Mr. Denby to Mr. Blaine.
Peking, September 11, 1890. (Received November 4.)
Sir: The fact that the new Canton coinage is being gradually put in circulation in China is worthy of note. It is the first serious attempt that has ever been made to coin money in China. The gold bar and the shoes of “sycee,” with the copper cash, have hitherto furnished the metallic currency of the Empire, except the Mexican dollar, which is taken freely all along the coast and wherever foreigners are located. The introduction of this coinage being almost contemporaneous with the great appreciation of silver consequent on the passage of the “silver bill” by Congress, suggests some reference to the prior values of silver in China and to the effect of that legislation.
A writer in the North China Daily News puts the value of silver in 1368 at 4 ounces of silver to 1 of gold. In 1574, almost 80 years after the discovery of America, 7 or 8 ounces of silver had the value of 1 of gold. In 1635 gold was ten times as dear as silver. In 1737 it became much cheaper. In 1840, 20 and more ounces went to pay for 1 of gold. In 1850, 14 ounces of silver were required, and in 1882, 18.
If these figures are correct, it is quite plain that the value of silver has decreased in proportion to the growth of foreign trade. The more silver imported the cheaper it became.
China is essentially a silver-using country. Salaries, taxes, and duties are paid in silver. It is a grievance with the literati of China that foreign trade deprives China of her silver. But, on the other hand, it is entirely plain that silver mainly comes from this same trade. A glaring proof of this fact is the enormous influence that the “silver bill” has had on the value of silver in China. By the last bank quotations received officially at this legation, a gold dollar is worth $1.0557 Mexican; a Mexican dollar is worth 94.72 cents gold; a gold dollar is worth 78.75 tael cents (Shanghai tael); a tael is equal to $1.27 geld. When we remember that the present treasury rate for the east is 75.8, and that last year it was 73.8, and was still lower in preceding years, this enormous and sudden appreciation will be realized.
On my trip around China I found at the various ports a general and very diverse discussion of the effect of our silver legislation. In general it seemed that the merchants rather preferred that silver should be cheap. Until prices are rearranged in China, the merchant must pay more for his goods than heretofore. When he draws a bill on London against an invoice of goods, he will now receive vastly less taels or Mexican dollars. Instead of receiving, as heretofore, 100 Mexican for every 72 or 73 gold dollars, he will only receive at present rates 100 Mexican for every 95 gold dollars. The value of the tael varies so much at the different ports that I use the Mexican dollar as an illustration. There is likelihood, also, that the silver dollar may become equal to the gold dollar.
It is impossible in China to arrange wages on a lower basis. The coolie who gets $6 (Mexican) per month, and has taken them all these years when they were worth only $4.50 gold, will still insist on receiving $6. It is plain that the resident in China who receives his wages or salary in gold and spends his money in China will lose enormously. But I found at Hong-Kong that all the officials who were paid in drafts on London were enthusiastic in favor of the new rates. They receive their pay in gold and send a great deal home to their families and, of course, gain in exchange. The missionaries will suffer seriously. They [Page 205] are paid in gold, and they lose the difference which has heretofore existed between the two metals. Officers of the Navy and of the diplomatic and consular services are likewise heavy losers, as their money is mostly spent in China. On the other hand, if they have made any savings and want to send their money home, they will make considerable gains.
As far as I could learn, the Hong-Kong and Shanghai Bank, which is based on silver, gains by the appreciation. Its capital becomes essentially a gold capital.
The employés of the imperial maritime customs and other governmental employés, who are paid in taels, are not at all affected unless they desire to send their money abroad. They will receive what they have always received, and, if by reason of the appreciation of silver they pay less for their supplies, they will gain.
A discussion of the effect of the appreciation of silver on the value of the copper cash of the country, which has hitherto been its only coin, is of interest. According to the writer above quoted, the value of copper cash has undergone a regular depreciation since the time when the Chinese had not yet adopted silver as their chief medium of currency. In the eleventh century, at Kuangchou in Honan, 40 cash bought a catty of tea (1⅓ pounds avoirdupois). At other points the price varied from 74 to 48 cash. At present, rating the cost of a picul of tea at 16 taels and a tael at 1,500 cash, a catty costs 240 cash. The depreciation of copper in 800 years has therefore been such that 5 cash are now required to buy what leash would have then bought. The writer quoted proceeds to argue that China might easily have been content with copper cash as a currency in the days of paper money. The people then required only one-fifth of the cash that they now require. It is known, also, that at that time a convenient system of notes prevailed for every article of trade.
The depreciation of cash is accounted for by the competition of silver. Salaries and large debts are paid in silver. The value of cash decreased in proportion to its disuse as a medium, a decrease which was accelerated by its great weight. But cash must remain the currency of the poor. The increasing population must have a small coin for its ordinary transactions. Copper cash will therefore always remain an important currency. The new coins, which are minted in a mint that was established at Canton by Chang Chih-tung, are said to be very handsome, equal, in fact, to the coinage of any other country. These coins are equivalent in value to a Mexican dollar, 50, 20, 10 and 5 cents. The values are expressed in fractions of a tael. The face value of a Chinese dollar is 7 mace and 2 candareens, and the other coins are worth 3 mace 6 candareens, 1 mace 43/5 candareens, 7.3 candareens and 3.63 candareens. The three smaller coins correspond with the 5, 10, and 20 cent pieces which are issued at Hong-Kong.
It may, perhaps, be convenient to state that heretofore money in China has been entirely represented by weights of silver (taels, mace, candareens). The tael actually in use is 1.351 ounces; 1 cash is equal to one-twentieth of a pence, 1 candareen is equal to half a pence, 1 mace is equal to 6d., 1 tael is equal to 5s.
Silver has hitherto been found in ingots or shoes, sometimes called “sycee,” or in broken silver. Cash are bronze coins, not unlike thin farthings, with a square hole in the center for stringing. The value fluctuates and is very much a matter of bargain. Hitherto about 1,200 to a Mexican dollar has been an average quotation.
It remains to be seen whether the Chinese will adopt for circulation [Page 206] the new coins in place of the Mexican. Curiously, Hong-Kong has not issued a dollar coinage. The Chinese are conservative and suspicious of all innovation, but it is likely that the new coinage, which is sustained by the views of the greatest men in the Empire, will be universally received.
I have, etc.,