Los Angeles herald., 1909-08-29

| llM y Nl In China is bad that statistics
| lW EcEHll show a decrease in Chinese
| IN %zSl trade and that there are no
lsA4za40Ml prospects of immediate COM
merclal bonanzas in the Celestial en-
pire cannot be disputed. 1t is folly,
however. to attempt to belittle the i'm
! portance of the Chinese market by
predicating conclusive judgment upon
the commercial depression of the mo-
ment. 1t would be as foolish as to de-
| eide that the United States will never
again be prosperous because there
! was a panic in 1907 The very same
panic which disturbed conditions in
the United States has spread through
out all the world. Japan has felt It
more, perhaps, than any other nation.
but China has also suffered severely,
! peculiar local conditions aggravating
the general financial trouble.
One of the worst of the many vex-
Ing troubles of the Chinese empire is
itssunstable, variform, complex and in
adequate currency system. Curously
enough, the foreigners trading in
China suffer more by the fluctuations
of the value of money, comparatively,
than do the Chinese. Foreign influence
is therefore pledged to q currency re-
form program, the necessity of which
the Chinese government admits.
| Whether the government has the power
to enforce such a reform is to be
doubted, but If taxation reform comes
lever with which to move the inert
provincial masses, a sound money
system may be evolved.
The foreign banks, as well as the
| Chinese exchange men, probably will
resist the Introduction of sound
money system. The banks In Manila
opposed the action of the American
government in giving stable cur
rency to the Philippines, They will
support the nuctuating silver system
In China as long as possible. The rea-
son is plain to see--the banks make
money when silver rises In value, they
make money when it falls. Their chief
business is exchange, and they get
their squeeze" coming and going.
l.. In a lower scale than the foreign
banks the Chinese exchange brokers
carry their business to a refinement
which is quite beyond the power of the
| Occidental mind to grasp. The silver
| tael is the standard of value In China.
| But there are no tael coins. That
would be too simple. The coins are
Mexican dollars. Hong Kong British
dollars and Chinese dollars from
various Chinese provincial mints. Large
sums are paid in silver ingots by
weight. There are a half dozen diff
ferent kinds of taels, with varying
values, and no two OF the various
kinds of dollars in circulation have
exactly the same value.
In the treaty ports the ordinary cur
rency Is the bank notes of the Foreign
banks. These are expressed in dol
| lars as promises to pay In local cur
rency on demand. But they are not
accepted at par value in any other port
city. even by other branches of the
same parent bank OF issue. In any
other country 1t would mean instant
bankruptcy for a bank to discount It's
own demand notes, but they do things
differently in China.
| If one has an American or European
draft to sell he goes to one of the big
foreign banks. He asks what the rate
| of exchange is, and he Is told the price
of a pound sterling or of gold dollar
| In taels-never in dollars. But he sells
! his draft for dollars. No one but an
expert can attempt to follow the raml-
| fcations of the calculations OF the
Chinese corr4pradore who pays him the
supposed value of his draft in dollars.
This illustration applies of course, only
to small transactions, but It throws
light on the iniquities of Chinese ex-
change banking.
But this is not all. The dollar, be 1t
Mexican, Hong Kong, Shantung'
Kirin or what-not, is composed or one
hundred cents. Very simple, you think.
But If you attempt to pay dollar debt
with five twenty-cent pieces the pay,
ment will be refused. "Small money
you are told. sis not good in dollar
lots" Then you are informed that
while one hundred cents make a dol
lar. 1t requires one hundred and eleven
coin cents to make one hundred actual
cents. To the Chinese such a system
is perfectly logical and intelligibie,
even desirable as adding zest to the
transaction of ordinary business. In
one community a hundred cash may
mean, In practice, eighty-hve cash.
while in another 1t may mean 245 cash.
| Nobody but the Chinese ever know
what's what in low finance.
In a village where 1t Is customary 70
go to market with three kinds OF
money-genuine cash, mixed lots or
genuine and counterfeit cash and an
other lot of all bogus cash-and where
| II is understood by merchant and by
customer that certain articles, such as