After a careful examination of the currency systems of the countries of the Far East Dr. Vissering claims that the yuan with subdivisions down to its thousandth part, which was adopted by the Imperial edict in 1910, would prove too large a unit for Chinese coinage. Dr. Vissering claims that the fact alone of the necessity of maintaining such minute subdivisions should prove that the coin was too unwieldly. There are many practical objections from the minting, business and public users' point of view against very small coins; and a unit which is too large is known to have a tendency to raise the cost of living. Generally speaking, the dollar is known very well only in the ports and their environs. In the interior of China the dollar is quite as unfamiliar to the people as any other coin of such a size. Dr. Vissering examines the position in Japan where the 50-sen piece is for all practical purposes the coin in circulation, in India where the rupee circulates and in the Strait Settlements where the old dollar weighing 26.957 grammes was replaced by the new token dollar of 20.2172 grammes. For China he advocates the fixing of a new unit at a value of roughly half a dollar, or more exactly, a third of a Kup'ing tael, with silver at 28d. per ounce. Such a unit would have a fixed gold value between the shilling and the reichsmark. Existing contracts, debts, etc., would, of course, have to be converted into the new unit by due proportion, or left to work themselves out on the silver basis, which must continue to exist, in any case, for some time side by side with the new unit. The subdivisions proposed by him go down to 1/200 of the unit or half a cent as the smallest coin; this would be equal in value to about a quarter of the present copper coin (T'ung Tzu) and the needs of the poorest of the population would thus be adequately met. Should by any chance the value of any commodity be even below that, says Dr. Vissering, it is hardly conceivable that the poorest purchaser could not lump together two or more purchases in a day so as to make up the value of this small coin. The most important consideration in connexion with the coinage of small coins should be the economical factor - in the minting and in the actual circulation. In some countries the small coins have had to be abandoned as useless after a large amount of unnecessary expenditure in the minting. Dr. Vissering proposes that China should avoid committing the error from the very outset.
I have already given the weight and fineness of the unit and the subsidiary coins proposed for China by Dr. Vissering; and we know already the considerations that have led to fixing of the scale of weight and fineness with regard to silver pieces and the alloy and weight with regard to the nickel and copper pieces. It must, however, be borne in mind that the date of minting of the token and other coins, according to Dr. Vissering, would actually be left entirely open for many years after starting the bank unit system in actual practice.
It is understood that the unit as a coin must come into circulation within a few years of the adoption of the bank unit. Once the coins are put into circulation it would be high time to look after the building up of the reserve. Dr. Vissering proposes that a gold reserve fund to maintain the par value of the token coins could be created out of the so-called seigniorage profits, arising out of the coins being issued at a higher value than their intrinsic value in metal; this fund would be distributed mostly abroad, and managed very much like the bank-note reserve fund, referred to already. The principal difference would be that while the bank-note reserve belonged to the bank the currency reserve would be the property, not of the bank but of the Government, although the management might with advantage be entrusted to the former. Being less liable to sudden calls than a bank-note reserve, after the currency has once been firmly established in circulation, he estimates that after a few years it would be safe to use 25 per cent, of the fund for works of public utility. About ten years after the issue of coins, the proportion might safely be increased to 50 per cent., and thus in the course of a few years a very large sum of money would become available for the construction of railways, redemption of debts, etc.
The large token coins should be raised to the rank of legal tender only when a reserve is firmly established, and their parity with gold, or nominal value, could be fully maintained. Also care should be taken not to allow local premia or discounts on the token coins; a contingency like that could be avoided, by general acceptance of token coins at their full face value by the Government, the Customs, post office, railways and other public institutions. Similarly, the subsidiary coins should be readily exchangeable against larger token coins, bank-notes or transfers.
When once the new coinage is well established and available in sufficient quantities, the old silver dollar, sycee, cash, etc., could be gradually withdrawn and redeemed as much as possible, only in the shape of new token and subsidiary coins. Dr. Vissering also proposed measures for the redemption of copper cash, especially in view of the fact that their value varied with different places. The various local values would have to be recognized when the old coinage was being redeemed; in this instance, as in others, an enlightened bank administration, which must come in pari passu with currency reform, would help considerably.
I believe I have given the salient points of the scheme of reform proposed by Dr. Vissering. I do hope that the learned doctor is not misunderstood by my readers by the entirely short account which I am obliged to give of his system, mainly because I do not wish my book to become unwieldly. It so happens that all the previous schemes which I have given in brief in the earlier chapters are dead and gone, for all practical purposes. The only scheme that lives or has even a chance of being discussed with a view to adoption is that of Dr. Vissering. Hence, I am sorry to be obliged to criticise his scheme alone rather fully.