To the Editor of the "Nowru-Cunxa Daur News"
Su.—t read with great interest your excellent leading article of July 22. The scheme is perfectly feasiMe but. the ratepayers have to take action be. fore the scheme is being talked to death, Those who look upon money as a commodity only will of course sec difficulties but not the advantage of the scheme. The foundation of any currency is confidence and ce-opera tion, oF in other words: the value of credit certificates (Banknotes) depends upon the possibility of making toe of such notes for the payment of what everybody has to pay or buy such as rent, taxes, light, power, water, telephone, transportation, wages to servants, etc, local-made articles, local (not "i), food, cinema, ele. To make this interchange Service and merchandise possible is the real function of money and 80 per cent, or more of this interchange has nothing to do with foreign exchange values.
It ig unfortunate that exchange Auetuations should have such an me fluence upon living conditions as we experience at present, What we need therefore is a stable focal medium of Payment. The level of 8d per Shanghai Dollar is rather low but Feasonable considering present condi-tons.
At this figure the Municipal Administration may sell Shanghai Dol-Tars, the proceeds in Sterling to be used og reserve. A 100 per cent. re~ serve is not necessary at the start though it may be built up in time as the Muniefpality will save a considerable amount of interest. which it would have to pay when issuing Debentures.
The new notes will not be exchanged by the Administration against foreign currency unless they are withdrawn from circulation, This will to a great extent prevent speculation in these notes. About 20 per cent, of our expenses may be subject to foreign exchange fluctuations but the rest of about 80 per cent. should be subject to these fluctuations, As to the cause of the drop in exchange value of the Chinese National Dollar it seems to be overlooked that The only way to invest is by importing merchandise in various forms which is shown by the surplus of imports over exports. Now the reverse taking place. Not only foreigners prefer to keep their surplus funds in foreign currency: hundreds of million have been changed into foreign currency by wealthy Chinese including the Government. As long as this tendency is prevalent a stabilization fund to keep the currency stable for any Jength of time will be an expensive affair for those providing the fund.
real stablizat of currencies is only "possible by US.A. especially Should Keep this in mind before its gold hoardings are good only for Museum exhibition. Tean see no reason why Shanghai under present cir-Jeumstances should not try having its own local currency. Who can lose by It?" As far as I can see, nobody. The benefit will come to the whole utility companies but by public as' well.
there any sound reason why this scheme should find opposition? If so the opponents must be able to suggest something better, otherwise opposi-ton is senseless.
If someone should discover legal dimeulties, there is only one answer: change the law to sult present cit-
Scmorex.
Shanghai, July 27.
Text read from the printed page and cleaned; old type leaves the occasional error.