CO129-373 - Public Offices - 1910 — Page 61

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[This Document is the Property of His Britannic Majesty's Government 1

AFFAIRS OF CHINA.

CONFIDENTIAL.

[August 11.347

SECTION

JPECR

9 16 SEP 10,

(29197]

No. 1.

!

(No. 236.) Sir,

Mr. Max Müller to Sir Edward Grey.--(Received August 11.)

Peking, July 20, 1910. A STRIKING illustration of the urgent need for a recognised standard of 'currency in China, to which reference was made in my despatch No. 188 of the 3rd June, is, I venture to think, afforded by the recently concluded negotiations between the Chinese authorities and the consular body in Tien-tsin for the rehabilitation of the debased silver currency of that port.

I am indebted to Mr. Fulford, His Majesty's consul-general at Tien-tsin, for the information on which I have based the following short summary of what has come to be known locally as the "Tien-tsin sycee question."

In Tier-tsin, as in Shanghai, and the other large trading centres in China, the medium of exchange in large transactions is lump silver cast in shoes or ingots of about 50 Chinese taels or ounces, equivalent to 67 English ounces. The standard or customary touch of this silver is, in Tien-tsin, theoretically 992 of 1,000 pure silver. But in the absence of a Government Assay Office, the Chinese melting shops have gradually, during the past years, lowered the "touch" by introducing an undue amount of alloy into the shoes.

The depreciation which amounted in many cases to as much as 3 per cent. did not apparently affect the foreign banks and merchants, whose compradores evidently participated in the profits made by the melting shops, until two years ago when all, or a large portion of this debased sycee having been loaded on to the foreign banks, the Chinese customs bank, into which all duties on foreign trade have to be paid, suddenly refused to accept Tien-tsin sycee at its nominal touch of 992, and demanded an additional payment of 2 per cent. to compensate for the excess of alloy.

A long controversy ensued between the Chinese authorities, the consular body, the foreign banks, and the merchants. The latter strongly objected to being made to pay for the dishonesty of the melting shops, and the carelessness of the local authorities whose duty it was, they contended, to exercise an efficient supervision over the issue of silver. To add to the difficulty, most of the melting shops responsible for the debased issue had in the course of years come to grief in one way or another, and the proprietors had failed or disappeared.

t

Eventually, in October 1908, the obnoxious levy of the 2 per cent, supplement was withdrawn by the customs bank, and after further protracted negotiations the Chinese authorities, who at first denied all responsibility for the situation arising out of the depreciation of this silver, contending that the foreign banks had accepted the debased metal willingly and at their own risk, were made to realise the serious injury which this virtual repudiation of a legal tender was doing the foreign trade of Tien-tsin, and agreed to the adoption of some practical measures of currency-reform. The discussion of these measures lasted another six months, and it was not until the 7th May, 1910, that the Taotai, with the approval of the consular body, issued his final proclamation on the subject, translation of which I have the honour to enclose. The arrangement come to is briefly as follows: From the 1st year of Hsuan Tung (January 22, 1999) all silver melted by the melting shops is treated as of 992 touch," the melting shops being held responsible for any deficiency. This silver must be stamped with the date and the shops "hong" name. Old silver, i.e., silver melted before the above date, and silver coming from other places must be stamped by the Government Assay Office, who will indicate its fineness as compared with 992 standard, by marking on it the amount of premium, or discount, as the case may be. The silver will gradually be melted down and recast as '992 sycee, the end of the present Chinese year-29th January, 1911-being fixed as the limit allowed for this operation. As regards the stock of debased silver held by the foreign banks-estimated at 1,200,000 taels-this will be assayed by experts and the difference between it and standard silver made good by the Chinese Chamber of Commerce.

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