No. 35.
Mr. Seward
to Mr. Fish.
Sir: The trade-dollar, as I believe, was coined to afford another outlet for the silver produced from our mines. It was not supposed that it would become largely current at home, but was intended for shipment to China, where it was thought it might take the place of the Mexican dollar.
In my trade report for last year I spoke of the difficulty of introducing it into Northern and Central China. There are not 500 of the new coins n circulation north of Foochow. In Southern China it has not displaced the Mexican or found a market to any great extent; I doubt whether it can ever come into general or even extensive circulation. In point of fact, the Mexican dollar, introduced twenty years ago, is found only at the ports open to foreign trade, and not at all of these.
We have in China the singular spectacle of a great trading people who may be said to be devoid of a currency. The cash, which varies from 500 to 1,500 to the dollar, is current for small transactions, but it is too bulky for large ones. All considerable settlements have to be made by an exchange of bullion or mercantile paper. There are no issues of paper money by the government or by banking corporations.
The difficulties of the situation are aggravated by the fact that the scales used in weighing bullion vary in each considerable city.
[Page 46]The capacity of this empire to absorb silver bullion is well understood. I imagine that its capacity to absorb silver in the form of coin issued by the government would be far greater. Bullion is so inconvenient as a medium of exchange, that mercantile paper is made to take its place wherever possible, and the quantity actually retained for commercial purposes at any one point is known to be small. The convenience of a silver coinage would naturally call into use greater quantities of the metal, while the great magnitude of the empire, its immense population, the universal distribution of trading interests, the lack of rapid means of intercommunication, and the hoarding tendencies of the people are further elements which must not be overlooked in considering the extent to which coins of unvarying value issued by the central government would be taken up.
The advantages which would result to China from the establishment of a convenient, uniform, and sound currency cannot be overrated. It would put new life into all the channels of commerce and bring about a great and rapid development of trading interests. It would enrich the people, and, as a consequence, the government, and in particular form a foundation upon which the state might build up a system of finances of an advanced order. It is pitiable to see this empire borrowing from foreign merchants paltry sums of one, two, or three millions of dollars, specially pledging for the repayment of such loans this or that branch of her revenue.
* * * * * * *
Chinese statesmen of the new school are disposed in a timid way—for they do not yet feel individually safe in taking up the advocacy of progressive measures—to adopt many western ideas; and it is very possible that schemes which will appear almost utopian to the many foreigners who have not yet learned that China is beginning to move, may admit of a comparatively easy accomplishment. At any rate, the objects in view in this instance are of such importance, that we ought to make the trial, even in the face of discouragements of a grave nature.
If you approve the plan, I suggest that the Secretary of the Treasury be asked for information as to the cost of establishing a mint of moderate magnitude, and the expense of working it, giving plans and descriptions of the buildings and material, and a statement of the staff required.
Would it be possible for the government to secure from a mint a direct income sufficient to support it?
I have, &c.,