The next possible scheme is the adoption of the gold exchange standard which has been adopted in India, Java, Strait Settlements and the Philippines, and which was in force in Siam and Japan before they finally became gold standard countries. This scheme has been very much advocated for China and hence it deserves special attention. Dr. Vissering is the only great authority that has given out a co-ordinated scheme of reform and the steps by which it is to be achieved; for the sake of convenience and also because the learned doctor's scheme has attracted considerable attention, I take his proposal as the basis for my criticism.

Few will disagree with the learned doctor that a change is absolutely and urgently necessary; and there will also be general agreement with regard to his statement of the disadvantages of the present system of currency based on the silver standard. But he has failed to show how the silver standard itself is responsible for all the uncertainties in connection with currency in China. Now let us consider his scheme, i.e., the adoption of the gold exchange standard and the several steps necessary to complete the introduction of currency reform. I have already given a summary of Dr. Vissering's scheme; therefore I do not propose to recapitulate the details of his scheme. I will endeavour to show that, however logical his scheme may be, it has a number of flaws which the learned doctor has evidently not considered; and it is neither practical nor possible in the present circumstances. The fundamental of the gold exchange standard system is the token coin. Dr. Vissering himself admits that raising the intrinsic value of any coin would mean a sudden disappearance of the entire circulation into the melting-pot, if the intrinsic value is by any freak of the silver market above the nominal value; otherwise there is the danger of "honest" counterfeiting. The reason is obvious. The Chinese have long been accustomed to have the medium of exchange at its mere intrinsic value, whether in bullion or coin, in any shape or size. The only remedy, according to Dr. Vissering, is to have the margin between the real and nominal value rather broad, and coins can be issued under such arrangements, only when the Government is powerful enough to prevent counterfeiting and defends its frontiers against the introduction of counterfeit money from abroad.

Therefore, he proposes to do for a time without token coins, and let the present currency circulate while, at the same time, having a book unit or a unit based on gold.

As Dr. Vissering's experience has been practically confined to Java, he points out that such a system has succeeded in the Netherlands Indies in the final ousting of the old silver standard; ergo, it ought to succeed in China.

The great mistake of this scheme is that it ignores altogether the local situation. It is eminently absurd to compare Java with China, although Dr. Vissering admits that the experience of Java is only on a small scale. First of all the people of Java have had no traditions; as a matter of fact they had no coin of their own, which circulated even for two decades; they are people who are mainly agricultural, and on a very small scale; and they have as little to do with foreign trade as possible. Practically every scheme adopted in Java was for the benefit of the Dutch colonists, who have complete control of the foreign trade as well as of agriculture, mining, etc.; the Chinese do all the retail trade; so much so that the Javanese have neither the control nor the interest in any of the affairs of the country. For instance, of the land ceded by the Government for private agriculture under the Agrarian law of 1870 2,500,000 acres belonged to the Dutch, 304,000 acres to the Chinese and about 30,000 acres to the natives of the country. Coffee, tea, rice, indigo, tobacco, copra and tin lands practically all belong to the Dutch colonists; and a good portion of them are Government monopolies, 24 per cent, of the revenue of the Colony being from Government monopolies. It would indeed be surprising if, with all the foreign trade in their hands, and a domination over the country, the Dutch people had not adopted the gold or gold exchange standard, especially as all their trade has been with the gold countries. Another point worthy of note is that exports always exceeded imports ever since 1898; during recent years the difference was as high as 50 per cent. Therefore, the Netherlands Indies has been for some time a creditor nation and the gold countries had to pay considerable sums to the credit of the Dutch merchants of Java; further, the standard did not affect the natives of the country, especially as exports were practically in the hands of the Dutch colonists. Moreover a gold exchange standard helps in the case of imports, the wholesale business in which is also in the hands of the Dutch, by making the Javanese pay more than they otherwise would in silver. Is this the system that Dr. Vissering recommends for China? If too much stress is laid on the interests of foreigners in China it would lead to a situation not acceptable to the Chinese people. In China the exports are fully in the hands of the Chinese and their interests are paramount over those of the foreign importers, from their point of view; if the Chinese are not able to export sufficient quantities of their produce they would have to stop buying foreign goods or borrow money from the foreign countries in order to make up for the adverse balance. Therefore, Dr. Vissering's proposal is not beneficial or suitable for either Chinese or foreigners.

It may be asked why the gold exchange standard, which has been introduced and found to be admirably suitable to India, should not be suitable to China ? There is a great difference between the method proposed by Dr. Vissering and the one adopted in India. To grasp the whole situation one has to compare the respective positions in India and in China. Even before the British came to India there was practically one standard coin, and that was the rupee - and its subdivisions. Although there were several rupees minted by the several independent states - as a matter of fact there are one or two besides the British rupee to-day - they were practically all of the same weight and fineness and circulated with the utmost ease. The subsidiary coins, both in silver and copper, had fixed weights and fineness which were rarely deviated from. All that the British had to do was to adopt the most popular rupee and to change the imprints on the coins without even changing the name of the rupee or its subsidiary coins. Currency reform or currency adjustment in India started, altogether owing to the fact of the larger growth of international trade, and the heavy payment which had to be made by India on account of the home charges. Here again, it was the interest of the British merchant and the manufacturer at home that was paramount in the dictation of the policy, so far as the regulation of foreign exchange was concerned. As I have said already, the whole thing was patch-work arrangement; but circumstances helped to benefit the people of India. Including the tea trade, practically no exports in India are exclusively controlled by the natives of the country, as in China; but Indians have also the advantages of doing a fairly substantial portion of the import trade and having a larger share in the manufacturing industry - especially in cotton -than is the case in China. Naturally the changing of the standard did not bring about any serious difficulty. Moreover, it must be distinctly understood that there was no change in the coinage of India for at least 300 years; all that was done was raising the existing coin to a fixed gold value. Even the new gold unit was not new to India. The growth of foreign trade had already familiarized the people with the British sovereign and the proclamation of it as the standard unit really did not affect a serious change in the business life of the people.