MAY 4, 1903/1
CHINA OVERLAND TRADE REPORT.
SHANGHAI AND THE CURRENCY | Jast ten years; rice which was formerly $3 to $4
QUESTIUN:
per picul is now $6 to 87 per pioul; cotton which we was formerly Tls, 9 to Tls 10 per pical, is now Tis. 19 to . 24, and so in througboat the
missionaries,
Chinese emigrants.
ilway and
the_Philipp.nes,
ure
"at the meeting of the Shanghai entire ran, "commodities; even the coolies foreign Powers such as Russi
Ir. F. Anderson in moving the currency of Commerce que led in our Friday's At this our annual meeting, we are disones questions afflotiong the welfare Of all the important questions which bot the foreign trade of China, there is none which occasions mord anxiety to those engaged in trade than the vagaries of exchange; both Chinese and foreigners are daily affected by the uncertainty which const ntly haugs over daily exchange quotations and there can be no doubt that the sudden and Holentiluctuations to which we are from time to time subjected, add to the uncertainty and risk of rade, and therefore tend to curtail if; these fine nations discour age the investment of foreign capital in Chius, and binder the dere opment of the country, The uncertainty of exchange makes it im- possible to do busin. Es on site lines, and brings un element of gambling into trade, whieh hs in many cases had most unfortunate results. 8 an instance of how little any opi. ion about the future of exchange is worth, it may not be inappropriate to quote the following e tract from the speech of the Chairman of the leading Bank at its last annual meeting in Hongkong on the 14th February :—
in the streets will tell you "just now dollar more cheap."
If the argument means anything, it also means that China, or any other nation, can, by simply depreciating its currency, enable its producers to compete successfully with the producers of every country whose currency has not depreciated; that by having a depreciated corre.ey, China can make money, she can grow rich at the expense of her neighbours. If this is true, does it not occur to you that in this age of keen competition, it is extraordinary that other nations do not try this simple expedient; all nations are striving to grow rich and powerful: how is it that one after the other, they are all discarding silver? India, Japan, Sam, the Philippines, with the best expert advice in the world at their disposal, have deliberately foregone this precious advantage, and the Straits are preparing to follow their example. The plain fact is that the statement is not true, it is a fallady. Lord Farrar, from whose works I have already quoted, says that it is impossible to imagine a more dangerous and preposter.us fallacy.
Frobably it is true that wages have not yet been adjusted to the higher prices of com- modities-wages always rire more slowly than commodities, and to that extent cost of produc. tion may be cheaper in China during the period of transition-but what is the effect of this P The masses of China. find that the necessaries of life are becoming at adily dearer, they find
315
China
amount
the
er by
and lastly the export of Bilv aggregate sufficient to adjust
For instance it has been esti remittances from California about 2,000,000 per annum
onble notes which filter down from the North to Shanghai have been estimated at some considerably over, £2,500,000; they are brought here and used as remittano a from China; and gold shipments from Shanghai alone are over £2,000,000 per annum, whilst we have seen from the Customs figures that nearly £1,700,000 of allver was exported last year, and China provides for the payment of her national- it is not improbable that in this or similar ways, debt, and that but for that debt she would be becoming rapidy richer, Not only has China had to pay a large additional amount în taels owing to the fall in silver, but the rates of exchange since the beginning of last year, have been on an average about 2 per cent below the parity of silver; for months in the height of the produce season they were 3 to 4 silver, all of which was so much extra loss to per cent below the Chinese Government; as far as exports are concerned, it has been equivalent to a rebate of the major part of the export duties, while it has proportionately increased the laying down price of imports. Gentlemen, the whole situation in. China is filled with uncertainty and perplexity, and one of the elements which adds to the feel- ing of unrest is the instability of the currency
the Government does not know what demands: day, merchants do not know upon what basis to calculate their operations; the constant fluctus, tions in exchange make it impossible to have any feeling of safety or security in auy commercial transactions, contracts are altered from day to day by the operations of exchange over the heads of those who have made them, the. loss in the purchasing power of the floating capital of the country is enormous, and may become still greater. This part of the wealth- of the country has disappeared into thin air; wealth is something that has a value, the value of a thing is what you can get for it, and you, to-day than you could when silver was double can get much less for a tael or thousand taels: its present value.
After remarking that the uncertainty of the silver market had made exchange operations a matter of much difficulty and no little anxiety, he went on to congratulate the Chinese in the North in the following terms : The Chinese have again proved their capabilities as business men and have mostly settled their sterling exchange at the time they ordered their goods, it difficult to get a corresponding advance in may be made upon its resources from day to
EL
thus insuring them against loss on a falling silver market.”
چیره
wages; they have therefore to curtail expendi- ture, the consuming power of the country is less No doubt the Chinese did insure themselves than it would otherwise be, and there is a against a further decline in silver in the large feeling of unrest and dissatisfaction spread forwar1 settlements they made in December throughout the country. The farmers and and Januar, but what is their position to-day ? the merchan's r coup themselves by selling Very few of them have scaped losses of from their commodities at higher prices, but 2 per cent. to 4 per cent, at tu-day's rates, and the poorest of the population, wage-earning may have to face machheavier losses before classes, are the people who feel the effect their contracts are due; this is at present the of the depreciation of the currency most result of their efforts to try and insure them--they have to bear their share of the fucreased selves against loss. Now gentlemen, I ned not waste your time in enlarging upon the instability of silver but perhaps even at this late hour of the day, it will not be inadvisable to say a few words upon the question of low exchange being beneficial to the export trade of China, as this is one of the fallacies which seem to have some influence still; it is one of those statements which have been repeated here for a generation and it is a
taxation which has to be imposed to meet the additional public burdens, but they find it a hard struggle t› increase their incomes. Then those people who say that low exchange stimulates exports appear to forget that exports are paid for, not in gold or silver but in imports. If China exports produce and that produce is not paid for by a corresponding amount of im ports, she is a loser by the transaction a nation like an individual grows rich by receiving, not
08
belief which seems to die very hard. No proof | by paying. As her exports therefore ure paid / sitnawon along as the prese
for by her imports, all the advance in price
received with caution; but I cannot but think that neglect of such an important ques ion will a only add to the confusion which now exists and › that Chins cannot be wrong in trying to follow the lead of the united wisdom of the whole civilised world, especially as she is practically. the only exception to the establishment of ne universul single standard, a standard like gold for which demand is constant and steady, not- like silver, for which demand is filful and erratios a
becoming scarce, credit especially in the North Silver, low and depreciated though it be, is of China is seriously restricted, and we bave no prospect of any permanent alleviation of the
continues. The subject – of i's truth is considered necessay by those who
difficult and complicated; any one who professes believe in it all that is required is to make the obtained for the former is lost in the higher to thoroughly understand this question =~ is.... statement,
say nothing more, and look as if prices, she has to pay for the latter, and as she probably a man whose opinions should be, it were an u una swerable argument. But what imports more than she exports, she has been a is the truth? If this argument, that a tsel is loser instead of a gainery the fall in silver. still a tuel to a Chinaman, means anything at
Perhaps you will bear with me if I read to all, it means that silver las not depreciated in you the conclusions of Lord Herschell's Com- the interior of the country, although it has mittee on this point, the Committee who were fallen enormonsly elsewhere, that silver, one of appointed to investigate the Indian Currency the most transportable commodities, can change before the closing of the Mints. They state that: its value to any extent in one country without
— An examination of the statistics of exported changing its value in another, that it has one produce does not appear to afford any substan- value in China, and another and totally different tial foundation for the view that in practice the value everywhere se, uch a conclusion is stimulus of a falling exchange, assuming it to world value for have existed, has had any prevailing effect on all commodities where transport is reasonably the cours» of trade on
the contrary the pro- cheap, but according to the theoris's, silver may gress of the export trade has been less with a lose its valus all over the world, and with rapidly falling than with a steady exchange, out any special protection retain its former Statistics do not show that a falling exchange value as soon it comes within the his had any effect in checking imports." charmed citole of the Celestial Empire. Those were the conclusions arrived at in India, When the Chinese want to provide for the after a thorough and exhaustive examination of necessities o their deceased relations in the the subject, and our experience in China tends unseen world, they barn large quantities of to furnish additional proof of their soundness. imitation sycee made of silver paper, as the spirits are not supposed to know the difference between this paper money and the syces they were so fond of when they were in the Celestial Empire here below in the flesh, but whatever the
may believe, amongst th 400 mi prob
manifestly absurd. There 18❤
no
Ohinese it is very im- ona cone sane man who does a much less valuable than copper cash have been yet this debased cop- 1 cop la premium of between 20 and 25 per cent,, as compared with silver in the
steadily debase per cash h”.
The paragraph in the report of the Committee. which refers to this question is exceedingly mea- gre, the settlement of her currency on a sound. bas ́s is a vital one for China, both politically and commercially, but in their report the Committes. hare referred to the drawback on bunker orals at twice the length which they have devoted to the financial problem. I venture to think that if they faithfully represent the commercial opinion of this important centre of trade, they will show a keener inter st the solution of the problem than they appear to ha judging by their report and their cor Their suggestion that an Inte sion should be appointed to into the matter, is one
hich with univer such a Comu Chinese Gov ference
But it may be said, if these views are correct, and if China imports niore than she exports, how does she pay her heavy gold indebtedness for loans and indemnity nearly all of which is a drain upon her resources with no return. It she has to pay about a million taels, about the equivalent of the annual revenue of Shanghai, every week, low can she liquidate that debt except by increasing her expons? That no doubt, is a difficult question to answer, but if it is looked into carefully, it wi
be found confl that the export of gold, the xpenditure in Chins of foreign armies, foreign navies and the detail
compi
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