Previous article, Inflation Story: 1 pound of bread 1 trillion marks, talking about the end of World War I, the Deutsche mark depreciated directly as firewood.
Some friends said that the recent price of pork is only 10 yuan a catty, the original peak of 40 yuan a catty, to persuade everyone to hoard more pork for the New Year.
Continue with the inflation story today.
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1
Ling Fox asked, was the inflation during the Nationalist government worse than the hyperinflation of Germany in World War I?
The Undefeated East said, let's first look at the price situation during the period of the National Government.
In the first two years of the War of Resistance, prices rose more slowly; after 1938, the increase accelerated.
By the end of the War of Resistance in 1945, prices were 86,400 times higher than before the War of Resistance in 1937.
Prices in December 1945 rose fivefold from September. In 1946, it was up 6.7 times from the previous year.
In 1947, it increased by 13.76 times over the previous year. In August 1948, it was 55.1 times higher than at the end of 1947.
On August 19, 1948, the government implemented the reform of gold yuan coupons. On the same day: 58.33 million yuan per stone meter, up 62 times over the previous year;
Every two gold 508 million yuan, up 60 times over the previous year; 1 US dollar for 10.7 million yuan, up 78 times over the previous year;
But the reform of the golden yuan coupon failed, and the price rise was even crazier. Even up multiple times a day.
From the end of 1945 to May 1949, in just four years and five months, prices rose by 41.1 billion times.
From June 1937 to May 1949, prices rose more than 360 billion times.
Undefeated In the East went on to say that the following examples are more intuitive.
(1) At the beginning of 1948, hawkers in some places bought legal tender below 100 yuan as waste paper, at a price of 2,000 yuan per kilogram, while the purchase price of old newspapers was 6,000 yuan per kilogram.
(2) In May 1949, Xinjiang Province issued gold yuan coupons with a face value of 6 billion yuan. According to records, a total of 4.8 million of these 6 billion yuan banknotes were issued, with a total amount of 288 million yuan.
This 6 billion yuan golden yuan coupon could only buy 70 grains of rice in the Shanghai market on the eve of liberation.
A 6 billion yuan of gold yuan issued by Xinjiang Province
(3) The purchasing power of 100 yuan of legal tender has dropped sharply.
In 1937, 100 yuan could buy 2 cows; by 1945, 2 eggs; by August 19, 1948, 0.002416 rice; by May 1949, only 2.45/1000 grains of rice could be bought.
(4) The 1 yuan coupon used to buy a large cake weighs 120 pounds; 2 28-inch suitcases filled with 1 yuan coupon can mail a flat letter; and the 4-and-a-half-ton truck filled with 1 yuan coupon is enough to buy a stone of rice.
U.S. military officers in China light cigarettes in french currency
2
Ling Fox onion asked, is the inflation so serious during the National Government period also because of the excessive issuance of currency?
The East undefeated said, yes, the direct cause is only the over-issuance of paper money.
Ling Fox onion asked, how powerful was the National Government's over-issuance of banknotes at that time?
Dongfang Undefeated said that in the early days of the War of Resistance Against Japanese Aggression, the growth rate of currency issuance was relatively moderate.
In June 1937, 1.41 billion yuan was issued. In June 1938, it issued 1.73 billion yuan.
At the end of 1939, 4.29 billion yuan was issued. Circulation began to double every year.
At the end of 1944, 189.5 billion yuan was issued, more than 2.5 times that of the previous year.
In June 1945, it issued 397.8 billion yuan. At the end of 1945, 1.0319 trillion yuan was issued. It is more than 2.59 times the circulation half a year ago.
At the end of 1947, 33.1885 trillion yuan was issued, more than 8.9 times that of the previous year.
On August 21, 1948, 663.6946 trillion yuan was issued, an increase of 470,7044 times over June 1937.
May 1949 currency issuance increased by 144.566 billion times compared to 1937.
Yu Hongjun, the finance minister of the National Government, admitted in 1946, "From January to May ... Taxes are only 250 million, about 1/6000 of expenditure, and a huge fiscal deficit is made up by the issuance."
The Shanghai Mint prints paper money around the clock
3
Ling Huliang asked: During the Period of the War of Resistance Against Japanese Aggression, the excessive issuance of currency was still relatively restrained, so why did it become more and more crazy after the end of the War of Resistance against Japanese Aggression in 1945?
The Undefeated East said that during the War of Resistance Against Japanese Aggression, the economically developed areas along the southeast coast where the main source of the National Government's tax revenue were occupied by Japan, and the taxes were also plundered by the Japanese invaders. As a result, government taxes have been greatly reduced, and more and more reliance has been placed on the over-issuance of paper money.
After the end of the War of Resistance Against Japanese Aggression, followed by the outbreak of civil war, the United States, which had supported the Nationalist government, cut off military aid in August 1946, and the Nationalist government's finances were even worse off, and it could only supplement the finances by printing and distributing currency.
Ling Fox onion said that the currency is so crazy that paper money is depreciating all the time, can the people not take paper money, hoard gold or other hard currency?
Dongfang Undefeated said that the idea is good. However, at that time, the National Government stipulated that private individuals were not allowed to hold gold, silver and foreign exchange, and that they were redeemed into gold coupons within a certain period of time and confiscated after the deadline.
Ling Hu onion said that it is strange that the National Government has not fallen down in this way. The common people have been plundered too much.
Dongfang Undefeated said, yes, not only in the period of hyperinflation, in fact, many times, ordinary people have to find ways to deal with inflation.
We will discuss this from time to time in subsequent tweets. If you are interested, please pay attention.
Key References:
1． He Shuijin, "A Comparative Study of Hyperinflation in China and Germany", Social Sciences, 2007(08).
2． Wu Jinwang, "Comic Inflation", China Finance Publishing House, 2015.
3. Compilation of Price Data Before and After the Liberation of Shanghai, Shanghai People's Publishing House, 1958.
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