Los Angeles herald., 1909-08-29
I'm MODERN CHINA
TX-Need of Currency Reform
By Frederic j. HaSkin

rice and sweet potatoes, must be paid
for in genuine money, while mix
ture of good and spurious coin Will be
accepted for pork and eggs, and the
counterfeit money as quite good for
bamboo sprouts, the ordinary western
man will give up in despair any at
tempt to fathom Chinese finances.
AS long as the foreign banks, repre-
senting large transactions, and the
Chinese money changers, representing
small transactions, continue to find the
fluctuations of the money market
profitable they will oppose currency
reform. 1t is folly for the merchant
doing business in China to accept the
bankers view of what is desirable in
financial systems.
The Chinese knows nothing and cares
nothing of the gold value of his money.
He thinks in taels, buys In taels, sells
in taels of silver. He keeps up With
the complexities Of the Chinese inter-
nal currency system, but beyond that
he does not inquire and refuses to be
informed. Therefore, when by reason
of falling off in the purchasing power
of India as the result of a famine, the
price of silver drops in money markets
of the world or when financial manip-
ulation has the same effect, Chinese Is
not disturbed. He desires to buy just
as much foreign goods for the silver
tael as he did last year, or the year
before. He will not listen to argu-
nents about the difference between
gold and silver prices. Perhaps he Is
wise and overshrewd in refusing to
learn this comparatively simple lesson.
Last year the average exchange value
of the tael. using for example that par
ticular tael which is reckoned as the
standard by the customs houses, was
60 cents, American money. The year
before the average value was 10 cents.
On the whole there was an average
rise in silver prices of commodities of
from Is to 20 per cent to realize the
same amount of gold. Naturally the
Chinese objected to buying goods. But
they were delighted to sell at the new
prices, since the foreigner was willing
to give more taels for the same amount
OF goods, and to them tael Is a tael.
Consequently, the falling price of silver
stimulates exports and correspondingly
depresses imports. 1t also greatly in
creases the burden of gold debts owed
by Chinese or by the Chinese govern
ment. The operation of the system at
present Is to depress the business of
those foreigners who are trying to find
a market in China, to increase the bur-
den of debt upon the Chinese, and gen.
orally to injure legitimate trade. Only
the system. If all the powers would
follow the lead of the United States
and endeavor to help China reform its
currency system, II would be of the
greatest possible advantage to all par
ties concerned. That is, except the
banks.
AS regards trade with the United
States. there is an apparent contradic-
ton of the general rule. The Chinese
empire last year bought from the
United States goods to the value of
S26,000.000 gold, a decrease of S3,000O00,
as compared with the year before. In
fact, however, the business was greater
in volume. as the silver prices show an
increase of nearly 100000 taels. Prices
were lower, of course. China sold to
the United States last year goods to
the value of 10000, 900 gold. decrease.
as compared with the year previous. of
$4,000. 900. This enormous falling off in
exports to America at the time the
falling price of silver was stimulating
exports was not due to Chinese condi-
tions, but TO financial troubles in the
United States. which caused a cessa-
tion of demand for silks and other
Chinese products which may be rated
as luxuries.
The Chinese market was overstocked
after the Japanese Russian war by
large buying to meet the expected post
bellum boom, which has not yet ma
terialized. This has contributed to the
partial paralysis OF Chinese trade, and
has had its effect on lowering the price
of silver while increasing the debts
due by merchants on balances for these
same goods. This feature of the situa-
tion has carried the general business
depression and panic into the interior.
Yet bad as things may be now, they
are not as bad as they were eight
months ago. The Chinese market as an
essential factor in the future of the
worlds trade Is rapidly growing more
important. Even in panic times the
education of the people to new tastes
and to a higher standard of living goes
on. The troubles of the time will pass.
but the appetites and desires of 400, 000.-
900 of people will multiply and con-
tinue. The present duty of the nations
is TO assist China to establish staple
uniform. simple and adequate currency
system.
Tomorrow-Tn Modern China: x-"DrOp-
ping the Pilot"