The comprehensive summary of the position and development of currency and banking in China which I have made, is, I believe, sufficient to form an adequate groundwork of constructive reform. The several schemes that have been proposed so far are faulty and incomplete, in view of the fact that the proposals have taken one or other of the several aspects of possible reform and constructed details on insecure foundations. Reform loses value and effectiveness if the foundation on which it is built is too narrow, or shallow. No reform could be perfect, if it did not take into account every detail of the administration. But that does not imply that the reform of every department should be taken in hand at one and the same time. The implication is that a thorough reform of one branch of the administration of a country is neither possible nor could be satisfactory if others are not properly attended to. But there are certain branches of the administration which need attending to before others; and there is at least one branch of any Government, i.e., finance, which has to be attended to before everything else. To have a proper system of finance there must be a proper currency, and not the haphazard ones that we have been having in China; and to introduce a proper currency there must be some system of banking, based upon a better foundation than that of the best of existing native banks, or even the Governments' Bank of China or Bank of Communications. The point that I wish to emphasize, in this connection, is that no reform of currency is possible or practicable without a reform of banking and vice versa. Hitherto several well intentioned proposals have been made to reform currency or banking; and the two have rarely been tackled together. Dr. Vissering is the only authority that has ever drafted proposals for the reform of currency and banking - not, however, together. I have already referred to his currency scheme. The reason why I have not made, so far, any reference to his reform of banking is that he takes absolutely no cognizance of the past and the present state of banking in this country, and goes on simply elaborating a scheme for a central bank for China - an institution the formation of which he advocated in the course of suggesting a solution for the present tangle of currency. It is surprising that such a high authority as Dr. Vissering should have altogether ignored the existence of the present banking institutions which wield not an inconsiderable amount of influence over Chinese commerce; nor to the Bank of China which, at present, is doing everything which Dr. Vissering has proposed a central bank should do, except making profit out of the inconvertible notes or token silver and copper coins. Even in his scheme of currency reform there is the briefest reference to the existing position; and he never once mentions the fact that the cash in this country is the standard in even a more correct sense than the sovereign is in England. The only authorities that have proposed schemes for reform with due regard to the traditions of this country and the prevailing conditions that have to be taken count of when making any innovations, are Chang Chih-tung and Sir Robert Hart. Even Sir Robert Hart fell into the error of taking too much count of the foreign trade and too little of the internal situation - an error pardonable in a man who has been directly responsible for the large growth of foreign commerce in this country and who had no experience in banking. Chang, of course, had no experience or knowledge of economics of any other part of the world but China.
* For many of the facts in this chapter, I must acknowledge my indebtedness to "The Standard of Value" by Sir David Barbour, K.C.S.I k.c.m.g., and "Indian Currency and Finance" by John Maynard Keynes.