File No. 893.51/1321.
The American Group to the
Secretary of State.
New York,
February 25, 1913.
Sir: We enclose herewith, for your
information, a copy of a letter received by us from Messers. Morgan,
Grenfell & Co., dated February 14th, together with a copy of the
memorandum referred to therein, relating to a meeting of the
representatives of the four groups and Dr. Vissering in London, on
January 11th, 1913.
Very truly yours,
[Inclosure.]
Morgan, Grenfell & Co. to the
American Group.
London, E. C.,
February 14, 1913.
Dear Sirs: We inclose herewith 6 copies of
a memorandum made by Mr. Whigham of the conversation between Dr.
Vissering and the representatives of the four groups at their
meeting with him on Saturday the 11th January.
The memorandum was made by Mr. Whigham next day from memory raid
cannot therefore be considered in any way a complete record of Dr.
Vissering’s statements, but it has been submitted to Dr. Melchior
and Mr. Addis, who were both present, and who have agreed that it
gives a fair account of the main points covered in the
discussion.
Personally we consider that the meeting with Dr. Vissering was very
disappointing. Without venturing to criticise the views of such an
expert in currency matters, it appeared to us that his statements
were mostly those which might be found in any text-book on currency
reform, but that he evaded the whole practical problem, viz.,
whether the results which had been found to obtain in states and
communities with strong governments, which can to a certain extent
enforce their wishes in currency matters, would obtain in China
where the Government is weak and the population are peculiarly
governed by customs and prejudice.
Yours very truly,
Morgan, Grenfell & Co.
[Subinclosure—Memorandum—Summary.]
[Untitled]
Dr. Vissering explained that he had originally been invited by the
former Manchu Government to act as financial adviser to China in
connection with the currency-reform proposals as outlined in the
currency-loan agreement. Owing to the revolution, the matter was
suspended. Thereafter the Provisional Government asked him to act as
its financial adviser and in August or September, 1912, he went to
Peking, conferred with a currency-reform committee composed entirely
of Chinese, and concluded a contract as Adviser. He had
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previously prepared a
pamphlet fully explaining his currency-reform proposals, which was
presented to the Chinese committee and to the banking groups, and he
now explained his incomplete further plans, relating to the
organization of a requisite central bank. He considered China not
yet ready for a completely gold basis; a gold exchange basis would
best solve the present problem, similar to those adopted in British
India and some of the Dutch colonies; for this solution a central
bank would not at first require a considerable gold reserve but
would issue notes against first-class financial bills payable in
gold in European and American centers, thus gradually accumulating a
gold reserve in those centers. Neither would a central bank at first
undertake ordinary or financial business but would confine its
operations entirely to monetary matters. At first it would issue its
notes only against gold or gold values and not for services, etc.;
the notes so issued would thus go readily into and remain in
circulation side by side with the existing silver coinage, gradually
becoming a part of the circulating medium.
Messrs. Urbig, Addis and Simon, practical bankers in China, thought
Dr. Vissering’s proposals impracticable, but their differences with
him seemed matters of opinion rather than of principle. They thought
the notes issued as indicated by him would not remain in circulation
but would at once be presented at the central bank for payment in
gold, thus rendering the whole scheme inoperative and forcing the
bank soon to close its doors as, being debarred from commercial
business, it could make no profits and must eventually suffer
losses.
