Chapter 212
Chapter 212
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Translator: crow
Chapter 212
Chapter Title: Currency Reform
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Europeans were busy arguing about militarism or neoliberalism, what was right or wrong, but to the Chinese, it was all just the whining of the well-fed.
When you're struggling just to get a bite of rice into your mouth, ideologies and doctrines don't mean a damn thing.
Solving the problem of survival came first.
"When the hell is the price of rice going to stop rising?"
The Republic of China was suffering agonizing pain from runaway inflation.
Ironically, the warlords who had triggered hyperinflation by printing legal tender like mad were hurting just as badly.
"Vice Premier Sheng, we can't even cover the cost of the paper it's printed on anymore."
The Chinese warlords were trembling in terror at the disaster they had unleashed.
The fallout even reached North China, managed by the North China Railway Company.
The North China Railway Company was horrified by the plummeting value of the legal tender.
"What the fuck are these lunatics doing, printing money like it's going out of style?"
The company had been raking in massive profits, but as the value of Chinese legal tender tanked, it flipped overnight into a money-losing operation.
When the 1957 account books were released, shareholders screamed in outrage.
"No way a company that was killing it can't even cover maintenance costs!"
"At this rate, we'll be jumping into the Hudson River! Come up with a plan, damn it—a plan!"
The North China Railway Company posted record losses and kicked off a historic crash.
It slid from peak to one-tenth in the blink of an eye.
"It's slipping!"
The massive plunge in North China Railway shares sparked what became known as the "China Shock."
"Investing in the Republic of China is insane!"
Soon, newspapers warning against Chinese investments flooded America and Europe.
"Sell. Dump every single China stock. The way out of the Republic of China market is to run."
Already reeling from a drought of foreign investment, the Republic of China took a fatal blow from this capital flight.
Chiang Kai-shek's headquarters in Chungking held meetings on the issue every day.
"Your Excellency, we can't hold out like this. We need to launch currency reform at once."
Chiang Kai-shek felt the gravity of the situation.
Hadn't his predecessor, Li Zongren, crumbled partly because he failed to handle hyperinflation?
Chiang Kai-shek had no intention of repeating Li's mistakes.
"First, we'll change the currency. Prepare for redenomination."
Chiang Kai-shek readied a currency reform that would slash the unit by 1/10,000th.
But China was a country where security was lax.
"What? Redenomination? Then print high-denomination bills fast!"
Once warlords caught wind of Chiang Kai-shek's reform plans, they started cranking out ultra-high-value legal tender.
Of course, Chiang had spies planted among the warlords.
The moment he heard they were printing ultra-high bills, he devised a countermeasure.
"We'll set a cap on the amount of currency each person can exchange."
The warlords, who were just printing money out of thin air anyway, could eat the loss.
But up-and-coming tycoons felt like they'd been clubbed over the head when they heard about the exchange limits.
"What? Has Chiang gone mad? And we supported the bastard."
"What's the point of holding this money!"
In protest, people started burning Chinese legal tender and dumping it into the Yangtze River.
Chiang didn't bat an eye.
'Even if there are side effects, I can't let the warlords fatten up.'
To unify China, he had to strip the warlords of their economic power as much as possible.
Forged bills already in circulation were one thing, but he couldn't allow more profits.
Chiang's resolve was the government's resolve.
Despite opposition from countless people, the currency reform pushed ahead.
"Oh man, we're screwed."
Old-money elites who had accumulated wealth in land or hard currency like gold and silver took less of a hit.
But the new rich, built around businesses, couldn't weather the blow.
"I'm filing for bankruptcy."
A fair number of companies collapsed, unable to ride out the storm.
China's already fragile economy shook once more from the impact.
"Looking at how the country's run, supplies are definitely going to run short."
Merchants refused to put goods on shelves even after the reform.
They shut down shops and markets entirely.
As a result, prices rocketed sky-high again despite the reform.
"They wipe out our savings and jack up prices anyway. Is this politics? Is this governance?!"
When public discontent peaked, Chiang threw out an emergency fix.
To stabilize prices, there was only one way: flood the market with massive imports.
"Request aid from Korea."
Chiang had no choice but to bow his head to Korea, China's longtime antagonist that had exploited them.
Even after Chiang made that call, the Korean government didn't respond to the plea.
"We need some prep time too, so wait."
Truth be told, Korea had the capacity to help China if it wanted.
The reason they dragged their feet was simple.
'Why reach out and help when leaving them alone will just weaken China?'
There was no Communist threat forcing Korea to prop up the Republic of China this time.
Faced with Korea's lukewarm response, Chiang had to roll out drastic measures.
"Anyone hoarding essentials like food will face the full force of the law."
Chiang issued the decree and deployed state power.
But such tactics fell flat.
Tycoons and warlords with deep pockets were untouchable by China's authorities.
Cops and soldiers lacked the guts to lay hands on them.
Chiang had no choice but to play his last card.
He appointed his son, Chiang Ching-kuo, as head of the Price Control Committee with full authority.
"You take charge and fix this. Punish anyone who doesn't comply on the spot."
Chiang Ching-kuo, pistol at his hip, led a special squad under the committee and went out to requisition supplies.
But even Chiang's last hope, Chiang Ching-kuo, hit a brick wall in reality.
"You're the premier's son? Got it, but what does that have to do with us releasing our goods?"
"This is an order from headquarters!"
"And if we refuse?"
"Then we might have to shoot you."
"Go ahead and try."
"You... you..."
Warlords and tycoons bared their bellies in defiance before Chiang Ching-kuo.
It came from confidence that touching them would topple Chiang's regime.
Chiang Ching-kuo slunk back to headquarters empty-handed.
Chiang had no choice but to offer a compromise to his enemies.
"We'll raise the exchange cap, so release the goods."
Only then did merchants and warlords start putting out supplies.
Of course, the extra exchange allowance fueled even more inflation.
In the end, China's currency reform ended in half-success.
At least it put an end to the warlords' hyperinflation—that was a positive.
But it tanked the Chinese economy in the process and destroyed faith in legal tender.
Now, people shied away from saving in Chinese currency.
"The government could slap on exchange caps anytime and turn it to toilet paper—how can you trust it?"
Once that mindset took root, the currency was as good as dead.
Even for buying bean sprouts at market, Chinese wanted foreign money.
"No legal tender."
"What? We're in our country—shouldn't we use our money?"
"Nanjing yuan or Korean won. Dollars work too."
"Where am I supposed to get foreign cash on the spot? Take legal tender."
"Fine, we'll take it—but it'll cost more."
Legal tender became currency of last resort.
As a result, Chinese spent it the instant they got it.
On bricks, wood, stones—anything that seemed to hold value.
"That's more efficient for savings anyway. Who trusts scraps of paper like legal tender?"
Even tycoons thought that way.
The rich clung harder to traditional stores of value: gold, silver, land.
This turned China's wealth gap into an even bigger chasm after the reform.
Chiang wasn't blind to it.
But even the great Chiang lacked the nerve for a second reform.
Public sentiment was already boiling over from the first one.
Warlords seized the moment to push hard for provincial autonomy.
"See? Centralizing currency wrecked the whole country at once. If provinces ran their own books from the start, the whole of China wouldn't be in chaos."
It was brazen bullshit, but ordinary folk ignorant of the real issue bought it hook, line, and sinker.
"Even under Governor Yen in Shanxi, things were quiet before legal tender hit."
The more traction provincial autonomy gained, the more Chiang's dream of a unified China evaporated.
In the end, it wasn't Korean guns or swords that delivered the final blow to the ideal of a united China.
Money.
The sheer mass of currency printed by warlords had wrecked the country.
"In the end, I'll go down as history's sinner."
Chiang realized he couldn't even attempt unification in his lifetime.
No—first, he had to break free from the dominance of foreign currencies like Korea's.
As if that would be easy.
Chiang covered his face with both hands against the onrushing despair.