Dr. Vissering and his collaborator are experts in the theory and laws of banking and currency; but most of their practical illustrations are taken from the position and developments in the Netherland Indies. It is certainly questionable whether any proper comparison could be drawn between the Dutch East Indies and China. Two points are very evident. As in China to-day there was the same tangle and confusion of currency, to start with, in the Dutch Indies; the same difficulties, though on a smaller scale, had been experienced in the Netherland Indies, in connexion with imperfect communications with the interior, and decentralization of trade and administration; these conditions militate against the sure and successful introduction of a healthy currency system on any basis, approaching that of modern civilized countries. Above all the reform of currency on the lines proposed by practically all reformers involves the necessity of creating confidence in a token coin on the part of an Asiatic population, which has for generations been accustomed to accept most coins at their intrinsic value only. Beginning with these points of agreement, Dr. Vissering has proposed for China a reform based on the system adopted in the Netherland Indies. Hence the crux of Dr. Vissering scheme is a silver standard which has to be gradually replaced by a gold exchange standard, with a period intervening, during which the two systems have to function side by side without interference. I now propose to give briefly the plan of Dr. Vissering without going in detail into a discussion with regard to the several standards as also the several kinds of paper and coin money.
Dr. Vissering begins with the question whether it is advantageous to China to adhere to, or abandon, her present silver standard. The advantage of the present system is that it maintains itself with a minimum amount of legal fostering and supervision, the medium of exchange entering into circulation, at its mere intrinsic value, whether in bullion or coined in any shape or size. But in order to maintain even a silver standard worthy of the name a certain amount of care and organization is necessary to secure a stable subsidiary coinage in copper. At present the copper coinage in China stands practically by itself, fluctuating strongly in its ratio of the silver coinage, despite all official endeavours, following the laws of supply and demand. There is no doubt that, in actual practice, China is practically working with two independent standards, copper and silver, and the resultant confusion and hardships, both in trade and individual transactions, are admitted to be great. Ever since China began to have a volume of foreign trade the difficulties have been still further increased on account of the instability of exchange and prices for the simple reason that all foreign countries, with which China deals, have adopted the gold or gold exchange standard. Considered from every point of view, Dr. Vissering holds that it is absolutely necessary for China to come into line with the rest of the civilized world and base her currency upon gold, even if not a single gold coin is to circulate for generations to come. A gold coin is too big a unit for all daily transactions; and the practical difficulties of introducing an adequate gold circulation are all but prohibitive in the present circumstances. Hence, his proposal is to maintain a unit token coin at a nominal gold value by means of gold reserves held abroad. The introduction of a token coin is not so easy as it appears to be on the surface. Adequate protection against counterfeiting and illicit importation, as well as the general adoption of the new coin and securing its circulation throughout the length and breadth of the country, have to be secured by all possible means. All countries that have been using token coins have had to take precautions on the one hand against a possible rise in silver to the extent of raising the intrinsic value of the coin above its nominal value -which would result in the coins going into the melting pot; and on the other hand against a too tempting profit from counterfeiting. The Governments have had to face a further difficulty of outwitting "honest" counterfeiters - those who turn out coins of exactly the same weight and fineness of the legal coins and therefore defy detection; their activities result in a large addition to the Government coinage and the Government has eventually either to stand by and see its token coins fall below par, or redeem them and thus pay the counterfeiters a profit. In any case, the chance of automatic demonetization by a rise in silver values must be avoided if an issue of token coins is to be successful at all; it follows, of course, that the margin between the real and nominal value of the coin must be sufficiently broad. Therefore, Dr. Vissering states, a token coin can only be used by a Government which is powerful enough to prevent a serious degree of counterfeiting even in the remote parts of the interior and at the same time defend all its frontiers against the importation of counterfeit money from abroad. China is certainly not in such an enviable position; therefore she would have to try and do without token coins for the first few years. However, as a stepping stone to a gold exchange standard, she might for the present have a unit based in gold in conjunction with bank-notes and the silver and copper currency now existing. As a matter of expediency China would have to maintain a double standard for a while, that is the gold exchange, carried out as far as possible, with the present silver standard. He states that this method has great advantages over the ones adopted in India and Straits Settlements, i.e., raising the existing coin in circulation to a fixed gold value. He claims that by this method all speculations in advance of the new measure, and the sudden losses and gains, which were the unpleasant features of conversion in India and the Straits, could be avoided.