File No. 893.515/9.
Minister Reinsch to the Secretary of State.
Peking, January 26, 1914.
Sir: I have the honor to transmit, for the information of the Department, the Currency Law which has been approved by the President of the Republic of China.20 It will be seen that the law adopts as the unit of value a silver coin approximately of the size and standard of the Mexican dollar. Other important points in the law are the provision for the free coinage of silver at a slight minting fee, and the provision made with respect to the fractional currency, which is to be considerably inferior in fineness to the yuan or dollar.
If, by means of this measure when it shall be actually carried out, an unified standard could be introduced in Chinese currency the greatest possible service would be rendered to commerce and industry in this country. There would, however, still remain the question of how to escape from the disastrous results of the depreciated paper currency issued by the provinces. * * * In a thorough reform of the currency system of China, the present law will form only a starting point and, unless the credit of the Government is strong enough to support measures for redeeming and abolishing the provincial currency, complete relief cannot be afforded. * * *
It is natural that, as a large currency loan had in 1912 been nearly concluded between the United States and China, the Chinese Government should still be anxious and desirous of securing money from the United States for the purpose of supporting this most important reform. If money could be obtained for the strengthening of the credit of the National Bank of China, the Chinese Government would experience greater relief than would result from any other loan, because, with the currency system placed on a sounder basis and the consequent general improvement of the national credit, the Chinese Government would have its hands free to undertake improvements in other directions. There also could be no greater guaranty of the independence of China against possible inroads connected with financial pressure from without.
Of late these matters have been laid before me repeatedly by Cabinet Ministers, who have inquired whether it would not be possible for the Government of the United States or American bankers to assist them in this most important work of reconstituting the Government of China upon an efficient basis. * * * I would request to be informed telegraphically as to the attitude you wish me to take should I be further approached by the Chinese Government with a desire to secure American assistance in this most central of administrative problems of China.
I have [etc.]
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