New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-10-26
STABILITY OF EXCHANGE.


When Mexico and China made their request
last january for the aid OF the United States in
regulating the fluctuations in the value of silver
and establishing a fixed ratio between the cur
rency OF the silver using countries and gold The
Tribune declared in favor of the enterprise. pro-
vided it abandoned all schemes of bimetalsm
and concerned itself with securing a more per-
feet system of exchange and putting the silver
countries on a gold basis without interference
with local prices and popular habits by the in
PRODUCTION of gold the principal circulating
medium. This is just what has been done by
the Commission on international Exchange op-
pointed by the President in response TO the
Mexican and Chinese invitations. Hugh III.
Hanna. Charles A. Conant and jeremiah w.
jerks. the commissioners, have visited the prin
cipal countries OF Europe, discussed the subject
with representatives of Great Britain, France
Holland. Germany and Russia, in cooperation
with the Mexican commission, and have reached
agreement with them all as TO the deSirability
of the proposed reform and as TO the wisdom Of
the essential features of their plan.
The report OF the commission to the Secretary
Of State. a summary of which is published in
another column of this issue is concerned chief
ly with the introduction OF the gold standard
into China. Mexico is expected shortly on its
own motion, 10 undertake policy in harmony
with the commissions plan by bringing its sill
yer circulation 70 a fixed parity with gold. This
means the adoption of the gold standard with
out gold circula ton. and the transformation of
the silver circulation into token money with
a legal value not far removed from its bullion
value and exchangeable at a fixed rate into gold
for foreign payments. The Chinese problem is
more complicated. because there is no national
In
extended beyond the treaty ports. The plan
proposed is for currency of silver and copper
token money, put at once on a gold basis.
though Great Britain and Russia alone among
the powers favored first. a uniform national
silver currency. TO be brought subsequently 10
fixed gold value. The commission believes
that the gold standard with silver currency
could be established at the great commercial
ports without serious business disturbance, and
then the system could be gradually extended in
its perfection to other parts of the empire where
there is now no system a all.
The rarity Of the currency is TO be maintained
by coming silver solely on government account
and strictly limiting the amount to the demands
of trade by the acceptance Of the coins at their
legal value first forpublic debts and then making
them legal tender for private debts and by the
sale of drafts at or near par upon gold exchange
funds kept at the financial centres of the world
1t is not thought that the gold reserve for this
purpose need be large. There would be no local
demand for gold. and under proper regulations
the depletion of the gold stock could be pre-
vented. ANY tendency to drain gold could be
met by raising the discount rate under fixed
rules Neither need the government obligate It
self 10 sell exchange unless the commercial rate
for gold exchange advances per cent or more
above normal charges. Then its sales would
serve merely 10 restore the rate and maintain
its silver at par The ratio proposed for China
is 81 TO l. as most likely 10 enable the coinage
TO be kept at par without any undue burden or
drain on gold reserves, ana at the same time
keep the money from being Withdrawn from cir
cuation for the arts.
How far the commission is from any desire ''to
do something for silver is shown In the recon-
incubation that when the bullion value OF silver
equals its legal value government purchases
shall cease This is necessary 10 prevent loss,
but its tendency is TO keep silver prices down at
least to a fixed figure, since large market for
II is closed when IL goes higher.
This proposition +, Of course, purely academic
The United States cannot give China O none
tary system, and il is not intended by treaty or
otherwise 10 modify our own system assume
any responsibility with respect to the currency
OF any ofler country. III is manliesl however,
that Oriental trade would be greatly benefited
by stability OF exchange. At present all trans
actions are subject TO loss through extreme
fluctuations The plan proposed to remedy the
difficulty appears TO be perfectly sound. No de-
parture from the gold standard is TO be made
but the gold standard IL 10 be extended and
countries which have permitted the free coinage
OF silver exchangeable only at its varying
bullion value. are 20 adopt token money like
Tie silver money of the United States. but with
OUT any attempt, such was made here by
/ large purchases TO maintain an arbitrary price
OF silver as a commodity. II China wants this
! system china, not the United States must
adopt H. But the United States may give sym-
/ paihy and advice, and il has done valuable
WORK I'D securing European agreement on the
subject "heh ohina Is ready 10 net IL may be
sure that the powers will put no obstacles in