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Persistent Monetary Fight Against Financial Invasion by Japanese Puppet Regime (1939 - 1943)


 

After launching the invasion war against China, Japan put military pressure on China and lured Chiang Kai-Shek into surrender. In addition, they carried out an "economic invasion" in order to break down the government by financial and economic means.

As an international exchange bank authorized by the government, Bank of China was fighting against the Japanese puppet regime on the frontier of the financial war. It took all possible measures to resist the financial invasion from Japan.

I. Flexible and covert approach adopted for remittance payment

Bank of China Shanghai Branch needed a large amount of legal tender notes to pay the remittance in Tianjin and other places, to stabilize exchange discount of Shanghai and cope with the withdrawal of itself and affiliated banks in Nanjing, Hangzhou and other places. In the special circumstances, banknotes and bills could not be delivered by the bank itself and inventory reserve was limited. Thus, cash transportation and capital allocation were carried out via HSBC. Bank of China Hong Kong Branch entrusted HSBC Hong Kong Branch to ship the cash and bills to HSBC Shanghai Branch and then transferred them to Bank of China Shanghai Branch in batches by means of inventory as covertures, and the accounting was not reflected in the book of Bank of China.

Government authorities' remittance to Shanghai was concealed. Since September 1940, all military remittances from Chongqing to Shanghai were delivered to Hong Kong first, and then to Shanghai via Bank of China Hong Kong Branch in case of exposure.

II. Effort to maintain the status of legal tender in North China

After the establishment of Japanese Puppet Joint Preparatory Bank, Bank of China Tianjin Branch stopped providing and selling foreign exchanges. During that period, legal tender price in Shanghai was higher than that in Tianjin because the needs of transferring private fund to the South and purchasing materials from the South caused frequent remittances to Shanghai. To maintain legal tender note circulation in North China, Bank of China Tianjin Branch and Bank of Communication Tianjin Branch decided to charge handling fee of 0.1‰ on remittance to Shanghai; legal tender note marked with "Shanghai" were also accepted. As domestic and foreign banks in Shanghai Concession still purchased and sold foreign exchange with legal tender notes, and legal tender notes marked with "Tianjin" could be remitted to Shanghai and used to purchase foreign exchange in Shanghai, this increased people's confidence in legal tender and maintained its leading position in enemy-controlled areas in North China.

Legal tender notes marked with "Qingdao" issued by Bank of China Qingdao Branch were also forced by the Japanese puppet regime to be devaluated and forbidden from circulation. To protect holder's interests, Bank of China entrusted HSBC and Standard Chartered Bank to collect and exchange legal tender notes via their Qingdao branches, to which the advanced payment would be returned by Bank of China Shanghai Branch. From March to May 1939, Bank of China Shanghai Branch returned 3.5 million yuan in all.

III. Refusal to surrender the inventory silver in Beijing and Tianjin

Bank of China had inventory silver of over 20 million yuan in Beijing and Tianjin. The portion in Tianjin was stored in Bank of China's storehouse in French Concession, and the portion of Beijing was stored in the storehouses of Industrial & Commercial Bank of China-France and Calyon Bank in the embassy area. In order to get the silver, the Japanese resorted to both mild and severe measures to the leaders of Bank of China Tianjin Branch for several times, but they were rejected. And with the protection provided for Band of China Tianjin Branch by British and France embassies and consulates, there was nothing the Japanese could do.

IV. Boycott against Japanese puppet regime to issue Central Reserve Bank Certificate

Before the establishment of Puppet Central Reserve Bank of China (PCRBC), the Nationalist Government held a financial meeting to arrange boycott against the Central Reserve Bank Certificate. PCRBC forcibly promoted the counterfeit money relying on their military and political force and Wang Jingwei's puppet government forced Bank of China Shanghai Branch to accept their deposit of Puppet Central Reserve Bank Certificates. At first, the bank refused with the reason that no new account could be opened, but then it was forced to note on the passbook "the certificates to be paid with zero interest". Later, the fight between legal tender and Central Reserve Bank Certificate was even more severe, resulting in a series of terrorist movements such as staff of Bank of China shot by the spies of Wang's puppet government with two people died and one injured. The situation was very tough.

V. Support for the rush purchase of materials in enemy controlled area

After the outbreak of the Pacific War, the financial and economic battle against Japanese puppet regime was converted from a monetary-financial war to a material-economic one. In June 1942, Nationalist Government worked out Outline for Acquisition of Materials During the War, specifying that "as for the fund for panic purchase, the purchaser shall apply to the competent authority which would consult with state and local financial authorities for the convenience of remittance and exchange." To follow the Outline, Bank of China head office requested active cooperation from each branch.

Bank of China participated in the preparation for establishment of Tong Ji Trading Company for rush purchase of materials in enemy-controlled areas and stabilization of commodity prices in the inland. Upon establishment, the company purchased 4,000 units of cotton yarn and cloth from Shanghai as well as a batch of cotton yarn from Anhui, which were delivered to the inland safely.

During the period of Anti-Japanese War, Bank of China persisted in monetary fight by taking targeted measures, which helped protect the assets of China to the largest extent and maintain the creditability of legal tender, thus effectively boycotting the financial aggression launched by Japanese puppet regime.

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