EXPLAINS CENTRAL CONTROL OF FLUID CAPITAL AND PRICE STABILIZATION

Document Type: 
Collection: 
Document Number (FOIA) /ESDN (CREST): 
CIA-RDP80-00809A000600310659-6
Release Decision: 
RIPPUB
Original Classification: 
C
Document Page Count: 
2
Document Creation Date: 
December 22, 2016
Document Release Date: 
August 12, 2011
Sequence Number: 
659
Case Number: 
Publication Date: 
June 2, 1950
Content Type: 
REPORT
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PDF icon CIA-RDP80-00809A000600310659-6.pdf149 KB
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Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600310659-6 CLASSIFICATION CONFIDENTIAL CUP FIf1FP1T!A! CENTRAL INTELLIGENCE A( hG . P:3R INFORMATION FROM FOREIGN DOCUMENTS OR RADIO BROADC'A 7h Cr I'0. COUNTRY China r,;ATE OF SUBJECT Economic - Fiscal control iNFOPMATION 1950 HOW DATE DIST. a, Jun 1950 PUBLISHED Daily newspapers WHERE PUBLISHED Shanghai; Canton; Hong Kong NO. OF PAGES 2 DATE PUBLISHED 17 Apr - 7 May 1950 ,LANGUAGE SUPPLEMENT TO REPORT NO. EXPLAINS CENTRAL CONTROL OF FLUID CAPITAL AND PRICE STABILIZATION 1111 DOOUNUT CONTAINS INPOONATION Iu11CTIIS Till NATIONAL 11111111 OF Till 111110 STATES WITNIN TNt 11A1N11 Or ESPIOSAN9 ACT 11 N. 1. o.. 1I ANO 11. At A1uo10. In nAl/U1t$lox 00 TN1 DSTESATI00 Or 111 C01T11n IN ANT 1A1111 TO AN UTAUTWO11110 FAR ON It 11O- NumO 11 LAW. IVOOOUSTUN or TNU room to 11ONIUITCO. The idea of control of the nation's fluid capital by the national bank, that is, the People's Bank of China, is that the bank shall become the re- pository for the funds of all government enterprises as well as for much of the nongovernment capital. The bank may accomplish this by becoming the agency for most collections and disbursements of business intercourse such as collection of utility bills, sales of transportation tickets, issuance of travel insurance, and a multitude of other things in which it may serve the public. In other words, the national bank shall be the great national capi- tal reservoir into which all income flows and from which all expenses are dis- bursed. The reason for this system of capital control is to accumulate, in the na- tional treasury a great reserve of ready capital so that it will be unneces- sary to increase the issue of currency to have funds to stabilize the currency and the prices of goods. With this great reserve of capital in hand, the gov- ernment can promote production and thereby promote the general welfare of the people. The control, especially of government enterprise capital, which this plan places in the hands of the national bank, and thus in the hands of the govern- ment itself, enables it to prevent wildcat investments, to control the handl- ing of funds by government agencies and enterprises, and to prevent defalca- tion and waste by its power to withhold appropriations from any enterprise that is not operating according to the economic and financial principles laid down by the financial authorities. All enterprises seeking loans must fall into line with the government policies to secure them. Control of capital by the national bank is the prerequisite for carrying out the accounts cross-settlement; policy among all government agencies, mak- ing it unnecessary to use any cash funds except 'for petty cash transactions, thereby avoiding waste. It is necessary for the national bank to concentrate N'IW AIR R VC NSRB FBI Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600310659-6 Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600310659-6 1 f. nlNF!2 c&t"l1 A! and control capital to make needed loan adv+aces to -~ott? government and pri- vate enterprises. These loans are part c. the g:.e.'?'__ .e,: for increasing na- tional production, and therefore an important part of th,^ national fiscal pol- icy. NORTHEAST SLOWS CURRENCY PRINTING -- Hong Kong Ta Kung Pao, 7 May 50 Mukden, 6 May (Hsin-hua) -- Necessary capital for urge-scale economic reconstruction in the Northeast has been made available thus far in 1950 with- out any additional issuance of currency by the Northeast Bank. This factor and the current stabilization of prices are due to the new currency control and bookkeeping systems adopted by the Northeast in the past year, which have in turn speeded cash clearances and reduced expenditures in cash. An examination of the results of the new system from its adoption by state enterprises and government agencies until the end of 1949 reveals that it succeeded in cutting cash transfers in transactions between the various ex- ecutive agencies by 83.3 percent. During the same period, bank deposits dou- bled and an increase was shown in the issuance of bonds. This kept prices for the 1949 period from rising over 80 percent, and greatly facilitated economic reconstruction. In the first quarter of 1950, since cash and credit operations have been centralized under the Northeast Bank, payments in cash have been reduced even further. By the end of February 1950, treasury deposits had increased 3.5 times over the amount recorded in December 1949. PRICES DROP IN CENTRAL AND SOUTH CHINA -- Hong Kong Wen-hui Pao, 1 May 50 Hankow, 30 April (Hsin-hua) -- Between 1 March and 14 April 1950, the prices of salt, cotton, cotton yarn, textiles, and rice dropped, 45.62, 21.43, 11.28, 33.22, and 26.29 nercent, respectively, or an average of about 34.75 per- cent, in the Central and South China region. The average percentage drop in comnDd- ity prices in the major cities of tnis region during i.he same period was as follows: Canton 41.2, Wu-Han 38.19, Nan-ch'ang 36.95, Cheng-chou 29.82, and Ch'ang-sha 27.6. STATE-OWNED ENTERPRISES PAY TAXES -- Canton Nan-fang Jih-pao, 25 Apr 50 Canton -- Taxes on the 61 state-owned enterprises in Canton for the first quarter of 1950 amount to 4,031,877,856 yuan, of which 3,527,640,856 yuan had been paid up to 19 April 1950. The five concerns which have not yet made pay- ment are the Canton Foodstuffs Company, the Canton Branch of the Kwangtung Transportation Company, the Hua-nan Foreign Trade Company, the Hua-nan Trans- portation Company, and the Canton Department Store Company. Sanitized Copy Approved for Release 2011/08/17: CIA-RDP80-00809A000600310659-6