The question that confronts any proposal for reform is to fix the ratio between silver and copper. It must be understood that even trade transactions away from the ports are conducted mainly in cash, except for certain commodities; for instance tea, beans or cereals are all exchanged for cash, i.e., instead of stating the price as a foreigner would do as Tls. 20 or Tls. 30 the Chinese state 20,000 cash or 30,000 cash-according to the rate of exchange for the day. At one time, before the innovation of making a token of the copper cash, the exchange between silver and copper was kept fairly steady; even although, owing to the various touches and fineness of the several silver standards in different parts of the country the value of the standards varied, the position with regard to the copper coinage, which was the only coinage at the time, led to a greater uniformity in values than is apparent to-day. Strictly speaking, it is wrong to state that silver has ever been the standard, in the modern sense of the word; the real standard has always been copper. And the cause of all the later trouble with regard to currency was the foolish acts of the later Manchu Emperors tending to depreciate the value of copper coins.

A proper understanding of the difference between the situation in China and in England or India, is necessary in order to grasp the significance of the enormous difficulties in the path of currency reform in the former country. When the gold standard was adopted in England, gold and silver had a fixed ratio of value and copper or brass coins were only tokens. In India, silver was the only standard with no fixed relationship to gold, while copper coins were only tokens. In these two countries, taken as the types of gold and gold exchange standards, there were no internal variations of currency. Now let us turn to China; both gold and silver have always been been used at their intrinsic value; although actual copper coins circulated in the interior yet they were not recognized as tokens; and their value depreciated as much as possible in order to bring them to the level of their intrinsic value. Another difficulty was that so many important differences existed between various parts of the country.