CO129-373 - Public Offices - 1910 — Page 62

*****

61

2

The banks may then have this silver remelted themselves, paying the customary fee of 2 per cent. to the melting shops.

Mr. Fulford states that the Tien-tsin Chamber of Commerce and the foreign hanks have accepted this solution of the difficulty, which it is hoped will result in the removal of a long-standing incubus on the trade of the port.

In reviewing the causes which contributed to the extremely unsatisfactory state of affairs above described, Mr. Fulford holds the foreign banks to blame for allowing "The latter calculated," he says, their compradores to accept this debased sycec. "that their foreign employers would protect them from eventual loss and meanwhile they benefited by the difference in value between the debased and good silver." When the customs brought matters to a head by their ultimatum regarding the 2 per cent. supplement on duty payments, the banks were able to saddle the merchants, for the most part dependent on them, with the discount, and the latter in self defence were obliged to assert that the trade of the port could not be carried on unless all silver in circulation were of the same fixed standard. As a matter of fact, this is not the case in Shanghai, where silver is simply marked by the Assay Office with figures indicating its degree of superiority or inferiority to a market standard of 944 of pure silver. If the trade of Shanghai can be carried on under these conditions, it would seem that the smaller trade of Tien-tsin might well be conducted ou similar lines.

Mr. Fulford informs me that the inspection of the silver in the banks' vaults is procceding "very, very slowly," every day's delay being in favour of those who have to make good the deficiency in touch. It is probable that the Chinese authorities will endeavour to postpone the final settlement until the new dollars come into circulation, and if so, a fresh difficulty will arise with regard to the rate at which the new coinage will exchange for sycee.

I have, &c.

(Translation.)

Enclosure in No. 1.

W. G. MAX MÜLLER,

Proclamation by the Customs Taotui, May 7, 1910.

ON account of the debasement of Tien-tsin "hua pao" silver, both Chinese and foreign officials and merchants have suffered loss. I have frequently, in conjunction with the Chinese Chamber of Commerce, consulted with the commissioner of customs and the senior consul, and arranged the establishment of an assay for the improve- ment of the silver and the relief of the merchants.

I

11

orders to the Chinese Chamber of Commerce to open an Assay Office, and gave received the Governor-General's approval. As to the stock of debased "hua pao' silver held by the banks, monetary arrangements were made for compensating its deficiency in touch, so that it might be put into circulation and relieve the tension. Nevertheless, since the beginning of the assay work, no great improvement is manifest in this market. The causes of this are as follows:--n

Since the opening of the Assay Office but little new sycee has been smelted, and, despite the plan of granting a premium (for silver above standard), and paying a discount (for silver below standard), the Assay Office being an innovation, did not command sufficient confidence on the part of the merchants (native or foreign). They were filled with doubts.

Again, on assay of the old silver there was a large deficiency of touch to be made good. The banks were not willing to pay out the silver, and traders of other places did not wish to bring silver from outside into the market. The result was that the flow of silver from other towns daily decreased, and the stock of silver held by the banks increased. Ready money became scarcer day by day, and trade suffered more and more, to such an extent that disaster was imminent.

This has long been a matter of common knowledge, and unless some remedial measures be devised, imagination shrinks from the contemplation of future troubles.

I have now given directions to Wang, director of the Chamber of Commerce, who, in consultation with the senior consul, the British consul-general, and Mr. Mackintosh,

of the Hong Kong and Shanghai Bank, has devised a plan to meet the difficulty.

I (the Taotai) have accordingly settled that---

From the first year of Hsuan Tung all silver melted by the smelting shops must be of 992 standard Not the slightest debasement will be permitted. On the sycee

3

must be stamped by die the date (year and month), and the hong name to facilitate investigation. Should any dare to disobey, the Chamber of Commerce and the Assay Office are charged with the duty of detection and report to me for penalty to be inflicted. The silver so melted (contrary to regulation) must be taken back, the deficiency made good, and resmelted. It will not be allowed to circulate.

As to the old "hua pao sycee dating from 34th year of Kuang Hsu and earlier, and silver coming from other places, it will temporarily be treated according It will also to the plan of premium for excess and discount for deficiency of standard. be gradually melted by the smelting shops into full 992 standard silver, so as to produce uniformity. The limit of time within which it must be all melted is the present Chinese year.

As to the old debased "hua pao" sycee held by the banks, I will give orders to the Chamber of Commerce and the Assay Office to send men to assay it and determine the amount of debasement in comparison with 992 touch, and to make good the deficiency. The several banks can themselves have it remelted. The fee to be charged by the smelting shops for melting this old sycee has been arranged by the Chamber of Commerce in consultation with the smelting shops. The latter have agreed to make the reduced charge of 2 mace per 100 taels.

Mr. Mackintosh moreover observed that the interest at present charged by the banks for advances was very high, but that so soon as the touch of silver was properly regulated his bank would certainly reduce the rate.

In this way the arrangement will be to the advantage of all.

The Chamber of Commerce has also submitted to me regulations which are in conformity with the foregoing agreement, and have been discussed by me and the senior consul, and found to be suitable.

In addition to submitting the matter to the northern superintendent of trade and instructing the Chinese Chamber of Commerce to order the smelting shop proprietors to come to my yamen, give bonds and receive licenses, it is my duty to set forth below the seven articles of the procedure proposed by the Chinese Chamber of Commerce, and also to issue a proclamation for the information of all the smelting shops and the people generally of Tien-tsin.

From this date should any dare secretly to smelt debased "hua pao" silver and use pieces of silver which have not passed the Assay Office, they will on detection, or on information given, be immediately fined without mercy.

Let all tremble and obey.

}