Author: Sasha
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Chiang Kai-shek What is the purpose of currency reform? Is there any success in the end? Sasha Q&A Episode 153
Nanjing National Government carried out two currency reforms , and the significance is different.
The first time is fiat currency reform .
1935's fiat currency reform is of great significance to the country. Before the fiat currency reform, China implemented the silver standard, that is, silver was used as the main currency.
This has been the case in China since ancient times, and in fact, the West is the same.
In the 19th century, most Western countries still partially used paper money and partially used metal currency . In the novel "The Earl of Monte Cristo", Monte Cristo asks the bank to pay a huge sum of money, half of which is given to francs and half of which is given to gold coins.
During the Republic of China, the Chinese also trusted Ocean .
In the movie "Teahouse", Dabing came to the teahouse to blackmail and asked for to open his mouth to see the ocean .
However, the silver standard has long been outdated and cannot adapt to the global financial system.
Because of this silver standard, China suffered a lot of losses since the end of the Qing Dynasty.
After the success of the National Government in 1928, it implemented monetary reforms, but still maintained the silver standard.
This is mainly because the provinces controlled by the Nanjing government are limited and do not meet the conditions for issuing a national monetary reform.
If the silver standard is abolished without authorization, it may lead to the warlord-controlled area becoming a country in the middle of the country, and the entire China cannot carry out normal economic activities.
Naturally, everyone knows that the silver standard is unreliable.
In 1934, in order to cope with the domestic economic depression, the United States announced the purchase of silver as a national reserve, with a total of 1.35 billion ounces.
Subsequently, the international silver price soared.
At the end of 1933, the silver price in New York was still $0.3501 per ounce, and rose to $0.5448 by the end of 1934, an increase of 55.6% in a year, and even reached $0.7442 in May 1935.
As China, the third largest silver standard in the world, silver outflow immediately occurred.
Prodigal businessmen colluded with foreigners and sold a large amount of silver to the United States.
, and silver is a currency made of rare metals, which is completely different from paper money, and the total amount of currency is limited.
, and China is not a silver producer. Half of the silver in China was imported from , Spanish in the Ming Dynasty, and it cannot be supplemented at all.
To put it bluntly, as much as the silver from China is shipped out, the less it is in China.
. Silver in other countries is regulated by the government. Except for a few jewelry silver, it is basically not circulated on the market and cannot be bought by merchants.
But Chinese silver is currency. As long as merchants have money, they can buy as much silver as they want. It is completely reasonable and legal.
Therefore, in 1934, the outflow of Chinese silver was about 257 million yuan, five times that of 1907, and as high as 188 million ounces of silver, sold abroad through smuggling.
For a time, the amount of silver on the Chinese market dropped sharply, the interest rate soared, the currency severely contracted, and the financial system suffered a major impact.
Many banks and money banks went bankrupt and the financial system was in chaos.
The most direct feeling of the people is that there are fewer oceans on the market and there is no silver dollar available in your hands.
In this case, people will panic and privately hide the ocean, while reducing all non-essential purchases to prevent the lack of money on their hands.
As a result, business in the country experienced a severe depression, and no one went shopping at will again, and the economy was in a serious recession. In this case, the reform of the currency system can no longer wait.
1935, the National Government stipulated that legal currency is the national legal currency, replacing the silver dollar on the silver standard.Change from the silver standard to fiat currency, and other banknotes will be recovered within a time limit; and it is also stipulated that all public and private funds must be collected and paid in fiat currency, and the market silver dollars will be nationalized, and one fiat currency will be exchanged for one silver dollar.
The reform of fiat currency is in line with the reform of the modern country's financial system and is of great significance.
fiat currency completely unifies the country's currency and also puts control of currency issuance into the hands of the government.
As a result, China's silver and other hard currency began to gradually concentrate from the people to the hands of the government.
fiat currency has an immediate effect, and the state can control the national economy.
In the subsequent eight years of the War of Resistance Against Japan, China's economy almost collapsed and was extremely difficult, and it was barely maintained by the legal currency system.
The Japanese tried every means to destroy the fiat currency, but they failed.
During the Anti-Japanese War , the National Government obtained basic civil war essential materials by issuing a large amount of legal currency.
Although this is a way to quench thirst by drinking poison, it will lead to severe inflation , and it is better than that of Emperor Chongzhen of the Ming Dynasty, who hanged himself because the treasury had no silver.
The total issuance of fiat currency before the War of Resistance Against Japan did not exceed 1.4 billion yuan, and at the end of the War of Resistance Against Japan it was 556.9 billion yuan, an increase of about 400 times compared with before the War of Resistance Against Japan.
100 yuan in fiat currency in 1937, two cows were bought, one cow in 1938, a pig in 1941, a chicken in 1943, and a fish in 1945.
fiat currency depreciates very seriously and is not at the point of collapse after all.
Inflation occurred in poor countries during the war, which is also a very normal phenomenon. The main reason is that fiscal revenue is far from being able to cope with expenses and can only print more currency.
Take the Shaanxi-Gansu-Ningxia Border Region as an example, and has issued its own border currency since 1940. Because the economy of the border region is also very difficult and the finances are insufficient, it is forced to discover a large number of border region coins for temporary emergency assistance.
The border currency issued in the second half of 1940 was more than ten times that of the first half of the year, and the prices in Yan'an also rose by 6 times.
By the first half of 1941, the price growth rate of Shaanxi-Gansu-Ningxia Border Region even exceeded that of National Government District .
Even so, the issuance of border coins is becoming increasingly out of control.
By the second half of 1943, the issuance amount reached 1.3 billion, and by the first half of 1945, it reached 5.4 billion. You should know that the population of Shaanxi-Gansu-Ningxia Border Region is only more than 1 million, and this issuance is indeed very exaggerated.
In terms of price index, the growth rate of border coins is far greater than that of fiat currency. In the first half of 1941, the price index of border currency increased from more than 900 to more than 1,900, and the fiat currency increased from more than 900 to more than 1,200. In the second half of the year, the border currency increased from more than 1,900 to more than 4,400, and the fiat currency increased from more than 1,200 to more than 1,700.
Because border currency depreciates even more than legal currency, many areas where the Eighth Route Army passed by refused to use border currency.
Naturally, whether it is border currency or fiat currency, inflation during wartime is nothing great.
As the War of Resistance Against Japan stops and military spending shrinks, these inflation will disappear.
countries can solve these problems as long as they issue new coins.
For example, after the founding of New China, a new version of RMB was immediately issued and exchanged for the old version of RMB 1 to 10,000.
Before this, ordinary people would spend tens of thousands of yuan on old coins when they go to department stores to buy some daily necessities.
However, the second civil war between the Kuomintang and the Communist Party broke out quickly again, and there was no way to talk about currency stability. The real collapse of fiat currency in
was in 1948, which is the defeat of in the three major battles of .
The reason why the legal currency collapsed is mainly because the people all believe that the National Government will inevitably collapse and the legal currency will inevitably become waste paper. Just like the Japanese forcibly used military ticket before their demise, no ordinary people were willing to accept it at that time. Everyone knows that the Japanese are in danger. What is the difference between paper money issued by such people and ghost coins? It may be worthless at any time.
As for gold coupon , it is just a dying struggle when the fiat currency collapses.
The war continues to deteriorate, and a series of battles have failed one after another. Of course, the reform of the gold coupon cannot be successful. People say that what you can't get on the battlefield is the same as the negotiating table. The same is true for
. If you cannot win on the battlefield, the regime will collapse, and there will be no economic stability.
From today's perspective, the gold dollar coupon seems to be before the fall of the National Government, and it is used to make a hard currency in gold and silver to make it difficult for the death to struggle.
To put it more simply, the National Government does not think that the reform of the gold yuan coupon will be successful.
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