Chapter 54: The Coinage Process, Continued

Everyone expressed different opinions on the entire process and the specifications of the coin materials. Someone suggested that the silver coin of this specification was too thick. In fact, the Yuan Datou had a diameter of 39mm and a thickness of 2.3mm. If cast with a 31mm diameter, the silver coin’s thickness would become 3.64mm. Moreover, it couldn’t be “blown” at all—blowing and listening were important folk methods for distinguishing real silver coins from fakes. Making it too thick would actually open the door for counterfeiters.

He proposed changing the one-dollar specification of the new silver coin to 25g per coin, with a thickness of 2.5mm and a diameter of 35.2mm. The advantage was that it would allow the coin’s dimensions to be completely standardized: a roll of 40 coins would be 10cm high and weigh exactly 1kg, making them easy to count and package.

The dimensions of the subsidiary coins would also be adjusted accordingly. The metallurgy department proposed that there was no need to use electrolytic silver or purple copper for coinage. Fire-refined silver and copper could also reach 99% purity. The small amount of impurities in fire-refined metals mainly hindered electrical conductivity but had little effect on stamping coins.

Regarding the subsidiary coins, a Faction member pointed out that the concept of a quarter-dollar was not intuitive enough for the natives. It might cause misunderstandings in use. It would be better to mint 20-cent and 10-cent silver coins instead.

“Changing 25 cents to 20 cents is no problem in terms of production, but we will lose a portion of the seigniorage,” Cheng Dongliang said thoughtfully.

“Where is the loss?”

“The cost of producing a 25-cent coin and a 20-cent coin is almost the same. Even if reducing the size and weight can reduce the cost a little, it doesn’t actually save much. It means that for every 20-cent coin we mint, we lose 5 cents of revenue. For the same reason, we can’t mint 10-cent coins.”

“Why not?”

“The difference is too small. From a coinage perspective, it’s a loss.” Cheng Dong explained that the face value difference between 10 cents and 20 cents was only double. Not to mention the negligible difference in minting costs, just in terms of material costs, the cost of two 10-cent coins was actually higher than one 20-cent coin.

In the era of the Republic of China, Guangdong issued a large number of silver subsidiary coins with denominations of 20 cents, 10 cents, and 5 cents. However, the one that was minted and circulated in large quantities was the so-called double-dime (20 cents). The latter two were not issued much due to high costs and easy wear and tear, and were used even less.

“If we blindly reduce the cost of the coin material, the fineness of the silver coin will be too poor. If the fineness of a silver coin drops below 50%, frankly, it’s meaningless.”

“I think we should issue 10-fen copper coins. That way, the cost will be manageable. Copper coins can be made of brass, with a small amount of lead added. The copper content can be controlled at 60%.”

“The demand for subsidiary coins is astonishing. How much copper will be needed to meet the demand…”

“We are already issuing banknotes of the same denomination. We can just issue fewer copper coins and more banknotes.”

In terms of copper reserves alone, the Planning Institute had a considerable amount. In recent years, they had been collecting copper almost obsessively, resulting in a substantial stockpile. However, due to the demand from the electricity, refrigeration, communications, and a portion of the machinery industries, copper could not be said to be abundant. What’s more, minting silver coins itself would consume a large amount of copper.

“The memorandum also proposes using electrolytic silver and electrolytic copper. Our production capacity will be even more difficult to meet.”

“If we have enough electricity now, I wouldn’t object to the widespread use of electrolytic silver and copper. After all, after electrolyzing non-ferrous metals, the anode slime will contain many rare metals that are usually difficult for us to obtain. But right now, our electricity gap is still very large, and the supply of purple copper is not quite enough to meet the needs of the power industry…” The Faction member from the metallurgy department looked troubled.

Then, another Faction member pointed out that there was no issuing authority on the coin, which seemed inappropriate. Although modern coins generally do not have the country’s name or the issuing bank pressed on them, it seemed that corresponding marks should be added in this time and space.

“I have an opinion: right now, let alone the Chinese not knowing what S.P.Q.M. means, even foreigners don’t understand it. Spanish coins at least have the mint’s abbreviation. Even if we don’t add the country’s name to our coins, we should at least have an issuing bank. It’s better to let everyone know where the money is made.”

Wang Ruixiang proposed: “It’s too wasteful to use carbide tools to carve the dies every time. Our self-produced tools are a weak point. Not only is the output low, but the quality is also poor, and the lifespan is particularly short. What do you think of this: we use carbide tools to carve copper to make a master version of the coin. Electroforming it once will create a set of corresponding positive and negative dies. Then we just need to use this master version to continuously do electroforming. After all, chemical batteries and metals are easier to get than alloy tools.”

Wang Luobin shook his head: “A die has to be used for a long time. Your process has extremely high costs and extremely low efficiency, and the die surface is too easy to chip and wear. Especially when dealing with steel materials, the base of the punch and die itself is prone to deformation—insufficient strength. Besides, we are going to build an industry. We must pass the hurdle of tool alloys; there’s no way around it. And the sooner, the better. It doesn’t matter if we don’t do it well at first. We can do more and try more. Our current conditions are much better than before.”

After some discussion, it was finally decided to modify the coin specifications to conform to the “standardization” idea. In addition, the issuing bank was added to the coin: the Central Reserve Bank of the Senate. As for the coin materials, it was no longer stipulated that they must be electrolytic silver or copper, only that the materials must be 99% pure. It was also decided to change the original 25-cent denomination to 20 cents. As for the 10-cent coin, it would not be minted for the time being, and only banknotes would be issued.

“How long will it take to make the finished product?” Cheng Dong asked, seeing that a general consensus had been reached.

“If the equipment is all in place, we can get a sample out in two weeks. The subsequent adjustments will take some time. I think a month is enough,” said Liang Xin. “I just don’t know if the coin materials can be supplied sufficiently.”

“You can rest assured about that,” Cheng Dong said. “Once the new currency system is finalized, we will begin to remint all the silver we have in stock into uniform 99% silver bars, each weighing 1kg. I just don’t know how large the monthly production capacity of the mint is.”

“The designed capacity is 40,000 coins of various types per day,” Liang Xin said. “If we go all out, we can achieve a daily output of 80,000 coins. It all depends on whether the coin materials are sufficient. This number is actually very low. The Nanjing Mint in the early 20th century could produce 120,000 Yuan Datou per day, and the production capacity could be doubled with overtime.”

“A monthly output of 1.2 million coins… with our silver reserves, we’d have to stop production after one month.” Cheng Dong was secretly alarmed. The total silver inventory in the Planning Institute’s warehouse, regardless of fineness, was only 700,000 taels (a tael being 37 grams). Even after re-melting and adding copper, zinc, and other materials, it would only be enough for one month of production.

Would 1.2 million coins of various types be enough to meet the circulation demand on the market? The Senate’s currency reform, to put it bluntly, was to “abolish the tael and adopt the dollar,” a huge shock to the past system of weighed silver and copper cash as the standard currency. He had no idea what kind of reaction would occur on the market in Guangdong, or whether there would be financial struggles like “currency wars.”

He was particularly worried that people would hoard silver dollars, or worse, that the minted silver dollars would not be able to meet the circulation demand at all. The number of silver dollars that the Ministry of Finance could put into the market was limited. Although it could be supplemented by spoils of war, he couldn’t have too high expectations for the silver vaults of the various levels of government in Guangdong. As for tax revenue, that wouldn’t come in until the summer.

The Faction members of the Ministry of Finance were all counting on “expropriating the local tyrants.” But this income was completely unpredictable.

The meeting ended amidst Cheng Dong’s worries. After the meeting, several Faction members from the machinery department, led by Liang Xin, immediately began to make the dies.

Considering that the Hong Kong factory lacked sufficient native technicians and that its equipment and materials were not as complete as in Lingao, the steel dies for several types of coins were all manufactured in Lingao and then packed in special boxes to be taken to the Hong Kong mint by Liang Xin.

The Hong Kong mint was located near Central. This new factory was temporarily under the charge of Liang Xin and would be handed over to the Ministry of Finance after formal production began. According to the organization chart, the mint director and the chief accountant would be appointed by the Currency Bureau of the Ministry of Finance. The factory had two sections: general affairs and production. The general affairs section had a general office, a cashier’s office, a material warehouse, a coal bunker, a coin material warehouse, and a calibration office. In addition, the Ministry of Finance hired and the National Police dispatched volunteer police to guard the factory. The minting section had a technical office, under which there were various workshops for power, melting, rolling, stamping, polishing, pickling, die making, weighing, and coining. Although the scale of each workshop was not large, it could be said to be small but complete.

Except for a few laborers, almost all the workers at the Hong Kong mint were skilled workers trained by the Senate itself. Due to its special geographical location and the special nature of the mint’s work, the selection of workers was very cautious. Not only did their skills have to be up to standard and their political rating high, but their family background also had to be clean, with immediate family members living in Lingao. Those without any ties were all rejected.

After Liang Xin arrived in Hong Kong, he immediately began to prepare the machinery and equipment and train the workers to familiarize them with the process, waiting for the coin materials to arrive to start production. The biggest difficulty in minting coins was making the dies. After qualified dies were made, there was not much technical difficulty in manufacturing the coins themselves. It could be said that any machinery processing enterprise with a press of a certain tonnage could manufacture coins.

Before long, the first batch of coin materials was transported to Hong Kong. These were specially smelted by the metallurgy department for the mint: 1kg metal bars with a purity of 99%. In addition to silver and purple copper, there were also a small number of zinc bars. Zinc was added to improve the wear resistance of the coins.

The delivered coin materials were put into special crucibles in proportion to the types of coins to be minted and melted in a reverberatory furnace. Normally, such melting should be done in an electric furnace. If crucibles were used for melting, at least coke should be used as fuel. Now, Liang Xin had neither an electric furnace nor coke, so he could only use high-quality Hon Gai anthracite coal as a substitute. Fortunately, the use of a reverberatory furnace and a blower could also provide sufficient temperature for melting the alloy.