Manchuria Notes: A Regional Monetary Policy from 1945~1948
Date Issued
2010
Date
2010
Author(s)
Chen, Chang-An
Abstract
Abstract
The thesis aims to analyze and describe the formulation, purpose, effect and issuing process of the Manchuria Notes, promulgated as a regional monetary policy by Chinese Nationalist government, and its policy of economic recovery in Northeastern Provinces (Manchuria) after V-J Day. On September 9th, 1945, the Soviet army invaded Manchuria, defeated the Kwantung Army, and occupied Manchuria. During the same period, the Chinese Communist Party (CCP) intended to take control of Manchuria; while, the Chinese
Nationalist government in Chungking had already planned to send troops as well as recover the dominion of Manchuria from Soviet occupation through diplomatic negotiations. The contest between Chinese Nationalist government and CCP for Manchuria became more and more intense, after the Soviet army retreated from Northeast China. It was one of the causes of the beginning of the civil war.
Nationalist government formed the Economic Commission of the Northeast Headquarters, and designated Chang Kia Ngau, financial expert and ,the former vice-president of the central bank, as its chairman. He was in charge of making economic policy and negotiating with the Soviets about economic affairs in Manchuria. He knew that Manchuria was under the control of Japan, being separated from China proper for almost fourteen years; the Japanese had established a new currency system, taking advantage of abundant natural resources, and founding the basis of industrial development, so the economic situation was quiet different from China proper. Besides, compared with China proper, economics and industry in Manchuria didn’t suffer serious devastation from war. How to integrate and link two regions that had undergone economic development and used different currency systems was a rather complicated challenge. After consulting with many financial experts and bureaucrats, he decided to construct a new currency system in Manchuria, by means of issuing the Manchuria Notes as a separate regional currency, dividing China proper and Manchuria into the Fapi currency area (Fapi was issued by Central Bank of China since 1935) and the Manchuria Notes area. It was set to be a transitional policy in order to redeem notes issued by the Central Bank of Manchou (Manchuria) and Soviet Red Army, and to contain against the rapid inflation in China proper until economic integration is ready to proceed. The political and economic considerations of the Manchuria Notes were profound.
However, situation of Nationalist government got worse in Northeast China.The CCP’s forces gradually surpassed that of the Nationalist government. The currency area of Manchuria Notes also diminished because the competition of the CCP’s Notes. Nationalist government had to issue more Manchuria Notes for the financial deficit resulted from enormous Military expenditure. Moreover, it didn’t cope with the economic problems introduced by exchange control of Fapi and Manchuria Notes very well, which brought about rapid inflation and a predicament. On August 19th, 1948, Nationalist government carried out reforms, redeeming the Manchuria Notes and the Fapi to deal with the crisis; nevertheless, it failed at preventing economic disintegration. Two month after the reforms, Nationalist government’s troops were defeated by the CCP, retreating from Manchuria. So, another focus of my thesis is how Nationalist government enforced its economic in the recovered territories like Manchuria and why it failed.
There are various researches on Nationalist government’s recovery of Manchuria in most of which concentrates on aspects of the military confrontation, diplomatic relation, and the activities of the Nationalist Party ; only a few researches are about the economic policy. Base on these researches, my study start with an analysis of the Manchuria Notes as a monetary measure, discuss the historical significance of Nationalist government’s economic recovery scheme and the enforcement of that policy in Manchuria, and how does it tell us about the conflict between Nationalist government and the CCP.
Subjects
Nationalist government
Manchuria Notes
Economic recovery
CCP
Civil war
Rapid inflation
Exchange control
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