To the Editor of the "Nonrit-Cinwa Dany News"
Sim—Mr. C. S. Chen in to-day's issue discusses my talk about "China's Currency and the Future Trend of Gold." There have been certain mis~ quotations In your report on what I said, ondon such misquotations, Mr, Chen's criticism is based. Therefore, Tam very glad to have the opportunity to correct some of those misquotations. I explained that Alexander the Great, through his disper-Sion of the Persian gold chest, caused 'a. world-wide depreciation of gold, and T explained that the introduction of a Chinese gold currency by the Shi Huang Ti probably was the result of this change in the price of gold. So, China introduced a gold currency, because gold was cheap. I am sure, Mr. Chen will agree this was a logical conclusion, no other reasoning has been presented by me.
As to the present, I set forth that China's currency was reformed, just ata time when silver was comparatively dear, ie. in terms of inter~ national currencies, compared with say 5 years ago. i further pointed out that British gold and currency policy necessarily must result In a ise of commodity prices, i.e, into a fall of the value of gold, in terms of commodities. Such a depreciation of xold, I added, should facilitate the acceptance of a gold exchange standard by China in due course of ime, Lo, after the return of Britain toa vold standard, which event, in my. opinion, informally has taken place already, According to this reasoning, I do not subscribe to Mr, Chen's opinion that "gold 1s already demonetized." As a matter of fact, the gold stocks held by Central Banks and Governments have never been as huge, as they are at present, and there is ttle doubt that such reserves are considered to be an integral part of the general preparedness for war or "national defence" which is now generally the central object of go ernment policies all over the world.
Therefore, in case of war, large amounts of gold would be offered for commodities, and thus the falling trend of the value of gold would be When I was asked what the Chinese Government would do, if the price of silver rose, and smuggling of silver became rampant, cree more, answered that 1" did not think it would be advisable for the government to raise the exchange value of the national currency, in order to combat smuggling, us was suggested, bhut to keep the currency on its present level. "Since T am not informed of the exact contents of the Sino-American "silver agreement os negotiated by Mr. K. P. Chen, 1 do not know to what extent the Chinese government is free to sell sliver in the open market, as advised by Mr. Chen, T appreciate very much Mr. Chen's kind reservation, in the last paragraph of his loiter, and T hope to have con-vineed him, at least, that some of the iMogieal unreasoning ascribed to me has not been my own, Mokanshan, Aug. 1
Text read from the printed page and cleaned; old type leaves the occasional error.