When all countries were adopting the gold standard, when even Siam, by a royal decree issued on November 25, 1902, adopted a gold exchange standard, the only two countries that remained silver standard countries were Mexico and China. Even in the silver-using colonies and dependencies of Great Britain and France several commissions were appointed to enquire in detail into the most feasible manner for reforming the currency; and in practically all these places it was arranged to have the gold exchange standard. Thus it remained for Mexico and China to find methods whereby some sort of stability in the rate of exchange could be established, without in any way interfering with the free circulation of silver in their own confines. Mexico proposed to the Government of the United States to arrange for an international inquiry into the silver question. China joined in the request and in the memorandum presented to the United States States Department in 1903 China's concern to establish stability in exchange was evident. As I have pointed out in " Finance in China," China has remained purely a silver standard country in all her internal commerce relations, while practically every foreign country with which she trades has adopted the gold standard. As the exchange between gold and silver fluctuates, sometimes almost very violently, international trade in China has always been haphazard and attended with great risk. The Chinese memorandum rightly pointed out that the question of exchange concerned China as much as foreign countries. The memorandum stated in part:

"The Government of China does not seek the restoration of the free coinage of silver by either gold or silver-using nations. It is recognised by this Government that bimetallism in the sense of free coinage of both metals is a policy which has been definitely discarded by the leading Powers of Europe and by the United States, and that it would be futile to propose its restoration.

"It is therefore not the expectation nor the wish of this Government that the gold standard countries should take any action tending to impair their monetary systems. It is desired that the government of gold countries having dependencies where silver is used, and the governments of silver countries shall cooperate in forming some plan for establishing a definite relationship between their gold and silver monies, and shall take proper measures to maintain such relationship. One such plan, it is reported, has already been proposed in both houses of the Congress of the United States with reference to the Philippine Islands. It is this and other plans designed to accomplish the same end which the Government of China would be glad to have considered by the United States and other Governments, with a view to the adoption of the best attainable monetary arrangement by those countries which are not prepared under existing conditions to adopt a currency system involving the general use of gold coins."

In response to the request of China and Mexico a Commission on International Exchange was created by an Act of Congress on March 3, 1903. This Commission included Mr. Jeremiah W. Jenks, a competent authority on financial affairs and one who proposed the first plan of reform - although, however, as I will show later on, his scheme is unfortunately impracticable, ignoring the hard realities of the situation. The object of the Commission was to formulate a definite and feasible policy after consultation with the Governments of Mexico and China, as also the European Governments. Following upon the creation of the Commission of the International Exchange in Washington, China also appointed a Financial Commission to tackle the problem of currency reform in earnest, as also to co-operate with the American Commission. The Imperial edict appointing the Financial Commission was issued on April 22, 1903 - the same edict ordering the establishment of a central mint at Tientsin. The edict stated in part:

"It has been a recognized principle that the capability of a nation to exist as such entirely depends upon two things, the proper adjustment of its finance and the employment of competent persons. As the present situation is very critical and the national finances are in great straits, the Government and the people are both suffering from this state of things. There would be no prospect of any improvement in our fiscal policy unless this question were taken up and thoroughly studied in all its bearings, and such measures as are dictated by the necessity of the day were taken. We hereby command Prince Ch'ing and Ch'u Hung-chi, in conjunction with the Board of Finance, to consider carefully all necessary steps toward improvement in that direction and carry them out with diligence.

"At present the silver coins used in different provinces are all of different designs and quality, and their weights are also not uniform. This state of things entails a great inconvenience to the mercantile class and it is, therefore, very imperative that a uniform device for silver coins should be designed, and a mint should be established in Tientsin for the purpose of such coinage. As soon as a sufficient amount of such coin shall have been turned out and put into circulation, all national revenues, customs dues, etc., shall be collected and all public expenses shall be defrayed in that coin alone - with a view of putting an end altogether to the abuses of exactions for making up alleged insufficiency in weight of silver ingots that are now used. At any rate there will be uniformity so far as the monies received or sent out by the Board of Finance or by various provincial treasuries are concerned. We also command you to make exhaustive investigations in order to frame satisfactory regulations, and submit them to us. In short, this question is of great importance to our Empire, and will be of great benefit, to high and low. You, a Prince and a Minister of the State, are required to carry this out with undaunted courage, unflinching energy and strong determination in order that our currency may be improved and benefits therefrom will be so widespread as to gratify our earnest desire to benefit our people by adopting necessary reforms. Respect this."

To all appearances at least, the Commission took up currency reform in earnest. But the members of the Commission had neither the special knowledge nor the expert assistance to formulate any useful scheme. Whatever reform was proposed it always carried with it the centralization of power. For centuries past the history of the government in China has constantly been a tussle between the Central and Provincial Governments; especially since the Taiping Rebellion, the differences were growing acute day after day. For one thing Peking was powerless to enforce its full authority, partly because of the extent of the territory and mainly because of the long established tradition of provincial autonomy. For success in currency reform it was most essential that the control of coinage should be vested in a single and central authority. I have already shown how the provinces were continuing independent coinage regardless of the will of the Central Government and the broad interests of the people.

It is not, however, fair to represent the Provincial Governments as having acted against the public interest with a full knowledge of the evil of indiscriminate coinage. For long, public finance in China, whether at the capital or in the provinces, had been very unsatisfactory; it was always a question of trying to make both ends meet. Especially during the last sixty years of Manchu rule, public expenditure had been increasing while public revenue was decreasing. They were enabled to establish mints and when they saw the large profits in the issue of depreciated coinage they believed that the continuance of such a step would relieve the financial pressure to a very large extent. Neither the officials nor the people had a proper comprehension of the currency problem, both in its national and international aspects. The fundamental mistake of the Chinese financial authorities was their belief in the ability and willingness of the public to take all the coins issued out of the mints - at their face value.

The Central Government sent a special mission headed by Prince Tsai Chen and Na Tung to Japan to attend the Osaka Exposition, and the mission was charged with the special duty of studying the Japanese gold standard system with a view to its introduction into this country. Meanwhile practically all the legations in Europe were instructed to participate in the discussion then being carried on in Europe. The American Commission did not submit its plan to China until early in 1904.