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1

“...FOREIGN OFFICE. 1893. MISCELLANEOUS SERIES. W 305. REPORTS ON SUBJECTS OF GENERAL AND COMMERCIAL INTEREST. CHINA EFFECT OF THE FALL IN VALUE OF SILVER ON PRICES OF COMMODITIES IN CHINA. Issued during the Recess and Presented to both Houses of Parliament by Comwand of Her Majesty. LONDON: PRINTED FOR HER MAJESTY'S STATIONERY OFFICE, BY HAJRRISON AND SONS, ST. MARTIN'S LANE, And to be purchased, either directly or through any Bookseller, from EYEE & 6POTTISWOODE, East Harding Street, Fleet Street, E.C., and 32, Abingdon Street, Westminster, S.W.; or JOHN MENZIES & Co., 12, Hanover Street, Edinburgh, and 90, West Nlle Street, Glasgow; or HODGEB, FIGGIS, & Co., Limited, 104, Grafton Street, Dublin. REPORT ON THE printers in ordinary to he it majesty. [C. 68565.".]...”
2

“...2 China peculiarly well adapted for observing phenomena connected with elver.. .. .. .. .. .. .. .. .. .. 2 Fewer disturbing elements than elsewhere.. .. ,, .. ..3 Mode and cost of production of commodities unchanged .. .. .. 3 International trade equalises prices all over the world .. .. .. 3 2. Balance of trade since 1870 .. .. .. .. .. .. .. 4 Available data; customs; statistics of values of imports and exports; certain corrections and additions required .. .. .. .. 4 Table showing value of imports and cxporls of each rear since 1865 .. 9 Remarks thereon .. .. .. .. .. .. .. .. 9 (1639) a 2...”
3

“...following pages I propose to review the general paper. trade between China and foreign countries during the last 23 years with a view to showing: 1. To what extent China has been an importer or exporter of the precious metals since 1870. 2. What has been the effect of the fall in the value of silver on prices of: (a.) Articles of native origin commonly exported to foreign countries. (J.) Articles of native origin commonly produced for con- sumption in China itself. 3. What has been the effect of the fall of silver in stimulat- ng the volume of exports from China ? Preliminary Observations. China would seem to be peculiarly well situated for observing phenomena connected with changes in the value of the precious metals. There is a fair stock of both gold and silver in the country. Neither is produced to any extent at the present day within the country itself, but there is perfect freedom of transport to and from foreign countries....”
4

“...SHANGHAI, 3 There is no legislation in the country giving either metal a preference over the other as a medium of exchange. By common consent silver is so used, not, however, in the form of national coins bearing a certain standard of value, but simply by weight, as one commodity might be exchanged for another. There is nothing to prevent gold being used in payment, if the parties so desire, and if so used, it would be taken by weight. The relative value of gold and silver changes day by day, and closely follows the exchange on the London market. The Government of China has not been a borrower in the foreign market to any appreciable extent. Small loans have been contracted from time to time, but at the present moment they are nearly all paid off. There has never, therefore, been any disturbance of values by the sudden augmentation of the stock of the precious metals in the country, and whatever minor effects the temporary borrowing may have had, have been counteracted by the subsequent...”
5

“...silk in London remaining coustant, the price of silk in Shanghai is 1 dol. a pound below the London price. Com- petition at once sets in, and the price in Shanghai is quickly raised to 7 dol. Or suppose, again, that the price of a pound of silk in London falls to 17s., while the gold value of silver falls as before, so that the 17s. will produce in China approxi- mately G dol. The price of silk in China will not be affected, but the price of gold will. Gold, as a commodity, is then 15 per cent, cheaper in China than in London, and foreign buyers will bid against one another so long as any holders can be found willing to sell until equilibrium is restored. It is thus evident that changes in the relative value of gold and silver arising in Europe will, through the agency of international commerce, immediately have their full effect in the altered purchasing power of the two metals all the world over, and in China no less than elsewhere; and in as much as, for the reasons before stated, the...”
6

“...out-valued the exports by some 2,000,000/. per annum, and that, therefore, there has been a constant outflow of the precious metals to that extent. This is by no means the true state of facts, and a few brief explana- tions are necessary to show what corrections and allowances must be made. In the first place, the values given in these returns are the Explanation market values at the port of landing or shipment, as the case may be. A moment's consideration will show that this is not Difference the value at which the one sort of merchandise can be set off between against the other, that is, the imports against the exports. valuea Take, for instance, a consignment of Manchester goods arriving exchangeable from England for sale by a local agent which fetches on the values, market 10,000 taels. The whole of this sum is not available for Examples in remittance to the owner in England. The local agent, before ^lu3tration- he can put the goods on the market, has had to pay duty and landing charges...”
7

“...Description. Amount. Taels. Bought, say 500 piculs tea at 15 taels 7,500 Paid duty at 2-50 taels .. 1,250 350 Total .......... 9,100 The transaction is thus closed from an international point of view; there is no balance to be remitted on either side. But it is evident that it would be quite erroneous to represent, as the customs returns do, that the double transaction meant that imports to the value of 10,000 taels had come into the country and exports to the value of 7,500 taels had left. What really took place was an import of the value of 9,100 taels and an export of an ideutical value. Freights need It will be noticed that I have taken no note of freight out- not be counted ward. This, though usually paid and charged by the exporting on China's agent, does not really enter into the transaction, because if partof cMt Paid by the shipper it has to be remitted by the agent of the vessel to the shipowner; all ocean-going vessels being foreign owned, and so comes to the same thing as...”
8

“...Hong-Kong being a free port, no information as to the values of junk cargoes was to be procured on that side. Con- sequently it was impossible to form any accurate sort of esti- mate as to the amount of this trade, or as to the proportions which the imports bore to the exports. One thing, however, was known, and that was that almost all the Indian opium con- sumed in Southern China entered by these junks, and not through the Foreign Customs. This alone made it quite certain that a great deal more in value entered China by this means than came out. It was estimated that from 15,000 to 18,000 chests of opium entered China in this way, which, at an average cost in Hong-Kong of 350 taels per chest, made an indebted- ness on the part of China and increased the national bill against her by some 5,000,000 taels to 6,000,000 taels per annum. In 1887 the control of the junk trade between Hong-Kong Allowance to and the mainland was by international convention placed in *ne made on the hands of the Maritime...”
9

“...but I content myself here by merely indicating them without attempting to strike a balance between those that make for and those that make against Here taken to China. I do so, firstly, because 1 have no data that can be another 0ne en^re^y relied upon; and secondly, because, taking a rough estimate, the one set of items may be considered as on the whole a fair set-off against the other. To the debit of China are the following: 1. Rents and profits from foreign capital invested in China. The value of land alone within the foreign settlement of Shanghai is estimated at about 20,000,000 taels, and the build- ings thereon may be taken as worth half as much. This gives a total of 30,000,000 taels, of which perhaps half is owned by foreigners resident out of the country, mostly, of course, in England. Taking interest on this at 6 per cent, to 7 per cent., we have an annual sum to be remitted of about 1,000,000 taels on this head alone. The like profits from other ports would, of course, swell...”
10

“...s, &c., all of which, ultimately find their way to China. This must be a very large item, and one which is probably increasing. It being, however, impossible, with our present information, to strike any exact balance between these opposing accounts, I leave them to stand against each other. Allowing for the various corrections and additions in the Value of manner I have indicated, the balance of trade between China imPor,ta * and foreign countries presents itself as follows : ilej'881 Table of Imports into, and Exports from, China, during the Years 1865-92, showing Balance for and against China every Year.* Tear. Value of Imports. Value of Exports. Balance in Favour of China. Balance Against China. E. taels. H. taels. H. taels. H. taels. 1865 .. 55,861,000 60,161,000 4,300,000 1866 .. 66,352,000 56,280,000 10,072,000 1867 .. 61,930,000 58,167,000 , , 3,763,000 1868 .. 62,595,000 68,691,000 6,096,000 1869 .. 60,091,000 67,114,000 1,023,000 1870 .. 62,720,000 61,771,000 949,000...”
11

“...-i CHINA. Value of tael in gold has been continuously decreasing. Except for short period 1879-84, when it remained fairly steady. Value of t \el has not influenced balance. Statistics of movement of bullion. 100,000,000 taels, of a sterling value of 30,000,000/. The value of the tael fell in those 10 years continuously from 6s. 8d. in 1872, to 5s. 8d. in 1880. 3rd. During the period from 1881 to 1887, the imports and exports again approximately balance, and from 1888 to date there has been an adverse balance against China, amcmnting in the aggregate to about 32,000,000 taels, aud indicating a corresponding drain of one or other of the precious metals from China. The value of the tael was approximately steady from 1879 to 1884 at 5s. Id. From 1884 to 1892 it has fallen continuously from 5s. Id. to 4s. 4d. It is thus impossible to trace any direct relation between the value of the tael and the proportion between imports and exports. No sufficient data are obtainable for a reliable...”
12

“...contrary to what might reasonably have been expected in view of the great fall in the price of silver, but the facts seem too strong to admit of any other conclusion. Why it should be so I cannot otherwise explain than by saying that the Chinese are re idy and willing customers for our manufactures to the full extent of their means, and even a little over. Their own exports have grown fairly well, as will be seen by a reference to the fore* going table, but their imports have fully kept pace. They Value. Currency. Sterling. H. taels. £ Net export of gold for 9 years 27,959,000 Equivalent, at average exchange, to.. .. 6,989,000 Met export of silver for 9 yeara 2,210,000 Equivalent to 552,000...”
13

“...SHANGHAI, Table C. 15 As regards Table A the result arrived at will not appear In internal surprising. The only way, it would seem, in which foreign trade or the fluctuations of foreign exchanges can affect the greater or internal prices, i.e., prices of articles which are not in demand supply of for foreign trade, is by drawing away or bringing in one or silvrer- other of the precious metals. If the result of foreign trade is to cause a flow of silver into or out of the country the value or the purchasing power of silver will tend to fall or rise as the case may be, and so with gold. But, as we have seen, there has been no great addition to the stock of silver in China during the period under review, and consequently we ought not to expect a general rise in prices. The fluctuations which we find in the prices of commodities in Table A can, indeed, be shown to coincide closely with the greater or less supply of silver. From 1870 to 1880 there was a continuous favourable balance of trade...”
14

“...exports from China, an answer has in effect been supplied by the fore- going remarks. There has been a stimulus, but not such a stimulus as might have been expected. The stimulus has been a readiness on the part of foreign merchants to buy native produce of all sorts at current quotations, but not the stimulus which comes from offering higher prices. Such as it is, however, it has developed the exports very considerably, especially within the last few years. In 1872 the exports of China stood in value approximately as follows:...”
15

“...SHANGHAI, 17 Articles. Value. Silk and Bilk products Tea, all kinds Miscellaneous.. IT. taels. 26,000,000 38,000,000 7,000,000 In 1892 the figures were Article5. Value. Silk and silk products Tea, all kinds.. Miscellaneous.. H. taels. 38,292,000 25,983,000 38,308,000 Comparative values of exporls, 1872-92. The following table indicates in some detail the particular lines in which the general exports from China have developed. The prices of these articles will be found in Tables A and B. Tea has always figured so prominently as one of the Tea. products of China that it could not be omitted from any list of exports, but the causes operating of late years to affect both its price and the volume of the export have been so exceptional that it ought not, perhaps, to be included in a table from which it is sought to draw general conclusions. As will be seen, both Subject to the price and the quantity have fallen off very much, owing, cmpetitio of course, to the Indian competition....”
16

“...grow very fast, but as things are, I do not look for any very rapid expansion. It follows, therefore, that it is impossible to expect that China will, under present circumstances, become a great consumer of silver. The conditions of the last few years which have made China an absolute exporter of silver are doubtless abnormal. Under ordinary circumstances China ought to be an importer, but of course she cannot get silver unless she gives value for it in some form or other. Her power of absorbing silver is measured by the difference between the value of her exports and imports, and unless the former outvalue the latter, there is nothing left for her tu receive. I see no reason to suppose that China will, until things are greatly altered, take the place of India as an absorber of silver....”
17

“...20 CHINA. 3. The fall in the price of silver has stimulated exports by making it possible for foreign merchants to purchase and export at a profit a large variety of miscellaneous articles which formerly would have yielded no return at all. The value of such miscellaneous articles has quadrupled within the last ten years. Tea has declined very largely both in volume and price, but for this there are no special reasons. Raw silk of best quality has increased somewhat in volume, but not in price. There has been a great increase in the quantity of waste and refuse silk exported, but the price has somewhat declined. A continued growth in the exports of China is to be expected, but under present conditions it cannot attain to great dimensions. As the capability of China to absorb silver depends upon the excess of her exports over her imports, there is no reason to expect that China will, within the next few years at all events, take much silver off the European market....”