We have been accustomed to speak of the government receiving taxation in money, man making profit in business in money, or an agriculturer selling his produce for a certain amount. By common custom and mainly because such is inevitable, each locality has come to think of money in a certain denomination. The moment you speak of money to an Englishman it conjures in his mind the idea of a sovereign, a shilling, or a penny. The moment you speak of money to a Frenchman he thinks of nothing else but francs and centimes, as also divisibles and multiples of it. The German always thinks of marks and pfennigs whenever any mention of money is made. It is inevitable, therefore, that a group of people living in a limited area, speaking a common language, having certain common features of government, civilization and trade, should agree to have a certain unit as money, - such an agreement receiving always, as a matter of course, legislative sanction by the government. Therefore, when a transaction takes place between two Germans it follows naturally that one should sell and the other should buy for marks and marks alone. Under such a state of affairs each country will have its own unit, and currency would not have grown to be a problem at all. Even only two hundred years ago the external trade of the country was almost negligible, even for England and France; the internal trade also was very limited, the transport of cargo proving difficult on account of want of cheap and easy communications. But progress of time and the advance in material civilization have brought about a state of affairs in which the external trade of the country - especially such as has come under the spell of aggressive industrialism - is of far more importance to it than its internal trade. Each country competes with its neighbour to increase its external trade as much as possible, as also to sell much more than it buys. With rare exceptions, it has become the common rule that the country should place as many obstacles in the path of another as possible when the latter wants to sell its goods to the former, but facilitate transactions when the latter wants to buy its goods. England alone is an exception to this rule for this reason; industry in England has been out of its swaddling clothes for a long time and manufacturers welcome competition rather than otherwise; also Great Britain depends almost altogether on foreign countries for the supply of raw materials for its manufactories as also for its food - the local production of raw materials for manufacture and food being extremely small.

Modern conditions have thus necessitated extensive business relations between countries having different kinds of government, industries, manners and customs, and, above all, money. It would be purposeless on my part to go in detail into the various theories of the meaning and value of money, especially as one could easily obtain sufficient and valuable information from several standard works. My purpose is to state the position of currency in China, and I will confine myself to such general observations as are necessary to help my readers towards a correct comprehension of the past, present and future of the currency of this country. It is axiomatic that money has no intrinsic value. Gold, silver, or copper have only such values as are given to them by convention, as also legislative enactment. The governments of the world have their currency in these metals, as also in paper, for the convenience of administration as also that of the business of the public. Trade transactions are intended to maintain or add to the comforts of the individuals composing a state or city. Primary wants and the ones that have to be compulsorily attended to are those relating to our food stuffs. Secondary ones are those relating to our luxuries. It is but natural, therefore, that the greater part of the volume of the world's commerce should be in the food stuffs and other primary necessaries of life. As under the ideal or primitive conditions of life, every person is supposed to be actually engaged in some pursuit or other, such pursuits should therefore be towards satisfying their wants.

Even under the nomadic stage of life there is a certain amount of division of labour; a few individuals composing the tribe have to go hunting for food; a few have to guard the camp and women and children; a few have to march afield in order to prospect and find out the lay of the land; while the women have to prepare the food for the men. In the next stage, when the life is regulated by the village communities, division of labour becomes more marked and individual. When once a settlement is made in a village the food is not always obtainable by hunting; the cultivation of the land become an essential of life; within the confines of the village each one produces the necessaries of life. Supposing the village contained a hundred inhabitants, of whom twenty-five were landholders and heads of families; it is not advantageous for any one of the twenty-five that each should raise everything that is necessary for his home in his own farm; consequently four of them raise all the wheat that is necessary for the whole village, another four look after the necessary live-stock, and each one of the rest devotes his attention to such affairs as would prove beneficial to the village community. The man who raises wheat distributes wheat to The whole village, the man who raises live-stock supplies meat To the whole village, the man who spins and weaves supplies cloth to the whole village. Although this arrangement is for the communal benefit it is also pure business. The position is thus; the man who has wheat sets apart a certain portion for the use of himself and his family; the rest he exchanges for meat, cloth and other necessaries of life. The man who has cattle keeps a certain portion needed as meat for himself and family; the rest he exchanges for wheat and other necessary supplies. In this stage of communal life there is not the slightest need of money in any shape or form. When, however, society develops to such a state that very large numbers of people congregate in one place, the need for money becomes apparent. When this state of affairs comes to pass the division of labour becomes more marked; also the wants of the individuals are larger. If near a certain settlement the land be suited to the growing of wheat and nothing else the people find it to their advantage to grow only wheat; but as they could not live altogether on wheat, they take their surplus production of wheat to the next town or village and exchange it for other necessaries. But with the development of society it is not improbably the case that the neighbouring village to which the surplus wheat is transported may have also a surplus of wheat; so the village producing only wheat has to go to another village or number of villages to buy the necessaries - or any commodities needed even in such primitive state of life, to cater to the creature comforts of the individual. It is at this stage that the usefulness of money becomes apparent. The wheat producing village would prefer to carry something very light and portable with which to buy other necessaries of life; the meat producing village is also similarly inclined. Hence the group of villages producing certain articles come to an understanding that they will have as common medium of exchange something which is not quite as perishable, which is comparatively light and whose value fluctuates as little as possible. They also come to a tacit understanding as to the relation between the medium of exchange and the several commodities which they want to buy and sell, on the basis of the average of the exchangeable value of the different commodities during a certain period. Such, therefore, was the origin of money.