The proper method of introducing the new coinage, both the unit and the subsidiary coins, is indeed a problem. I expressly refrain from discussing the relationship between currency and the balance of trade, reserves and the several problems arising out of international trade, because such relations are better understood and adjusted after a stable local unit and coinage are popularized within the country itself. For ever so long, the question of the settlement of the balance of trade and reserves has been left to drift; and it would surely be no disadvantage to let it alone for a while until a sort of unity and regularity is established in the internal currency. As a matter of fact, the internal regularization of currency would, of itself, bring about a certain amount of stability in the relationship between gold and silver, or, in other words, in connection with international trade.

For the moment the question is one of the best means of popularizing the coins without dislocation in trade or disturbance in prices. Conditions in the country have remained unchanged for at least thirty years. Viceroy Chang Chih-tung has described them very accurately.

The considerations mentioned by Chang are very important and should have a great deal of influence in the decision of all questions connected with currency reform. Apart from the question of the standard, even the introduction of coins has to be guided by extremely cautious steps. The people are so poor, and the standard of living so low, that the slightest disturbance is likely to cause more evil than would probably be the case in any other country. When a man is able to live comfortably on forty cash or four cents a day in the interior of China, any step that would affect the value of his money or commodities by even half a cent would be productive of evil, and be resented by him; to the Westerner, or those trained in Western ideas and conditions, a variation of half a cent appears to be too insignificant to need even passing attention. The introduction of a new currency is always attended with a change in values, causing a disturbance in the values of commodities, or in the standard of life. A slight measure of disturbance is inevitable; but all efforts of reform should be towards minimizing the effects of such a dislocation. According to his own lights, Viceroy Chang sketched the following brief course when he put in a powerful plea for the silver standard:

"For the present we must begin reform by establishing uniformity in the silver and copper currency. The value of a tael in cash should be made fixed and definite. The values of the silver and copper currency must stand in a fixed relationship to each other. If this is accomplished the benefit to the country and people would be immense. This is in fact what ought to be done according to the law of orderly progress. Then, when the currency has been made uniform, when silver and copper in the coinage have come to stand in a definite ratio, when the use of bullion as currency has been given up, when the order prohibiting the use of gold for ornamental purposes has been enforced, when products of gold mining have gradually increased, when within twenty years railroads have spread over the whole country, when silver coins become universally acceptable, when consumption of native products has increased, when manufacture by means of modern machinery has pushed into the interior, and when the circulation of silver has reached even to the remotest regions of the Empire - then investigate the situation and, if it is indeed necessary to have a partial circulation of gold, it may not be too late to consider attempting to introduce the gold standard."

Chang's memorial is a bit far fetched; but is reflects faithfully a thorough understanding of the position of his country. The uniformity in the silver and copper currency is the first thing that ought to be attempted and on the measure of success of this step would depend the future of all reform. As the cash is the prevailing currency in the land in all daily transactions, and as the tael is the prevailing currency in all trade transactions, and as from time immemorial the regulation ratio between the cash and the tael has remained 1 to 1,000 - although such a fixity was never known in actual practice - the most important step is to bring about such a relationship. It might be asked if this is not superfluous, in view of the fact that coinage is to be based on such a relationship. But we have had too many sad experiences of the fact that inscriptions on coins have no meaning at all. Bad regulations, or, to be more precise, regulation of currency without sufficient attention to economic forces, have unfortunately brought about a chaotic relationship between the relative value of currency and commodities. This is especially so in the case of copper, the value of the coins varying differently at different places. The primary cause is the debasement of the coinage; people would accept the newly minted coins only at reduced values. I pointed out that the idea of weight for value, even in the case of cash, was so deeply rooted among the people, in spite of the fact that copper cash was only a medium of exchange and not used like silver or gold for ornamental or other purposes. As it was simply a medium of exchange it would certainly nave been easy to cure the people of the false idea, under the circumstances, but for the large number of spurious coins that were being daily thrown out on the market. The Government has been unable to control vagaries of coinage, and the spurious coins began to have also a value in the market. Even then the depreciation would not have been great; but the mints that were established since 1890 threw out enormous quantities of copper coins, while no attempt was made to withdraw the older cash pieces. Although it was simply and purely a medium of exchange, a very large quantity of ten-cash pieces had the effect of cheapening them; that is, their value in the shape of commodities depreciated. Even this would not have been so bad, if the supply of the cash had been evenly distributed, or distributed according to the demand in each city or province. Unfortunately the new coinage was simply thrown out haphazard and the quantities thrown out in each market depended on the proximity of the mint, zeal of the mint authorities, the copper available and the speculators, who traded on such supplies. Therefore, the value of the cash varied differently at different places, the circulation being almost always at a discount.