In the meanwhile, currency conditions, as the result of the addition of the new copper coins, were steadily growing from bad to worse. As it was easy to counterfeit the old cash, and as the country was being flooded with suprious cash coins, a censor proposed in 1897 to coin the cash by modern methods. The Government in China is a slow moving machinery. It was not until February 2, 1902 that the following Imperial edict with regard to the new copper coin was issued: -
* "Financial Capacity of China" by E. H. Parker.
"For some time past the local currency in the various provinces has been insufficient for use. Formerly the two provinces of Fukhien and Kwangtung minted some large, round copper coins of excellent workmanship, that was said by the people, after they were put into circulation, to be convenient. The Province of Kiangsu had now taken up a similar plan and finds it very convenient and beneficial as also a check upon the evil practice of illicit melting and illicit coining. Let the viceroys and governors of the provinces along the Yangtsze River and the sea coast provide the necessary funds and adopt the aforesaid plan, and at once mint these coins in addition to others coined by them, so that they may be put into general circulation. The legal cash of the capital also ought to be similar; therefore let the provinces of Fukhien, Kwangtung and Kiangsu forward at once to the Board of Revenue several hundred thousands each of the new copper coins minted by them, so that the said Board may pay them out and get them into use - which we hope will be beneficial and convenient to the people and prove a help to the currency."
As I pointed out in the last chapter, these new copper coins were only token coins; because they weighed only 7.5 grams, containing 95 per cent copper and 5 per cent zinc, and the actual values of a silver tael and dollar were then equivalent to 228 and 169 pieces of copper respectively. These cents or fen-cash pieces at first circulated at the rate of a hundred for a dollar; people took to them readily, these coins being extremely popular. Unfortunately the authorities misunderstood the significance of such popularity; and, owing to the large profit in mintage, utilized the coinage of copper coins as a means of raising revenue. Enormous quantities of copper were imported and turned into cents. The total issue of copper coins rose from 1,693,700,000 pieces in 1904 to 7,500,000,000 in the following year; at the close of 1905 there were 16 copper mints and 846 coinage presses with a capacity of sixteen billion coins a year. The import of copper, which rarely used to amount to over a million taels, increased to nearly twenty-two million taels in 1907.
Thus, an action which was intended to simplify currency only tended to make the problem more complex. The provincial mints under the control of the respective authorities had no means of controling distribution, owing partly to the insufficiency of communication, and partly to the incorrect understanding of their duties by the officials in charge. The authorities thought that they had performed their duty to the fullest extent as soon as they had finished coining. The result was that speculation which has been the bane of this country came to the forefront. The old cash was disappearing from the principal city markets, the better ones being melted down -while the inferior ones were being driven into the surrounding country. The depreciation of copper in terms of silver was general, and in Shanghai alone the copper cent depreciated 22 per cent, in 1905. The Government was gravely concerned about the depreciation of copper and in an edict issued on August 22, 1905, we find the following:
"Recently there has been a minting of the copper coins because of the shortage of the ordinary cash. The circulation of these has found favour among the people and the profit from minting them has been very great. The various provinces have vied with one another in asking permission to establish mints and there has been no end of confusion as a result. Because of this competition, too, recently the prices of machinery, copper and lead have risen and the value of copper coins has depreciated. If the provincial mints are to go on, each coining for its own use, each having its own way, perhaps prices will still further rise and the value of the cash still further depreciate; after a few years, when the demand for the new coins is non-existent, their circulation will not be easy and there will be the gradual loss on the capital invested. Moreover in everyone of the new commercial treaties there is an article providing for the adoption of a uniform currency; but if each province is to be allowed to have its own coinage we will probably be far from fulfilling our promise and intention in having a uniform currency."