The times-news. [volume] (Hendersonville, N.C.) 1927-current, 1937-09-09
SAYS CHINESE.
FISCAL PLANS.
SOUNDLY MADE.
Expert Believes Nation Is
Able to Finance War
With Japan

SAN FRANCISCO. Cal. Sept.
9.-UP)-As a result of Chinas
new financial policy. which has
now been in effect for twenty
months. she is in a better posi-
ton TO finance 4 war with Japan
than at any previous time IN her
history, according to DIR. Oh 40
ting Chi, Chinese expert OF the
Institute of Pacific Relations.
The agreement entered into be-
tween China and the United
States as late as July 9, 1887. Is
expected TO contribute in no small
degree TO the success OF emma
new monetary system and IN the
maintenance Of her war chest IN
the present conflict.
While the full terms of the
agreement between the Washing
ton treasury officials which were
made on the occasion of a visit to
WaShins ton by Chinese Finance
Minister DR.. II. II. Kung have not
been fully revealed. it Is known
that they will permit of the or
DERBY disposal by China OF large
stocks of Chinese silver without
driving down the price. instead,
il is understood that any such sale
of Chinese silver would b. made
AT the advanced arbitrary price
fixed by the American treasury.
The new monetary policy oi
China, which was rendered neceS-
sary when the United States be
gan purchasing silver ut advanc-
ed arbitrary rates the same aS
gold and which resulted M the
flight OF Chinese silver from Chr
ma, has two essential features.
NATIONAL BANK
The first is that China, for the
first time i'm her history, will have
u central, bankers bank. through
which the Central government
will be able TO Influence the coun-
try'S monetary policy.
The second feature of the new
Chinese monetary policy. IN q
which is rather unique in its
form. is that il consists Of 4 form
of govcrnment-managcd foreign
exchange.
Under this system. China has
not adopted a foreign exchange
standard whereby the national
currency is linked to q single for
eig exchange, thus involving Il
considerable measure Of mdepen-
dence on q single foreign country.
Theoretically, the Chinese have
not tied their currency To any
foreign standard. although in
practice Il has been stabilized
largely on the pound and the dol
lar.
Under this arrangement, the
stability of the Chinese dollar Is
maintained under the decree Of
November 5. 1885. by an unlimit-
ed buying and selling Of foreign
exchange. but the real ability oil
China 10 manipulate its exchange
rate is conditioned by the size of
her balance abroad.
SILVER RESERVE
If these continue to impose g
drain on her foreign balances, Us
will probably be the case i'm the
present conflict with Japan, she
will be obliged either to export
gold or silver OF contract 4 for
eign loan. Just what amount Chi
mas silver reserves are at the
present time, the institute Is TN
able TO state, but nevertheless the
agreement viii re United States
gives her the most Ia, orablc Op-
portunity for making the most "a
them.
In fact. under this 80 suMcut.
China will not even 90 UJiig,d
actually to export tue SILVER. as
long as she has ii NJ home Tor COZ
lateral.
For the time being. China Is
believed to have ample stocks oil
silver that resulted from her ma
tionaliZatiOn Of the metal.
As regards the orCani. atiGu of
the new Central Eank Of China,
the institute hnds that China mas
had the fullest cooperation oi the
foreign banks at Shanghai, and
especially the British who offer
ed at once their cooperation by
turning over their Chinese silver
for exchange for legal tender
notes.
JAPANESE OPPOSE
In general, the Japanese bank
erS. and especially those at Tient-
sin, have opposed vigorously the
new Chinese monetary policy, but
later this was modified at Shang-
hal. at least. where the Japanese
bankers there also offered to turn
their reserves of Chinese silver
TO the Chinese Central bank for
its notes.
The two net results of the new
Chinese monetary policy, accord
ing 10 the survey of the institute,
have been both TO stimulate for
eign trade and foreign borrow
ing. Both of these are being
counted on very much TO help
China in her present struggle.
Some idea of the beneficial eff
fects of the new Chinese none
tary system are indicated by her
ability To secure credits in
CzechoSlovakia and elsewhere in
Europe for ornaments and NUM-
tons, recently announced by Ii
nance Minister Kung himself.
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