New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-08-30
Unstable Money
Puts Damper on
Trade in China
Banking and Currency Reform
Urgently Needed to Re
store Confidence


the world out OF financial balance.
For instance, in the Canton consular
district where the currency used Is
Hong Kong bank notes, with some sill
yer dollars and a considerable quantity
Of small coin dollars. the rates be-
tween these various mediums fuctusted
widely and frequently.
At the beginning Of 1915 silver dol
lars were at a discount Of 4 per cent
compared with notes, and before the
end Of the year notes were at dis
count Of from TO 7 per cent compared
with silver dollars, an average differ
ence Of 10 per cent in value during the
twelve months. Small coin dollars az
the beginning of 1915 were at dis
count Of from Is TO Is per cent, but
at the end OF the year they had IN
creased in value TO only 4 per cent dis
count. The Canton branch Of the
Bank Of China suspended business on
April Is, 1915, and remained closed
through the year. With the money
market so uncertain, and with so much
discredited paper currency. great un-
easiness was felt in commercial circles
and the transaction of business became
unsatisfactory and hazardous.
"The provinces of this district says
p. s. Heintzleman, American Consul
General in the district, appear urgent
ly to require a reformed banking and
currency system to finance trade and
TO restore confidence in the money
markets Of the native trade centres
Concerning money conditions in the
Changshs district, Consul Nelson 7.
Johnson writes:
IN this district, as elsewhere in
China, there is provincial tael or
standard ounce OF silver. The tael OF
Human, known as the Changsha tael or
the chang ping, is theoretically heavier
than the Hankow and Shanghai taels.
Before the port of Changshs was
opened TO LEaue III lJJf. biAC NuaIi : 7A'A
tael was quoted at a premium in terms
o. Hankow or Shanghai tsels. The
financing of commercial transactions
was then shifted from the Chinese banks
20 the newly established foreign i'm
mort houses and consequently to the
foreign banks at Hankow and Shanghai,
the import centres from which Chang
sha merchants draw their supplies.
q \ h. fha nrnVln-
cial government caused an Over-issue
of paper by its discussing agent, the
Bank Of Human, the depository for all
provincial revenues. The result was
the disappearance OF silver bullion and
the depreciation of the tael note. Prior
20 1911, So Changsha taels equalled 100
IIankow taels; on July IL, 1918, 20
Changsha taels equalled 100 Hankow
taels; and on December 80 the ratio
was 1855 to 100. This gives an idea
of the local exchange situation. Al
though silver was high in terms Of
gold, making exchange favorable for
the purchase of foreign goods, this ad'
vantage was Offset, so far as Human
merchants were concerned, by the de-
probation in value OF their local cur
rency. The cost of foreign machinery
and other materials fell in terms Of
Hankow or Shanghai taelS, but ex-
pressed in Changsha taels IT rose to
prohlbltive amounts"
In the Chungking consular district,
so VI. S. Myers, American Consul, re-
ports, the year 1916 was so profitable
for bankers that ten new banks have
been started since the latter part Of
January this year.
Throughout 1916" says Mr.. Myers,
money was tight and interest rates
reached per cent month, but were
generally about I u per cent. AS re-
suit of the exchange notes of credit,
which were in circulation during most
Of the year, and the non-arrival Of sill
yer for the purchase of imports, the
bankers controlled the local silver sup,
ply. Sycee, the money of business, be-
came scarce, and It's expectation from
Chungking was prohibited from the end
of October. A peculiar feature Of
Chungking banking methods is the
lending of money without security.
This is restricted, Of course, 70 firms Of
known financial standing.
when the moratorium was declared
the notes Of the Bank of China and the
Bank Of Communication fell, and have
since remained below par. The former
have generally been exchangeable at
about 80 cents silver 20 the dollar, the
latter at about so cents silver TO the
dollar, and they have declined at times
70 90 cents. At present the use Of these
notes is restricted. The issues are con-
siderable, but as many were carried
into the interior the contraction in
their value has had little direct effect
upon the trade of this port; the small
dealers in the country have been the
chief sufferers.
Exchange on Shanghai was against
Chungking throughout the year, which
means that exporters obtained less
Chungking money for their goods. The
parity Of exchange is 90l176 Szechwan
taels, the equivalent Of 1000 Shanghai
taels. The average rates for each
quarter of 1916 were 9l5, $50. 946 and
9l6 Szechwan taels per 1000 Shanghai
tasls, due principally TO local political
conditions and the resulting scarcity Of
silver. Another factor was corner Of
the silver sycee in the autumn by the
local cash shops. The value of cash re-
NAMED at low level during the year
ranging between 1900 and 1850 cash
for the silver dollar.
"As 70 foreign exchange, the high
rate ruling for silver tended 10 restrict
exports. but for many commodities this
was more than counteracted by in
creased demand and higher prices
offered in foreign countries as a result
OF war conditions"
Unfavorable rates of exchange OPP
Grated TO the disadvantage OF local
merchants in the Swallow district
Horace Remillard, vice-consul for the
district, reports:
The disturbances in the early part
% 1915 resulted in the remittance of
large sums TO Hongkong. By Septem-
L. IL Ernrr.uI ,rn-r,- ho.nr..