Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 5, 1905
Minister Rockhill to the Secretary of State.
Peking , December 11, 1905 .
Sir: In further reference to my No. 110 of September 29 last, I have the honor to transmit, inclosed, (1) a report by the Chinese secretary of this legation, Mr. Williams, upon the subject of the new Chinese currency, which is accompanied by translations of a number of memorials dealing with the question and by a translation of a recent imperial edict establishing the weight and fineness of the standard silver coin and of the subsidiary silver coins, and (2) a copy of some comments upon the new system, made by Mr. E. G. Hillier, manager of the Peking branch of the Hongkong and Shanghai Banking Corporation, who is one of the most expert financiers in the Far East.
From these reports it seems that the new currency system of China is not likely to fulfill the requirements of our last treaty with China to the effect that she shall establish a uniform national coinage, and I have the honor to request that I may be instructed what representations, if any, under the circumstances to make to the Chinese Government respecting the matter.
I have, etc.,
Mr. Williams, Chinese Secretary, to Minister Rockhill.
Peking , December 11, 1905 .
Sir: I have the honor to submit herewith a report on the new currency system of the Chinese Government, as set forth in various memorials and a recent imperial edict, translations of which are inclosed.
It will be seen from subinclosure 2, regulations 1 and 2, that it has been definitely decided to establish a currency in three metals—gold, silver, and copper. As time was needed, however, to determine the question of the weight and fineness of the proposed gold and silver coins, the government last August resolved to begin with the minting of the subsidiary copper coinage, and an edict to that effect was issued on August 22. Previous to that date, however, the provincial mints with the approval of the Throne had already been issuing copper coins, for some time, and although these coins were of varying weights and degrees of fineness, they were allowed to remain in circulation, as were also the debased cash of the old system; but the provincial mints were ordered in future to make the copper coins of uniform weight, quality, and design, according to the rules laid down for the central mint.
These new copper coins are worth intrinsically only about two-fifths of their face value, and while they have found pretty general acceptance on account of the scarcity of cash some op position to their exchange at the legal rate is now beginning to be shown, because in places the supply seems to be too great. Last week the cash shops of Pao-ting Fu in this province closed their doors for five days rather than take the coins at the official valuation. The foreign merchants at Shanghai called attention to this danger some months ago, and the Chinese Government was duly warned. It now sees the necessity for action and has ordered the suspension of copper minting for the present.
Efforts were made to confine the circulation of the provincial copper coins to the provinces issuing them; but despite the imperial edict to this effect the viceroy at Canton prayed for permission to export his coins to Shanghai and other ports, claiming that his provinces needed exceptional treatment. His request was refused; but his neighbor, the viceroy at Foochow, endeavored without permission to ship large quantities of his coppers to Shanghai and Chefoo, which were seized by the customs, and this incident led to the order for the punishment of those concerned. The profit on these coins is so great that the temptation to evade the edicts is more than ordinary Chinese official nature can resist, and the provincialism which exists everywhere in China makes the officers of one viceroyalty utterly indifferent to the confusion which their acts may occasion elsewhere.
After three months deliberation the financial commission determined to recommend that the standard silver coin be made the equivalent of one K’u-p’ing tael. This was approved [Page 186] by imperial edict on November 19. But while this coin is to be called a “K’u-p’ing tael” and the law makes it exchangeable for a true K’u-p’ing tael of silver its intrinsic value is somewhat less, notwithstanding the declaration of the commission that the intrinsic value of the standard coin should agree with its nominal value. The K’u-p’ing tael contains 99.8 parts of pure silver. The new coin will contain’ but 96 parts, the difference being charged to the cost of minting, and the commission expresses the belief that if the government will accept it freely in exchange for the K’u-p’ing tael the merchants will be glad to do the same in order to avoid the annoyance attending the testing of silver sycee and the discount for lack of touch, etc. It does not seem likely, however, that the people will take kindly to this overvaluation of the new coin. It would seem to work hardship to creditors who have sums due them according to contract in K’u-p’ing taels and who are now required to receive in discharge of old, as well as new, debts one tael coin in lieu of a K’u-p’ing tael of silver. They must thus lose 3.8 per cent of their dues. Edicts have not been able to enforce such regulations in the past, and it is improbable that this will prove an exception. * * *
But if it will be difficult to compel the people to accept the new silver standard coin it will certainly be more difficult to unload upon them the paper notes which are to be circulated with it. It is provided (inclosure 3, regulation 4) that when a sufficient amount of the new coins shall have been minted to inaugurate the system, an equal amount in paper shall also be issued. There is no provision as yet to retain any silver in the treasury to secure these notes and no arrangement for their redemption beyond the bare statement that when a sufficient number of the new coins shall have been minted they will replace all other forms of money. Former issues of paper money by the Chinese Government have been repudiated, and the people will be slow to accept these notes unless substantial guaranties are given for their redemption.
When the time shall arrive for the inauguration of the system, the government will determine what proportion of any debt may be paid in the new silver, what proportion in paper money, and what proportion in the present silver dollars, sycee, etc. It thus appears that the present mixed currency is to continue in circulation for some time to come along with the new coins. Further coinage of silver dollars is apparently to be stopped, but no provision is made as yet for the eventual removal of these various silver coins from circulation. It may be doubted whether they can be driven from circulation so long as there is no check placed upon the importation of Mexican and Hongkong dollars, and as the present commercial treaties provide that no import duty may be levied upon gold and silver bullion or coin, a revision of these treaties may first be required in order to secure the uniformity in the currency which is desired.
Although a gold coinage is provided for, its introduction is for the present postponed. Professor Jenks’s suggestion that the gold value of the silver coins be fixed and guaranteed from the start was not accepted, and nothing has been done toward fixing the rate of exchange between the silver and the proposed gold coins.
Even the rate of exchange between the copper coins and the new silver currency has not yet been decided; the commission states that this will be done after the provincial mints shall have made the reports required of them.
On the whole the new system so far as developed at present can hardly be said to meet the requirements of Article XIII of the treaty of 1903 between the United States and China, which provides that China shall provide for “a uniform national coinage which shall be legal tender in payment of all duties, taxes, and other obligations throughout the Empire by the citizens of the United States, as well as Chinese subjects.”
I have, etc.,
Memorial submitting regulations proposed to secure the reform of the currency and the introduction of a uniform coinage throughout all the Provinces of the Empire.
We, Your Majesties’ ministers, in the fourth moon of last year (May–June, 1904) received an imperial edict, directing us to establish a central mint for the coinage of silver and cash with a view to the reform of the currency, and thereupon at once established such a mint at the port of Tientsin, and bought machinery. This machinery has now been erected and an experiment made in the minting of copper coins, the operations in connection with which have already been reported in a separate memorial; but coinage having thus begun at the central mint it becomes necessary at once to establish uniform regulations as to minting to be enforced in all the provinces in the hope that the purpose of the court to reform the currency, enrich the state, and benefit the people may be fulfilled.
The first minting of silver coins in China was undertaken in Kuangtung with the object of supplanting the foreign dollars and making good the deficiency in the volume of the copper [Page 187] cash. Afterwards the Provinces of Hupeh, Kiangnan, Chihli, Chêkiang, Anhui, Fengt’ien (Moukden), and Kirin successively bought minting machinery and proceeded to coin, but the coins minted differed considerably among themselves in weight and fineness, and even coins from the same mint lacked uniformity, so that the people made distinctions. The coins of one province, too, were unable to circulate in another, and thus they were less satisfactory than the Mexican dollar, which circulated generally throughout the north and south. Recently there has been added a minting of copper coins, because of the shortage in the ordinary cash. The circulation of these has found favor among the people and the profit from minting them has been very great.
The various provinces therefore have vied with one another in asking permission to coin, and there has been no end of confusion as a result. Because of this emulation, too, recently the prices of the machinery, copper, and lead have risen and the worth of the copper coins has depreciated, and if they are to go on, each coining for its own use, each having its own way, perhaps the price of copper will still further rise, and the value of the cash still further depreciate, and after a few years the demand for the new coins will be fully supplied and their circulation will not be easy, and there will be gradually a loss on the capital invested. Moreover, in the new commercial treaties there is an article providing that a uniform currency shall be adopted. But, if each province shall be allowed to adopt its own they will probably get a long way from fulfilling the intention to have a uniform currency. We find that in most countries the gold, silver, and copper coins in use are all coined at one mint, and the department of the government having direction of the matter will make investigation of the conditions of the market, and when the amount of money in circulation is insufficient minting is undertaken to increase it, and, if there is too much, the minting is stopped temporarily. Thus they are able to maintain the parity of exchange and avoid constant fluctuation.
The Chinese Empire is very large, and its population numerous, so that one mint will probably not be sufficient, and we propose in addition to the central mint established by the financial commission to permit four others which have proved most efficient in their work—those of Tientsin, Nanking, Wuchang, and Canton—to become branch mints for the coinage of silver.
As to the coinage of copper, the demand in the provinces is not yet supplied, and the mints already established will not be interfered with. For the present they will be allowed to continue coining (copper pieces), but in accordance with the memorial already submitted by the board of revenue no addition of new mints will be allowed, and we, your ministers, must be permitted to inspect the weight and fineness of the coins, which must be issued at a uniform rate without any variation. Should any one not comply with these regulations now submitted, on the one hand the mint concerned will be closed, and on the other the official in charge will be impeached. Investigation must be made from time to time of the coinage in the Provinces to determine whether or not the supply equals the demand. If the supply be sufficient, upon investigation of the facts by this board, orders will be issued to suspend for a time the minting in the provinces concerned, and such orders must be complied with; there must be no disobedience under the pretext that coins are needed to meet payments due. In this way we shall avoid complaints of an overissue, and we may hope that these mints being thus united under one authority will not be less advantageous than the use of one alone.
Your ministers reverently make these suggestions and submit herewith ten regulations, which, if after inspection, your Majesties approve of them, we shall notify the provincial authorities to observe.
Reverently submitted with a prayer for the instructions of their Majesties the Empress Dowager and the Emperor, as to whether or not the suggestions made and regulations proposed should be adopted.
Ten regulations for the reform of the currency, reverently submitted for the imperial inspection.
1. In order to carry out the present desire for the reform of the currency and the issue of a uniform coinage, it is proposed to request that the coinage of silver, after the weight and fineness of the coins shall have been decided upon and sanctioned, shall be allowed only to the central mint and the four branch mints at Tientsin, Nanking, Canton, and Wuchang. The central mint shall furnish the dies, and the weight, fineness, and designs shall be uniform. Every time an issue is ordered a number of the coins must be selected and forwarded together to the financial commission and the board of revenue, who shall appoint chemical experts to make analysis of them to determine whether or not they are up to the standard in fineness and weight. No variations of more than 1 per cent will be allowed. If the coins are not up to the mark, the whole lot minted must be remelted and reminted, and the several officials in charge shall be severally impeached. The central mint shall be under the direct management of the financial commission, and the said financial commission and the [Page 188] board of revenue shall select and appoint honest and capable officials to proceed to the branch mints at Tientsin, Nanking, Canton, and Wuchang to make inspection, so as to secure proper attention.
2. More leniency may be shown comparatively in the matter of coining copper than in that of minting silver, and it is proposed that the provincial mints already in operation be allowed for the present to go on with their minting, but they shall be allowed to use only the machinery already on hand; no further machinery may be added to increase the output. As for those provinces which have not yet submitted memorials upon the subject and received the Imperial consent to the establishment of such mints, they shall not be permitted hereafter to request it.
The fineness of the copper coins to be minted shall be 95 per cent pure copper and 5 per cent zinc. Those who desire to use instead of the zinc 1 per cent of “tien-t’ung” tin may be permitted to do so. The weight of the coins shall be twenty-cash piece, 4 mace, K’u-p’ing scales; 10-cash piece, 2 mace K’u-p’ing; 5-cash piece, 1 mace K’u-p’ing; 2-cash piece, 4 candareens, K’u-p’ing. The matrices shall be furnished by the board of revenue, and the coinage shall be exactly like that of the central mint, except that on the obverse one character shall be added to indicate the province in which the coin is issued, so as to facilitate examination. Every time an issue of coins is made samples shall be sent to the financial commission and the board of revenue for assay, and the financial commission and the board of revenue shall from time to time select and appoint suitable officials to inspect the mints. If it shall appear that any are not complying with the regulations adopted, further coining by the said mint shall at onec be suspended, and orders issued to call in and destroy the coins issued within a fixed time.
3. The minting of coins is for the convenience of the people. If, therefore, too many 20-cash and 10-cashes pieces be made, the people will not be able to divide them when they wish to make small purchases, and this will be very inconvenient. Therefore the regulations adopted by the central mint of the board of revenue provide that a sufficient supply of 5-cash and 2-cash pieces shall be minted. It is now proposed to fix a definite rule that at all the provincial mints the coins minted each day shall be in the following proportion: Two-cash pieces, five-tenths of the whole number; 5-cash pieces, two-tenths of the whole number; 2-cash pieces, also two-tenths of the whole number, and 20-cash pieces but one-tenth. The demand for coins smaller than the 2-cash piece shall be supplied by the use of the old cash in circulation.
4. The number of the coins to be minted must be determined by a careful consideration of the supply and demand; only so will it be possible to maintain their value. If the output is increased from day to day and they daily depreciate in value, the merchants who have a large supply on hand will suffer considerable loss, and that which was intended to be a benefit to the people becomes an injury to them. Hereafter in all the provinces which are minting these coins orders must be issued to the official cash bureau and assay office to make an investigation of the conditions of the market and fix the rate (of exchange) and firmly insist upon the issue and receipt of the coins at this rate, so as to inspire confidence, and the various denominaitons of copper coins shall be uniformly exchanged for their face value in the ordinary cash. Mercantile guilds shall not be allowed to interfere with the circulation by charging a discount, nor shall the mints be permitted to issue coins at a lower rate than that fixed, simply because they want to make a profit. When the condition of the market shows that there is an oversupply of copper coins, the coining must be suspended in compliance with the intention of the board (already expressed).
5. All the provinces engaged in minting these copper coins must first supply in full the lack of the ordinary cash in their own provinces, and they must not ship them in large quantities to other provinces, and thus stir up complaints from these other provinces. Any province having need of these, copper coins may send the price to the central mint and obtain what they need. The provinces on the frontiers, however, will be allowed to send to the mint of a neighboring province and have it coin for them and forward the coins to their destination.
6. Every viceroy and governor in whose provinces there are mints for the coinage of silver or copper must once every three months report to the financial commission and the board of revenue the number of machines bought, the country of their origin, how many of them are stamping machines, cost of the machines, value of the buildings erected, number of officers and men employed, number of hours of work per diem, and number of coins minted. They shall also once a year make a report of the cost of copper and lead or other materials used, and the net gain after deducting all expenses of the mint of every sort, that it may be used for comparison.
7. The central mint will in the future require a great deal of silver for use in minting the silver coins, and if it must all be shipped by the treasury of the board of revenue after requesting orders to that effect, the cost of transportation will be very heavy. We propose to ask, therefore, that after the date fixed for the minting of the silver coins the board of revenue shall set aside silver of the proper quality from the imperial revenues being sent to [Page 189] it, and issue instructions to certain of the provinces to send their quota of the imperial revenues thereafter to Tientsin, to the central mint, charging the managers of the mint with the responsibility of receiving and checking it, and requiring them to report the same day to the board of revenue, and the board of revenue shall, within the time limit fixed, acknowledge receipt which receipt shall be handed to the deputy (who has delivered the silver) by the central mint. The auditor of the board of revenue and the censors of the Kiangnan circuit have heretofore been charged with the duty of checking the receipts of the imperial revenues, but as the revenues from the provinces indicated are to be delivered instead to the mint at Tientsin and checked there, a change should be made in the old regulations so that they may correspond with the actual state of affairs, and it will not be necessary hereafter for the auditor of the board of revenue and the censors of the Kiangnan circuit to take delivery of the silver and give receipt therefor to the deputy. This arrangement will save time and prevent needless delay. But the duty of auditing the receipts of the imperial revenues is a very important one, and the board of revenue, therefore, should notify the auditor of these revenues and the censors of the Kiangnan circuit once every half-year of the various sums received by the central mint from the several provinces on this account, and the viceroys and governors of the provinces concerned should also every half-year make a report of the same that they may be compared. This will secure greater care in the auditing and the old regulations will not fall into confusion.
8. The coinage of money is a prerogative of the Sovereign. Both in China and in foreign countries merchants and other subjects are not allowed to coin money at their own pleasure. At present merchants see that there is great profit in the coinage of the copper pieces, and this awakens a coveteous desire in their hearts, so that they are constantly asking permission to raise capital and mint such coins under the pretext that the government will receive tens of thousands of taels from this source, but with a real desire to encroach upon the ancient rights of the state and pay a small portion of their gains to the government. Their hearts are really interested in the surplus gain which they may obtain, and how, then, can they have any concern for the general interest? If their requests be granted, great rivalry will result, and the deterioration of the coinage and other evils more than can be mentioned will follow. Now that the various provinces have been forbidden to add any more branch mints, most certainly we can not turn about and permit merchants to do so, and we have to request that imperial orders be issued to all the yamens at Peking and in the Provinces that every such request from merchants for permission to mint copper coins shall be refused. Moreover, we, your ministers, will from time to time investigate, and if any mint shall be discovered to have shares of private capital invested in it, notwithstanding the fact that it may have received the imperial sanction, orders will be issued for its immediate closing, so as to protect the imperial prerogative.
9. The various coins minted by the central mint of the board of revenue must have general circulation throughout all the provinces. After the bank of the board of revenue shall have been put into operation the silver and copper coins minted by the central mint, with the exception of such as may be appropriated for the uses of the board, will be delivered to the bank, which will distribute them from time to time according to the deficiency in the supply of cash in the various provinces, and will be issued at the fixed rate.
10. When the mints for the coinage of copper were first established in the provinces, the output could not meet the demand, and they were continually buying copper disks from Japan which, after simply being stamped, could be very conveniently put into circulation. It would seem as though this were a very profitable arrangement, but wages and other expenses are much greater abroad than in China, and as the ready-made copper disks after being shipped from abroad are still not dear is sufficient to indicate that their weight and quality are not up to the standard. Moreover, the foreign merchants when they ship them in do not scruple to secretly bring in an extra number, which they sell to make a profit, lightly inducing evil persons to commit the offense of private coining. And now that we have already proposed that the weight and quality of the coins shall be made uniform, and, moreover, as the various provinces have had their mints going for a long time, so that it can no longer be pretended that they can not coin fast enough for the demand, it will be proper that they shall all melt the copper themselves and make their coins from it. Therefore we, your ministers, have already issued orders to the various provincial authorities forbidding the purchase of these disks, and we have also to request that imperial orders be issued to the viceroys and governors of the various provinces forbidding the purchase of these disks of copper, and that the board of foreign affairs be instructed to direct the commissioners of customs to the effect that the import of such ready-made copper disks be forbidden, so as to prevent the evils referred to.
Memorial submitting regulations for the central mint at Tientsin.
We, Your Majesties’ ministers, having reverently received an imperial edict directing us to establish a central mint for the coinage of silver and cash, have already on previous occasions reported the establishment of such a mint at Tientsin with the reasons therefor, and stated the facts with respect to the investigation into the character of the location and the arrangements with regard to the building operations, as the records will show.
In order to coin silver and copper, it was necessary to buy proper machinery, and we at once directed the managers of the mint to contract with the firm of Arnhold, Karberg & Co. for a complete outfit of the new-style machines for minting silver and copper, manufactured by the American firm, Ch’ang-cheng, to be delivered at Tientsin within a certain time, and the said managers, in connection with Wang Jen-pao, newly promoted to the post of Tientsin taot’ai, arranged the specifications for the building of the mint and hastened the construction, reporting its entire completion in the spring of the present year. They also urged the aforesaid foreign firm to hasten the shipment of the machinery contracted for and directed the foreign and Chinese employees to put it in place immedaitely upon its arrival, which was done. They then appointed officials to engage workmen for the mint, and on the 8th day of the fifth moon of the present year they started the machinery and first began the minting of copper coins. Your ministers, Na (t’ung) and Chang (Po-hsi?) during the present month went separately to Tientsin to make inspection, and found the machinery ingenious and very suitable for use and the buildings properly constructed; but the machinery, as originally contracted for, was to turn out over 600,000 coins, small and large, silver and copper, in a day. At present, however, as it has just been started, it is impossible that it should not show a little roughness, and the workmen, too, have not yet become accustomed to it, so that the daily output is still somewhat small, though this will be steadily increased as they grow more familiar with it.
We have already submitted drawings of the buildings and machinery, two sets, and specimens of the four kinds of copper coins minted. We have now to present eight regulations for the control of the mint, which we have arranged and for which we beg Your Majesty’s approval. It will be necessary for us further to direct the various officials to give careful attention to their duties and to devise suitable arrangements, as occasion may require, and when things get in proper shape we shall begin the coinage of silver and purchase additional machinery, that the output may be gradually increased, in the hope that the purpose of the court to benefit the people by the reform of the currency may be fulfilled.
The original draft of these regulations was prepared by the financial commission and agreed to by the board of revenue, and both join in this memorial, submitting them to the inspection of Your Majesties.
Regulations for the central mint at Tientsin.
1. This mint having been established by imperial edict is on a different footing from that of the various provincial mints. For greater convenience in the shipment of coal and other materials it has been established at Tientsin (instead of Peking). The buildings have already been completed, and Your Majesties’ ministers after consultation have agreed upon a name for the mint, calling it the “central mint of the board of revenue.”
The coinage in three metals will be known as “The Ta-ch’ing gold coinage,” “The Ta-ch’ing silver coinage,” and “The Ta-ch’ing copper coinage” for general circulation throughout the Empire,a
2. The original intention in the establishment of this mint was the reform of the currency, and the purpose was to issue a currency in three metals—gold, silver, and copper; but the establishment of a currency system is a matter of serious importance, and we can not avoid a careful investigation to determine the proper weight and fineness of the gold and silver coins, and this has yet to be thoroughly considered and decided. During recent years, however, the supply of ordinary cash has been short, and that of the 10-cash pieces used in Peking has also been insufficient, and we propose, first of all, therefore, to undertake the minting of copper coins, and have decided upon four denominations. The largest will weigh 4 mace and be worth 20 ordinary cash; the second will weigh 2 mace and be the equivalent of 10 ordinary cash; the third weigh 1 mace and be equal to 5 ordinary cash, and the fourth weigh 4 candareens and be the equivalent of 2 cash. The fineness will be 95 parts copper and 5 parts zinc. After the copper and zinc shall have been mixed together, as [Page 191] above required, and the coins made, they must from time to time be submitted to analysis and if any are found wanting they must be returned to the melting pot and reminted, so as to avoid any irregularity.
3. Sometime ago we received an imperial decree directing the board of revenue to appropriate 4,000,000 taels as capital for minting purposes. The present expenses for the purchase of land, labor, and materials for building, the cost of the machinery, and payments for copper and zinc have been met by appropriations from time to time by the board of revenue. Salaries, wages, and food of the officials and workmen engaged in starting the enterprise have been paid by a temporary loan by the financial commission. The profits from the coinage of copper will be devoted to paying the running expenses of the mint, and after setting aside one-tenth for reserve and one-tenth as bonuses the remainder will be paid into the board of revenue to be employed hereafter in enlarging the mint, purchasing additional machinery, and as capital to be employed in the coinage of gold and silver. When the time for its use shall arrive, it will be appropriated for these purposes as required by the board of revenue.
4. The copper coins minted by this mint shall first be devoted to fully supplying the needs of the capital, and the remainder shall be distributed through the provinces. No matter whether or not they be places in which the copper coins circulate, the copper coins of this mint may be sent thither, and the local authorities must give such protection as the circumstances may require and order the markets and mercantile houses to give them general circulation. In all public funds they must receive the same treatment as the ordinary cash. There must not be the least discrimination made against them. Should any one oppose or make discrimination, the financial commission and board of revenue shall make a thorough investigation and punish the offenders.
5. This mint being under the control of the board of revenue, the treasury of said board in receiving the copper coins and in paying them out for salaries and stipends ought to reckon them according to their intrinsic value; but this mint is on a different footing from that of the provincial mints, inasmuch as the provincial copper coins received by the board of revenue are received by chance; but this mint must send its coins constantly to the board for regular use, and if they are all to be reckoned only at their intrinsic value there will be nothing from which to pay the salaries, bonuses, etc., of the mint. Moreover, all the profits of the mint over and above its capital are all turned into the board of revenue, so that there is no use in reckoning these details, and we propose that hereafter when coins are minted and forwarded to the board of revenue to be paid out for salaries and stipends the price at which they shall be reckoned shall be determined by the amount of silver retained by the board in lieu of the copper coins paid out, so that the profits may be protected.
6. The affairs of the mint being of weighty importance, the officers concerned must exert themselves with sincerity in the discharge of their duties; only so can there be constant success. We can not, therefore, but establish a system of rewards and penalties. As the Provinces of Kuangtung and Kirin have secured a great deal of profit from their coinage of copper the Tartar generals, viceroys, and governors of these provinces have given extra rewards to the most energetic officials. This mint being just established will require the expenditure of a great deal of care, and we ought all the more to decide upon a system of rewards and penalties, so as to warn and encourage, and we propose to request that after the mint shall have been in operation for two or three years and shall have become a success that we shall select those officials who shall have been most energetic and recommend them for reward. Those who have been in the mint less than two years shall not be included in the list. Those who do not exhibit diligence shall from time to time be discharged and replaced by others, and any found guilty of malpractices and underhanded dealings shall at once be reported, with a list of the charges against them for punishment.
7. The profits derived by the various provinces from the coinage of silver and copper, with the exception of that which has been set aside recently for the army reorganization funds and the fund for the improvement of the Whangpu, have been held by the provincial authorities for extraordinary expenses connected with Government reforms. The board of revenue has already urged them to report, giving detailed statement of their uses, but up to the present the most of them have not reported.
The funds received and expended by this mint in the management of its affairs are all the moneys of the board of revenue, and we have ordered that a true report shall be made of all the actual expenditures. It shall not be allowable to imitate the various provinces in their cooked reports, but at the end of each year the managers must direct the various officers to prepare a strict and clear account of all the receipts and expenditures of the year for report to the financial commission and the board of revenue, and we, your ministers, will carefully examine the same and make report to the Throne, so that everything may be clear and businesslike.
8. This mint at the end of each year will make a statement of the coins issued during the year and the moneys received in payment therefor, and after deducting the cost of the copper, zinc, coal, charcoal, etc., and the expenditures for new machinery, repairs, salaries, and other [Page 192] expenses of the mint, will reckon the net profit, which shall be divided into ten parts, one part of which shall go to the reserve fund of the mint, and one part for bonuses, and the remainder shall be transmitted to the board of revenue. The one part set aside for bonuses, following the general example of the provincial mints in such matters, shall be divided into ten parts, three of which shall be divided among the managers, five parts to all the other officials connected with the mint and to the mechanics and laborers, and two parts sent to the financial commission and board of revenue as food money (i. e., extra pay to the clerks).
As to the one part set aside for reserve, it shall year by year be added to the general fund, to be appropriated for any proper expenditure.
The foregoing regulations have been proposed after a consideration of the present conditions. But if there should be any matter not provided for or any need of additions or changes the propriety of such changes shall be taken into consideration from time to time, and a memorial on the subject submitted to the Throne, that proper action may be taken and the highest degree of perfection attained.
A memorial submitted by Prince of Ch’ing and others, ministers of the financial commission, in conjunction with the ministers of the board of revenue, recommending the experimental coinage of silver of a certain weight and fineness, and proposing regulations to be enforced.
In the regulations proposed by Your Majesties’ ministers for the central mint at Tientsin, we said: “The establishment of a currency system is a matter of serious importance, and we can not avoid a careful investigation to determine the proper weight and fineness of the gold and silver coins, and this has yet to be thoroughly considered and decided.” This was submitted in a memorial that was approved by the Throne, as the records will show. A further consideration of the matter discloses that a currency includes (a) a standard coin, and (b) subsidiary coins. The standard coin should correspond in its face value to the intrinsic value of the metals contained, and, as there can be no objection to its coinage and circulation in any amount, there need be no limit fixed. The value of the subsidiary coins will depend upon that of the standard coin, as they are to be used merely to supplement it, so that there can be no objection if their intrinsic value be somewhat less than their face value, but their coinage and circulation should be restricted. This is the general rule. The copper coins, whose minting has already begun by the central mint, are especially intended for subsidiary use, but in order to reform the currency we can not delay the determination of the standard coin. China’s accumulations of gold are not large, and heretofore in public or private financial transactions it has been customary to use silver and copper, so that it is still difficult for us at once to decide how gold should be used.
The silver coins heretofore minted in the various provinces have imitated the Mexican dollar in their fineness and weight, but this was sanctioned as a temporary measure only, and can not be regarded as a fixed rule. A careful examination of the currencies of other countries shows that each has selected the coin most suitable to its condition—as, for instance, in Great Britain the shilling, in Russia the rouble, in Germany the mark, in France the franc, in America the dollar, and in Japan the yen. They did not mutually make experiment and follow a common pattern. China in the levy and collection of her taxes and duties has mostly used the K’u-p’ing tael, and the people, too, in the use of silver have generally made their reckonings in taels, mace, candareens, and li. Your ministers are therefore of the opinion that in fixing upon a standard coin for China we should select the K’u-p’ing tael, mint it with extreme care, and maintain its fineness in full, and that, more than all else, it should first of all be received by the board of revenue in payment of imperial dues. If it be received by the treasury of the board of revenue, then the provincial treasuries can not refuse to receive it, and if the imperial and provincial treasuries receive it, then the district and department officials can not refuse to receive it in payment of taxes and other public dues. And when the mercantile classes see that it is received in payment of public dues, they, too, will want to get rid of the trouble of making good the weight and fineness (of silver sycee, etc.), and there will be none who will not rejoice to see the new coin in general circulation. In considering the practices which have prevailed among the people both in ancient and modern times with a view to deciding upon the most suitable unit of value we find nothing better than this. Therefore in the eighth moon of last year the viceroy of the Hukuang Provinces, Chang Chih-tung, began the experimental coinage of the K’u-p’ing taei, and this year your ministers Na-(t’ung), and others went separately to Tientsin to consult with the viceroy of Chihli, Yüan Shih-k’ai, as to currency regulations, and the aforesaid viceroy earnestly advocated the coinage of the K’u-p’ing tael. Thus your ministers having found their views to harmonize, [Page 193] have decided to unite in proposing that we coin a silver piece of the weight of one K’u-p’ing tael, and use the copper coins now being minted and the ordinary cash in circulation as subsidiary currency, and we reverently submit to the inspection of Your Majesties ten regulations. If they shall receive Your Majesties’ approval, we, your ministers, will then direct the central mint of the board of revenue and the provincial mints at Tientsin, Nanking, Wuch’ang, and Canton to at once proceed to coin, and, as soon as a sufficient number of the coins shall have been prepared, to issue them at one and the same time. Thereafter the new silver coins shall be made legal tender in a certain fixed proportion for the payment of all debts, public or private. On the other hand, the minting of the coins will steadily continue until they shall gradually become sufficient for the needs of the Empire, and gradually be substituted entirely for the other silver in circulation. Thus we earnestly hope it will become the special silver coin in general use throughout the Empire and be accepted as the fixed standard, and handled with confidence. When the silver coin shall have been successfully introduced into circulation, then we shall consider the matter of accumulating a quantity of gold for the minting of a gold coin, so that we may have a currency in three metals, able to be mutually interchanged and used together, orderly and uniform, and the question of a national currency will thus in its general outlines be settled. As to matters not provided for, your ministers will from time to time take them into consideration and deal with them in memorials for Your Majesties’ consideration. Such are the suggestions which we submit with the following proposed regulations to the consideration of Your Majesties, praying that Your Majesties will decide whether or not they should be adopted, and that instructions may be issued for general observance.
Reverently submitted. Imperial edict received. Respect this.
Ten regulations regarding the minting of the new silver coins, submitted by the financial commission and the board of revenue on November 20, 1905, and approved by the Throne.
1. The new silver currency should be purer in quality than the dollars heretofore coined in various provinces and the standard unit of value must be heavier to be suitable as a national coin.
The purest silver in circulation in China to-day is shown by chemical analysis to contain not more than 98 or 99 per cent of pure silver, but a deduction of 2 or 3 per cent should be allowed in minting the new coin to cover the cost of coinage, and it is proposed to make the new tael piece of 9 mace 6 candareens of pure silver, mixed with 1 mace’s weight of pure copper, to be fixed as the equivalent of 1 K’u-p’ing tael of full touch.
The fractional currency shall consist (a) of a piece containing 4 mace 8 candareens weight of K’u-p’ing silver mixed with 5 candareens’ weight of pure copper, which shall be declared the equivalent of 5 mace K’u-p’ing silver full touch; (b) a piece of 1 mace 7 candareens’ weight of K’u-p’ing silver mixed with 3 candareens of pure copper to be the equivalent of 2 mace K’u-p’ing silver of full touch; and (c) a piece of the weight of 8 candareens 5 li of pure K’u-p’ing silver mixed with 1 candareen 5 li of pure copper as the smallest piece to be the equivalent of 1 mace of K’u-p’ing silver, full touch. It is also decided that in every ten pieces minted four shall be of 1 tael’s value and two of the denomination of 5 mace, two of 2 mace and two of 1 mace. This shall be the rule, but if there shall be a demand for a larger proportion of any particular denomination orders shall be issued to make a careful investigation as to the real amount (in circulation) and report upon the matter to the financial commission and the board of revenue, who shall consult together and make reply, and only if they consent may the additional amount be minted. As to these coins, the central and branch mints must make them exactly of the same weight and fineness, and assay and inspection must be made according to the rules for the regulation of the coinage already submitted by us and approved by the Throne.
2. The 1-tael coin shall be equal to two 5-mace coins, or five 2-mace coins, or ten 1-mace coins. The small fractional coins of less than 5 mace shall exchange among themselves at this rate, and in all monetary transactions, public or private, they must be paid out and received at this rate. Under no circumstances may a discount be charged. Any disobedience will be punished according to law.
3. The 1-tael coin being the standard monetary unit, there shall be no limit to its circulation. The 5-mace and other fractional silver pieces shall be legal tender in every transaction to the amount of 10 taels—i. e., to the value of ten of the 1-tael coins. They must not be used to pay in full amounts over 10 taels, and if offered they may be refused in amounts over the sum specified. The rate of exchange between the copper coins and the silver and the limit of circulation of the former will be determined after the provincial authorities shall have complied with the regulations already submitted, by which they are required to investigate and report to the board of revenue the facts as to the circulation of the copper coins.
[Page 194]4. As to the minting of the silver coins, it is proposed that, the board of revenue having been ordered to coin, the central mint will coin several million pieces and send them to the bank, and the board of revenue shall send dies to the provincial mints of Chihli, Kiangsu, Hupeh, and Kuangtung, which shall at the same time mint several million pieces, whereupon the bank of the board of revenue shall print paper money to the full amount of the silver coins minted and fix a date upon which it shall be put into circulation. After its issue the treasury of the board of revenue and the treasuries of the provinces mentioned shall first receive it in a fixed proportion, and thereafter all the provinces, the railways, the (China Merchants) steamship company, and the telegraph administration shall receive it in the same proportion. There must be no discrimination against it on the ground that it is not issued in their own provinces. The method of arranging the proportions shall be to fix the proportion payable in silver coins and that payable in paper money of the bank of the board of revenue,a and for the present the remainder may be paid in other silver—i. e., in lump silver or the old dollars; but afterwards as the coinage of the new pieces increases in amount the proportion payable in this may be increased until finally payments will be made entirely in the new silver coins. We request that orders be issued to all the Tartar generals, viceroys, and governors, as well as to the superintendents of railways, of the China Merchants Steam Navigation Company, and the telegraph administration to comply with this regulation.
5. All provincial taxes levied in K’u-p’ing taels shall be payable in the same amount of the new tael coins. The collectors should have salaries definitely fixed—i. e., not be allowed to make their living by charges for exchange, etc., as heretofore. Aside from the legal charge for meltage, no other charge shall be added to the sum levied under the name of “assaying charges,” etc. All other moneys heretofore collected or paid in taels of another scale shall be converted according to the value of the tael used into their equivalent in K’u-p’ing taels of full touch, and the conversion having once been made, these sums shall forever thereafter be receivable and payable in that amount of the new 1-tael coins, and no variation from this rule will be allowed. We have also to request that orders be issued to all the provincial authorities to comply with this rule.
6. As China is now entering into new commercial treaties with the various foreign powers which provide for the adoption of a uniform national coinage which the merchants of foreign nationalities residing in China shall use, it becomes necessary to request that the board of foreign affairs be instructed that at the time of the issue of the new coinage dispatches must be sent to the various foreign ministers and to the consuls at the various treaty ports and notification made to the commissioners of customs that they may all thereafter uniformly use the new coins. The customs duties have heretofore been levied and collected in Haikwan taels, and orders must be issued to the commissioners of customs thereafter in accordance with the provisions of the commercial treaties to convert the duties levied in Haikwan taels into their equivalents in K’u-p’ing taels and collect accordingly.
7. On the day when the new coins are put into circulation the viceroys and governors of the various provinces must issue instructions to the local authorities to put out proclamations informing the merchants and all people that whatever accounts they may have, old or new, and whatever commercial transactions may take place in the markets, the original amounts according to the value of the taels in which they may be reckoned must be converted into their equivalents in K’u-p’ing taels of full touch and paid in that amount of the new silver coins, and such payment may not be refused.
8. As all viceroys, governors, other officials, merchants, soldiers, and common people in all the provinces must use the new coins, all may send their silver to be minted, and the central mint and the branch mints at Tientsin, Nanking, Wuchang, and Canton will coin it for them. Every tael of K’u-p’ing silver of full touch will be refined to pure silver 0.985 fine or finer, in return for which (0.985 Tl.) they will receive one of the new tael coins. Fractional coins of the denomination of 5 mace, 2 mace, and 1 mace will also be minted for them in the proportions set forth above. The excess in the fineness of the silver will pay the cost of minting, and thus there will be nothing to make good on either side.
[Page 195]Silver of inferior quality, foreign silver coins, and the silver dollars heretofore minted in the various provinces may also be sent in to be reminted, the amount of the new coins given in exchange being determined by the amount of pure silver contained—that is, their value will be determined in K’u-p’ing taels of full touch, and new coins issued accordingly.
9. When the new coins are first issued and the people are still unfamiliar with them there will almost surely be attempts made among the merchants in exchanging them to discriminate against them (boycott them) or to discount them. The bank of the board of revenue, the customs banks in the various provinces, and other official banks and cash shops must be charged with the responsibility of seeing that anyone bringing the new silver coins to exchange for paper money, bullion, or copper coins or desiring to exchange paper money, silver bullion, or copper coins for the new silver coins shall receive just treatment on the basis of 1 K’u-p’ing tael, being the equivalent of 1 tael in the new coinage. There must be no extortion. Orders must be given also to investigate the markets, and, if any mercantile firms are found raising or lowering the rate of exchange at their own pleasure, report shall be made for cases in Peking to the financial commission and the board of revenue, and for the provinces to the Tartar generals, viceroys, and governors concerned, who shall investigate and severely punish the offense, so as to enforce the coinage regulations.
10. These regulations must be published in the official gazettes for the information of the people, and we have to request that orders be issued to the Tartar generals, viceroys, and governors of the various provinces that at the time when the new coins are issued they must instruct the department and district magistrates to print these regulations in large characters in proclamations which must be posted in all the cities, villages, and market towns of their jurisdictions, that the people on seeing the same may become thoroughly acquainted with the matter, and that thus the yamen clerks may be kept from cheating them.
We have received the imperial rescript approving these regulations.
Respect this.
Imperial edict of November 19, 1905, authorizing the coinage of taels and fractions of the tael in silver.
The financial commission has submitted a memorial reporting the result of its deliberations upon the subject of a silver coinage, and its recommendations as to the weight and fineness of the coins, together with the regulations proposed for their issue. According to the statements of this memorial the coinage of silver dollars heretofore in the various provinces was but a temporary arrangement, and may not be considered as furnishing an established rule. Now that a national coinage is about to be adopted, it is proposed, to coin pieces of the weight of 1 K’u-p’ing tael, which shall be the unit of value, and in addition to mint three other silver pieces of the weight of 5 mace, 2 mace, and 1 mace, respectively, to be circulated in conjunction with the new copper pieces and the old cash.
The reform of the currency is the most important matter at present connected with the financial administration. Let the board of revenue proceed with the minting, and let the chief mint in accordance with the proposed regulations notify the branch mints of Chihli, Kiangsu, Hupeh, and Kuangtung to issue these coins without delay, to be put into circulation as legal tender for all public collections and disbursements, that thus the confidence of the people may be secured. In all matters not yet settled the prince and high ministers must investigate the circumstances and report from time to time suggesting a course of procedure. As for the rest, let the matter be dealt with as proposed.
Respect this.
Further coinage regulations.
The board of revenue and the council of government finance have submitted a memorial requesting that a limit be placed on the output of copper coins by the provinces. They point out that the coinage of gold, silver, and copper in foreign countries is properly regulated and the rate of exchange well adjusted. At present there is no limit set on the coinage of copper coins in the provinces. The viceroys and governors endeavor to extend the circulation of copper coins simply on account of its profit, and the output increases each day. The result is that one province strives for its exportation, while the other province prohibits strictly its importation. It is evident that the copper coins are now sufficient to meet the demand. The more the output increases the more copper and lead have to be purchased [Page 196] and the more the price of copper coins will necessarily fall. The old 10-cash pieces coined by the mints of the boards of revenue and works are worth but 2 cash, which may be taken as an example. In future when the profit becomes less it will not only involve loss of capital, but will also drive up the price of the supplies in the market. The consequence will be loss to the government and distress to the people.
China has agreed in the commercial treaties settled with the foreign countries to adopt a uniform currency, and unless a remedy is applied the situation will be hopeless and we shall be laughed at by foreigners. It has therefore been decided that the coinage of copper coins should be limited—the daily output for Kiangsu, Hupei, and Kuangtung to be not more than 1,000,000 pieces, Chihli and Szechuan not more than 600,000 pieces, and other provinces not to be more than 300,000 pieces. The quality and weight are to be uniform according to the regulations sanctioned by the Throne. Shansi and Shensi can have their supplies from the imperial mint, Kueichou from the Szechuan mint, while in other provinces where there are no mints existing there should be no attempt to establish them.
The importation of copper coin blanks from foreign countries has been prohibited, but those orders made previous to the enforcement of the rule will be allowed to hold good. But as they are purchased from different countries their quality and weight will certainly not be uniform. If they are put into circulation by simply stamping them, it will make matters more complicated. After taking delivery, they must be melted down and recoined after the regulations approved for dealing with alloy. Should any of the copper coins be found not in agreement with the rules as regards weight and quality, the officials concerned will be severally impeached. Even the purchase of copper must first be sanctioned by the council of finance and board of revenue.
The names of the mints existing should not be used any longer, and the words Hu-pu Tsao Pi Fén-ch’ang prefixed with the name of the province—that is, submint of the board of reveune of a certain province—should be adopted. The matrices used at present are of different shapes, and the minting should be stopped temporarily (three months) until the issue of new ones by the board of revenue. In the meantime detailed reports should be submitted regarding the quantity of copper coins stamped since the commencement, the number in stock, the demand of the people, the circulation in the market, the localities, and the materials for minting in stock. The report must be in within three months, so as to enable the council of finance and the board of revenue to form an idea of the amount which is already in circulation and the quantity which is to be made.
Official exchange and assaying offices are to be established in connection with the board of revenue bank for the fixing of a uniform price of silver and copper, so that there will be no danger of there being an overflow of copper coins and frequently fluctuations of the rate of exchange. The attention of the viceroys and governors is called to the unreliability of the profit obtained from coinage. It is requested that orders be issued to the provinces that funds should be raised from other sources for the military organization and other reforms.
Imperial rescript. Let it be as proposed.
Punishment for disobedience.—Extensive coinage and export of copper coins.
A memorial has been submitted by the council of government finance and the board of revenue requesting that the officials at the mint in Che kiang and Fukien be punished for a breach of regulations. It is clearly stated in the currency reform regulations that the copper coins stamped by a certain province should first be circulated in its own province and not be exported in large quantities to other provinces. This has been approved by imperial rescript and was notified to the provinces in the form of circular on the 21st day, seventh moon, this year. A dispatch has now been received from the Waiwu Pu stating that the British minister has been notified by the Chefoo consul that a British firm has imported from Shanghai 35 boxes of copper coins under bond, the landing of which has been prohibited by the commissioner of customs. Telegraphic inquiry was made at once, and in reply the viceroy of Liangkiang wired that a bond has, as a rule, to be signed by foreigners for the export of silver, both in coins and bullion, but lately, for the transportation of copper coins, a Huchao of the province where the coins are minted has to be provided. A British merchant shipped from Shanghai for Chefoo 35 boxes of Chêkiang copper coins, covered by Huchao from the Chêldang governor, Nieh Chikuei, on the strength of which the Shanghai customs granted permission for its release, Besides this, there is another lot of 230 boxes of copper coins waiting to be shipped to Tsintau from Chêkiang Province.
It is stated in a separate telegram of the said viceroy that Chung Shan, Tartar general of Foochow, has telegraphed to the effect that the Foochow copper mint had to stamp in haste 14 millions of copper coins in order to pay off the debt due for copper obtained in Shanghai. [Page 197] In addition to the 4 millions already shipped to Shanghai the balance will be shipped in lots. Three telegrams have been sent, stopping this, but a telegraph message has been received saying that 8 millions have already been put on board for export on the night of the 12th day, tenth moon. According to the regulations sanctioned, in any case of violation of the rules the mint in question will be ordered to discontinue the coinage and the officials concerned be impeached and dealt with strictly. The provincial authorities have already been notified of these rules. Now the Chêkiang and Fukien Provinces have not only disobeyed the order of discontinuing the export of copper coins, but have attempted to have more sent out. They are heedless of the new rules. It is requested that the officials concerned at the mints of the two provinces be referred to the proper board to consult and decide on what punishment is due. The Chêkiang governor, Nieh Chi-kuei, and Tartar general, Chung Shan, having issued an Huchao after receipt of the regulations and thereby caused the exportation of copper coins in large quantities, are also blameable and their names are to be handed to the board for treatment.
Imperial rescript. Let it be as proposed.
- This is to be the inscription on the coins and may be rendered freely, “Chinese imperial gold currency,” “Chinese imperial silver currency,” etc.↩
- This passage in No. 4 is rather vague. The proportions in which the new silver coins and the paper money shall be receivable in payment of public and private debts is as yet undetermined. It will be necessary first to get some idea of the volume of the currency needed for the business of the Empire. This will be a much larger sum than the mints can issue in the immediate future, so that the commission does not propose to retire at once the various forms of silver money already in use. They propose as a temporary expedient to double the volume of the new currency by issuing a paper tael for every silver one, and when the date of inaugurating the new system arrives the commission will announce the proportions in which one’s debts may be paid in the new silver coins and in paper, and allow the balance for the present to be paid in old dollars, sycee, etc. As the volume of the new silver coinage increases these proportions will be changed, and presumably the paper gradually withdrawn, as well as the old coins, until only the new silver shall remain in circulation.—E. T, W.↩