligations throughout the Empire by British as well as by Chinese subjects. Some months ago his Excellency Chao Erb-hsun was good enough to explain to me that the scheme of the Board of Revenue contemplated in the first place 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. On this His Majesty's Govern- ment remark that, as far as the scheme 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 coinage, much more convenient to handle than the present cumbrous cash, and it will have the educational value of a fixed familiarizing them with the use of coins of various denominations bearing relation to one another. But they cannot regard this measure as a practical 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
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