THE NEW DIRECTION OF FINANCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00039R000200060017-6
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 99
• Document Creation Date: December 22, 2016
• Document Release Date: March 28, 2012
• Sequence Number: 17
• Publication Date: June 26, 1952
• Content Type: REPORT

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the New p~r~c,,, ~0n ?~-Fjt.'r=
Ch-Y' Yeh Ti Hs inai ~an
Shang-
han
~.n~ ,
hsiang9 Wand We:~-ts
hai, October 1951
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50X1 -HUM
50X1-HUM
 PRFACE
~ the radual stabilisation o:C' curre:l~cy
since liberation, because of g
ansion of produCtion, the correct
and prices, the resumption and exp
ank and the reliable efforts of
le~~.dership of the Chinese ~'eoplr. I s ~ ,
'1~ has passed t'nrouh x~farm and
banking; ernplayees, the bank~.nbusiness
and industxYfor the cxp~~nsion
construction and begun. to serve trade
r~:e.
of production ,
just ncti^r, the b::.nl:a.ng business is underg,aing further recar1st1 action
owards collect:~ve management' At
~ld is advancing in a new d~.roct~.an t
an
~r the Common j'rofJlralTr, it uhould cnc;oura~;e
the sang time, accord~.nto
private .,-~,pc. ~1r1.lion in the d:i.rection of national
,
capital ' s sf~~irit o r ~
capital and ra:Lsing the proportion of na.. ~0nal capital.
anct i n uevelopint .
io d~rectiorls, the
t
r
i these
It by effortsn .. may be firmly believed that b,1 r
the Cr~.rrese People bank, will
~~. ;i China ~ s fiinancial system, headed by
~~e la,nned national
and firm, will more and more develop a p
be more regular ~h tide of economic,
creasir~g~-:Y pave the way for. a hi,,
e c an omy, and will ' ~n
reconstruction?
h have been pub
f ulhic
ieles, all o Here are collected l~. short art a1
as and the Cha~_. Chou- , ao ? In general
Jih
lisher.~ in the Clueh-fang _..~...,~-,- rh ref
rm and
'
tang Nei" ts' an.
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o
.opwent of the Eankirrg bus~.ness throw,
the devel
they trace
offered to
l1
y
the new road. They are respectfu
recanstruct~.on to
and correction ?
iticism
I await cr
financial workers for reference
 TI ROAD FOR PRIVATE BANKING
Does private banking have
economic system?
I claim that it has.
As is well known, the "New Democracy" economics embraces five
categories; State-operated economics; co-~.:peratives econoiriics; indict
vidual economics; private capital ecc,norrrics; aria national capital ec-
onomics. At the same time, the "Tlew Democracy" economic policy is to
develop production, advance the economy, protect public and private
interests, and. ensure profit to both labor and capital. Therefore,
private banking that serves to foster social wealth and, helps incre~.so
production, can not only survive, but will also be protected.
How~vcr, looking at it from rr the present subjective conditions, does
private banking adequat ;ly fit into the ec uno tic policy of the New Uem-
ocracy?" T think not.
For this r..ason, let's make a brief' investigation.
First, we should explain the nature of Chinese, financial capital,
especially that of Shanghai. u/e should frankly confess that for several
decades it has in part been basically compradore capital, and has been
associated with bureaucratic capital. We likevd;3e confess that some of
the money-shops have drawn their capital from the villages, and have long
been linked with commercial capital. There:E'ore they have not yet wholly
rid themselves of feudalism. We also see clearly that after victory in
the 'War of Resistance, a portion. of the financial capital that poured
into Shanghai, from ,he hinterland, represented certain social strata just
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.,, ,s, It was the financial ca'pi'tal of
as it had in Shanghai for many y~ax 'st
' rowri. up under the ~l~apanese ~.~i~~per~.ala.
speculatve nature ti~ha.ch had
re g irae .
oal conditions in bax~ka.ng? It cannot be
act
Let us also look at the ,~' or ~ he real stren~~;~tJr 0? bk1 ha greatly
denied that for 10 years or so ~
at the end o? February this year (19La9),
decl'.ned. 1~1a-th rc~axd depos~,ts, at
tra ,, .,, .:nalts r. 219 private r'iva~te bs,nk;~ was ~, > ~9, 6UU, UU0
co rn total of deposits in Shang:e '' ''lUu old bars;
'icatcs, ;north at that time, sortie a g
an in k~ous Gold Cez t' ~. ^ c , ~ in vat~
liberation, the s + m total of dpo3~.t5 pri
about the t~.me o~. the vrorth at that
OUO 000,UUO,000 in Go1d. Certificates,
banks was about 3, , ~ when the
old.. How different from before the Vuar, when t~11e some 1UU bars of ~ and pronesiaops
per notes) in Shanghais 76 banks an Y?-
sum total of ~'' - pax 7 d bars ! Of
uivalent at 'ghat Limo to L70,000 ,o1
was x,70, UOU, UOU an, e~:
course the rnaking of this a.mpecLtna. ' oL7s condition must chiefly be darned
on an : reactionary ~;ove:rr~n1ent which
the grasping policy of the om' ~.nt~
a.sed currency inf r.ation as a te~'i:lfliC14.Ei.
~.
the operations o:~: private banking became very
Under such conditions, th ~ almost
ansactions were gone; trust actiVitieS were
?tr~.flin~; . Savings ~av~.ng~ tr
one; exchange, deposit azld loan business also gradually dwindled' And
g
. rt~- ~on, activi~.ies i the speculate arc: market
because of accelerated in.E.la , ~.
arid the c~lrrerro;~ turnoVUr.' b~:c':11 Y fl came in fact
sort of receiVing and paying organ for receipts and actual cash.
merely a s-houses" or
ttaccouritin~
were rid7.culed as being mere .f
'ghat is why banlcs wen sensitivity to the
At the same time, because of bankingts
speculators.
,
of soldiers, politicians, trouble-1a4cer5
whole market a large number .
ot: .1*
,,,I`pti,,r^ lili
~~~~~~ x),11 1
! -,:a!;P
?
"'4~ t~Y'ti
_3
iIL
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y4~~ +~ft "#P4{i4~ ~I'lt~~~ I ~l
Declassified
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and speCUlatare moved into the ba.ikinbusiness, making con?usion worse
dud. So durin ; the regime of Japanese imper:ialisrrt, private bani.,
cons Darr
reached a peak nwn.ber of more than aUO. `Then under orders
in Shanghai
from the Kuomintang reactiorxar'y government, many oi' them closed their
doors, and now only about 200 rerriain..
rih~, ~s the simple character of banking deteriorated, and banks lost
toue.,h with the broad savintr classes, and became alienated, from trade
Stil7. more serious, ba,lkin; basically relieu art (directly
and industry.
or indirectly) speculative activities in order to survive. Last year
( 19 August), when the bonus Fapi were changed for Gold Certificates,
speculative activities were somewhat cu2bed; balking actiJities becaiile
un.steacil and tended to collapse ?
Cher, we m..;y iriention solar( unhealthy t,ndenciCS ~ithin private
bal~~?'i.. There are shoum in careless business tra.isaetions such as
.~.i ~;
; ositloans on a personal rather than ?`inancial
~.n~, of ~ .
irregular handl dcp
reckless issuing of notes; hidden ledgers; discountin r exchange-
basa.a,
balls and using dishonored. chejue$ to make up the aanount ext vague
~vn in poor management, such as a general lack of democratic
Some are . sha ~.
spirit; adopting a severe attitude towards employees; poor personnel
schemes of cornrnendations and a false system fo test-
sytein, unfair
banks and money-shoPs; lack o?' harniony among big, medium, and small
with other baiks; blind competition; lack of connection between
ld fry ons
the vogue of bowing to the master; questionable re-
credits; reta.inin
financial institution,, etc.
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of coua: se all these are now past and such subjective defects c ni
no longer continue. !her fore the most pr$ss ifC; bask for private bank-
irrg now is to make a caruf'ul self-exarninatiori on how to overcome these
defects. ~uithout a deterriiination to recognize and overcome these defects,
sooner or later mistakes will be made.
l~nct so hovt cal private banking fit into the economic policy of the
'New Democracy?" I believe there should be effort aloe. three lines
1. Serve the People.
Today Ciiina has bsicaliY eir.tered pon an era of people's
democracy. Consequently all work, all business, all must serve the
people . All must seek the people's welfare) . Of course, baking ca,. not
be aJ exception. using the words o?' ivianager Chen l~iu of the Shan hai
branch of thc; People's Bank; "The great doors of the banks must be opened
.,
for the 7eo~rle. All persons engaged in private banking should take a vow
~
to serve the people and eradicate t}.ic former errorreou. ideas that banking
s a bit higher than the people. :ever again should a bank appear to
cs of ordinary folk as a ' government headquarters", but more like
the y
ea-house which they cai enter at any time. e can positively assert
at
without such a fLU~darnental change, any person, any business, will
that
meet ruin."
2 Link up with Production.
If China wants to be independent, free, rich and strong, she
must devote ote her strength to expanding pr+"oduction. Private banking should
stand that production is the basis of all economic activity
clearly under
that banking follows production and is subservient to it. If pro-
and
('1 n cannot expand, then neither can banking. Only as production goes
due doll
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 j;\,,,.
C1F13Ei''T
SccurY
ahead happily can banking have a i'uture . Therefore all thoughts oi'
speculating, risking, borinin, Must be cast aside, and replaced w.Lth
undivided, honest study and plaaming on how to draw in. capital and
alp)?1Y it to production.
3. Set up a UemocrtiC SystC,t.
Unless there is a.:~ active spirit oj: work among the employees
who carry on the actual work, nrivatu banking cannot develop ev1n wb.en
it wants to. i' is means first the e~3tab1islun of a fine labor--capital
relationship, in line with the principle of "wrlsure the profit o?' labor
and capital." At the same tune, there should be i'r querlt executive con-
;
ferences in which employees have a voice, to hear employees sugestioT1S
and criticisruS as to management and operations. There should follow a
discussion in which all take pare. Let all a:orrLler undemocratic arrange-
merits b" ~;radually discarded. i'he exployees should actively work, earn-
estly learn, striving hard to expand production and raise the quality
of banking.
private bankin, travel a s~,tooth road under the guid-
Only thus can P
ance of the People's (iovernraent.
10 July 19Li.9 ?
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 kRLY STEPS IN T tE REFORM OF pRIVATiBANKING IN aHj NUr>Ai
The ? rry P ethod for ontrol1i1if; p'riva'te Banlca-n in the 1Jast
Tempora
China Region,t published on 21 Au..~~us't (19.9), is in fact a me~.sri'Gr
-
zr--Stablishirig private bakifg . ;'erne people have seen in this method
eE
of cor.~trcl si.lm)ly a 'method o~ ' ref oranincapital, bu. t that is a mistake.
~
?~'ox^ th: rexorrn o capital and renewed registration is only an item in
'
control. At the sae time, I claim that even if
~ .~ the total riiethod of
priuratc banks and rnone,r-shops present an application to the chief of a
bureau of finance and econoraics, yet, until they have been examined by
ireau and been ap?roved, they cannot be said to have cam-
said c_ie.:t b
ation. Therefor, Yriiat I call the early steps in
pl.eted rc:newc.d rc~~-s ~..r
aa.lking in. s hanghai ref o rs to the 172 Shanghai banks
rep orra of pi ~.vatc, b
eftre 20 septe.rnber had ;one tbrough with the
and rnaney-shops tiYillcn b
r nd exar~ining resources, th6 banks which had
process of registeri.~lg a
had ti~.is done for them by their main offices in other cities b? ore
' October, and the 20 bank; irhich announced closinr;?
an editorial in the Libaratio'i. Daily of 21 August,
As pointed out In
after tbe method of control was published, there would certainly come
~ ? ' ? cities where there was an over-canccntratiori of
about a ttshru~,e in
private banking, as 1 Shanghai. So the dropping of 20, that is of
,
n
e banks from the ranks ifl Shanghai, could have be e
7n percent of th .
eforehand. But here we must point out that about the time w.
foreseen b
the me bhod of control, friends 0[ the banking business
the publishing of
ueser~ and estimates, saying that the financial auu
made many' incorrect yrect g .
s authorities were by tnea.r huge resources rain1fi,ne pr'vc
econozjlic
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 r I
11 '
In rl ~f ~,;1.1 Al l? Y ~Y
(j.i~.i ~ ( ~ ~.
and . at least ":tali' o:: the banks and money-shops had no way
banlcs, tha ~ aL
,p?$ a ' etc . ,,'.?ter thc7 ear:.y stk. ira redarrn, these
to increase capita.
guesse,3 and e tilates have; provod t~)O ~ilistakL~l'l.
'tep,a in ro orii Lf pri'vav baukifL in ~har'lhaia
~.,~ur ire t11E early . s~ 1,
;;r.3LOr' aCco:L'riir1. to
ol, '. 1::. (,.ltl~.l,i. -' .;Orl;,,, - 1ViC
y 'V~~ ''lr :)oct :L or 1Jo1.oii:Lrlh trivat..
~. ? , i. ' I~J rll. ~ ~ ~ .~l~.J a~~4 ~~
! (.LI'ci3 o:' capit~.J. in
ti I:~a.a. wa3 at lea. ' t iO~.) taill:i.on an of act'L,lal caaf i. or
akin: 111 L an . niand at ;l.r~as?t GO ,:i_1a.iral:'a %or monc~y~-chapse
banks and t,.~ u,,,~ t c ozrzp~~
~ ans and at.,~.dios could a :~ final d~~ciion
C~n1y a1 'ter n :u's~eraus and
1. '~!.c~t l,itat i~~a,iwate banks had becrl dspoil~:d
be zt>.ade . (~i.i the one hand the
'.r ia,n~,l , s anda.t was kept in mind;
i2
anC.i ti~rcai~cne~~. aairt ~~nr,. af~raifl by ~
the naunt of capital that a bank or money-snoP
also, he :d was paid to
. .~ ,,,.: a~i hand. Therefore this realistic proYr:'LSian
aJ.10..:.Ld. at b,cZis ~l~rlc r,~3.., have
..,, ,- ~-sto s easily Lo depot it increased ready caah?
enabled znas"~ banks and zlzozzey p
d after the Gazr>ml~.~ tist ;.,as l; (china
. u`i.l~Ce the closin,; rs ax July,
2
an I3 mash the ene~zly b:Loc;ltadc; s triv'c; for the
Uf'f'iee had started the slog
~~hai "all the people in the east (~h~-rla region,
b'uildin~; or a new , ~.~ ~h~ ~.,.),~, ~
. ~ {, ax?ans, worked ceaselessly and the :L'~irs~t
wider the leader
,; een V,;or~.. In the field of economics this
stages o :' victory had alread,~. b
' ces the gradual restoration oi'
was revealed by the stab ~Llizatiorl of pry , .
'
.anl~l,a~i ~~~'u:c'i: Lb i?. L(J 1
ail
'' lar7,va'l~~~~ , baik 1, ,
'tt~U a
and
meet of exchange cf goods between to~wz~
the rapid develop...
tion
d
,
uc
pro
osits
ed de
p
. was re:Elec-tecl in increas
country. In the field of banking this
to
t
s
tbGL1nn1nE; Of ].Qa115? All these caused the banking capitalis
fi'ut~re o:the new ,economic r~coz~stz?uction and tnere~. u~~u
l;nderstand the . ,
stimulated thetr
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As to private banks and mo~~rry-shops depositin,.., cash; c~egirhnin ; with
the ba.ilc wlhich was the first to apply or1 14 aepteinber, tht: newspapers
reaor't;d as ?'ollov,rss o:?l tip; 13th, ox1u; 15th, five; lath, two; 17th,
? ~;ent)r ? 19th eighty-five; 20th, lea t da.y, s i. c t,y'-nine . i~1e arly enough,
the majority did it on the last two d.a"rs. i'hcash d posits d was 1L ,3Uu
'llion yuan. ~:f' to this is added recognized property valued at 53
rna.
inilli.od, the total is 19, 9UU mill:i.,on yuan~.
Because the 'i'ernporary :ethod for Controllir1~; Private Banking in the
J East G ',mina ~egion' was a re J;ionai uieast, and the nation was not entirely
liberated, and since telegraphic coinaunLcations wern~xb yet entirely
restored, etc,, the financial and economics offices, as regards the amount
fixed for cash ca, ital in i:,hc co: tro:J. method, cid not insist strictly that
it be for by share;: polders of the banks . But there was a prin-
be subscribed
inolvednamely, that the entire cash capital must really be in
~.p.L ~
the pasessiofl of tJ '-he bank or money-shop itself, and also must not b
~
falsely made up by d1'count loans or such schemes. As to the sources
of Shanghai private banks' cash capital at that time, I have uncovered
personally the follotii.ng:
1. The cash c a ital o?' raos t of them, e sp oc ially the larger one,
came entirely from adjusting property in hidden accounts. The Chinese
le's Bak also had changed some I~OCU ounces of gold from hidden
Pe op
accounts u:~oci request of over LSO banks anti money-shops.
accounts to open ~
? 3d as 7 - silvsr dollars, the total coming to UU million
Each ou,1c~, c.-~uait~~
According to estimates froxn all sides, at least lyO banks arid money-
JMP .
shops, on instructions from the Ciiinese Peop1e'S i3ank, changd their
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eM r^ eft . f:? j o'Ip" i t I
ri s )i~ II
(,11
L. ' Iii I I
~I:
On 2C Septembwr it deposited cash capital in the Chi.:ese i'eole's Bank
amounting to 60 million yuan, but of this 21,SOU,000 was not the bankts
own property, but was borrowed from other ba :k5 on a dis.: ount. This
plainly was speculative, clever conduct contravening the order. Aithounh
the batik spontaneously and frankly confessed to`the Chinese People's Bank,
and w .s permitted by the People's Bank to have its deposit returried and
to wind up its affairs, yet ~re must admit. that this is a blot on Shanghai
private banks.
hidden accounts into open accounts. So it m~ bafi:ir>>rGd that most
of the cash capital deposited at that time by the Shanghai banks ca ie
from hidden accounts.
2. Some banks converted the property in their re : ,~lar accoutts
(such as real estate, va1aab1 e securities, etc., ) maki:ig them cash
capital.
3.:I:iccause property in. hidden accounts was insu 'ficient, and tw'rere
WS none in reg.Liar aecor;Cats 'that could be turned into cash, somc3 banks
and money-shops got a roportionat' amount of new securities subscri:beu
by old shareholders.
L.. Banks and money-shops which could follow none of the above: three
procedures sought new shareho]l..ders to subscribe i'or stock. A nu;:ber of
branch banks in, other cities a.dvertisin;; "incr 'auu ox' capital on our own
initiative" belong under this category.
. Some had shares subscribed for by enployees.
6. Sorrte branch banks had cash. capital arranged for by main banks
(meaning those in areas yet unliberateu. and those outside of east China).
Here we must mention the cage of the i''u-hua /restore Crrina7 bank.
?J r"'i
Hiwj' ~iifotin atio
-lo-
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:.iY N 'd A y lj ~i'uz
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/he 20 Banks Which Liquid?ted7
Location of Bank N~xne of Bank
Yunnan Yangtze Industrial, Overseas Cbine$e, K' un-mint,
I-hua
I-Iunarr Fu-skiing, Aunt-hsing
Szechwan Ch'eng-tu, T'ung..hsi~i, Yh-k'an, ilui--t 'ung,
Yung-sheng;, China Industrial and Mining, au-hua
Sikang Chi-.k'ang
Philippines Chun.:-?hsin;
Shanghai Ilua-wei, h.uo-hsi.1., Shanghai Iron, `i''ai-ho--hying,
Shen r-ta Trust
From the above list we can seth..t the rtlairl oL. Ices of i+lost oa'
there branch banks were riot in ~ihanghai. I do not have enough data to
figure o'.t the reas(?n i;or their closing. I situp:,.;y know that the main
offices of several had alreL.dj closethoc~
increased and thy ~uc,rc, r.~,
' r Private tsankilrin the laat China Region, II rortl corl~-
f ar to>>trolllrr
the be ~rinniflg of ~iebruar,y th'Ls year, i.n a
pletiorr of rer~;istratl.on to
inonthE lr( haclosed i'o~~ vaz~ic~us reasons. ~o
~per:i od of about .E a.ve a
rher~ U5 inrpex~ialisin and ~hiaxlg' a
the
be ginning With 6 ie , ;r ..:ary, the d .,
bo;nbed Shail~rl>~i., until today, 7 .:.pril, in
ba.ncit garb: indiacrim1r1at~ly.
' tmore than 50 private bauks and money-shoPS
tire; space of ~loout ~.o months,
, Because of this comparatively concentrated
n shanghai have cloy
that bankin, is y nat,arc a cOrlLmu:nity
closing,, arid due to the fact
l s1.do;3 deep c~.~rlcer~rl tl~a the d:i.rection it rakes.
enterprise, 1. ~ erc is on al
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tie caul aratively co :ce.ltratea closifr; 01harl~haz pi-
that Ct:tuS( t? p
e y s1 clailri that basically, (except ior~ yornier
~r.~~?,e barrlts and mo~i y p
busir1ess as which were managed accordlrto tie objectives of i,iiperi~.J.-
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trade and industry, and this relation is true o;L its prosperity c.r th-
cline. Under such coridi..tiol1a, the business of private bank,a arid money-
shops began to contract, and because some; loans were riot promptly re-
covc;rable, the turnover of capital became more aiffieult?
rfhe second reaso,a i.s that the amount of private baciking irr Shanghai
was too large to start with, and not proportionate to real need. As o?
.February, Shanghai's private banks and money-shops :Mill numbered 17
5
(not including joint atace-private and foreign conunercial). Tiiis nrulrber
was just twice the pre-war figure. Now when the government, in order
to liberate Taiwan and Tibet, to m~.ke secure the people's livelihood,
and to ;r,ive heed to econorlic reconstruction on a national scale is
striving for financial balance, for control of'ii1i'lation, and i'or ,stabi-
lizing, of prices, the sI rinkagt.; of private banking is truly ari unavoid-
ably tendency, because private bankiri; has been inflated oy more than
10 years o abnormal prosperity. And anon; the 50 most recently closed,
the va?t ma j c city are small-scale ones, with an extreAa 'y weak basis in
capital and con..idence. According to data of L February, the suit total
of deposits in these 50 banks and irroney-shops was only 1/10th the entire
amount o deposits in private baiiks and money-shops on that same day,
his is about the amount of deposits in two fairly larg.private banks)
But as regards number the 50 make up just about 1/3 the total; as r-
Tar ds number of errrployees, they account for one-fourth o?' the total of
banks arid honey-shops. Iii other words, these banks represented few
deposits but rrluch expense.
Next to that is the fact that some of the private ba..cs and money-
shops, had. not yet been reoriented. They were in new environment but
lc~.cpt their old customs, such, as 1)only thinking of their own immediate
- 21 - COKF1flEHT11
Security In orn atio~r
Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
Ul"I.,w, .tUU,.,..?y I CU,cLL'L:L.Ui 1 ; lu LL A
ef'
,. i1':I
the
profit, arid 'o1e to plan i' or the nation and
no pb.~.n~, .,.~~d
~ ~Uaa"ra V~~.t~lol.it CC,1^ci'u~. sexun:~.ty~
an in ?t~re use o~L capital .~ )ma}~~' ~-nPa
~. r ~, n"
baSis; L)not bean siruple and iruga s but Wai
but ~au.1?o~.y' orr a ;ac; surld~.
'
x. rh1S was a~Gn t11UrG 1r1 p;l'f'i,C?Ya
' n ~ 7~erso~~xrel and z~aaterial r'esol~rces ? au V~itir
~~
w~r? arid profit, but v~hen they face
who ord.ina.t, il;;fsnatche( , po
?troLi'r~le tire,~~,la;iu:cl or~u ~;~i~othcr, and c;verr rail ~way. ~L~cYr Corrd'itiorrs
were the ~ ~+~ barilcs G~,nd. rrtor~Y-shopthat c~.o5k.
The moat cle..rly v1s,b.lin. t}.l, >
,ive,te hi:;.rr:ks, labor alrr~ G~.})it. are
1~cae l~c;ople's Bank, r rx
? ex~ it riot :L Or .U}::.~.s
concerrier o Jc;r ie;e uan.k clc~
all grea'tClhy
l.' rle ~11Urr; Sep':i.U~aa.
C( ncerr, anu tUex.x
L.: l~.r?a' unlol::, th~ eirf oVe.,,~
rrr.~.er t;he l~;a,ae~'o1,~. . C the .,.'a~.narlce ror
, ba1'lk1?'r' f; (1"tGI'prlCb i"laV a c,d at ~
~` :re
~, t v '
Uf' ) ` J. J'a.E.
71 Orr ~ aY'Crr, they drY'S.V'
n1C1nat prent? in a da.scass.0
vats ba
::~arai;ary cori>,laittee a:'.t.r
sar).e o the ~ba,rker
::. the ~?.
: c. clusiorr a~ th~~ mernb crs o.;
o,s. eci. a }:,r:~.cta.c;G.1 rnethac;t or
f' L1. At the samo 'kjine the:r propos
socatio" renewal acrd
u~r,decr, o~=~~ the pr:':.ri.ca.~,les o~.se1.~.~
u~rex'corrting ~?? , he A, art at capital,
i. ita.l ? 't'his plan was, on ~ r
profit to both labor ca~p , ~tice s:i.ric}?licit~]' and
capital, ac tiVel px a,_
to f' 1r id a ~uva:i to have ;.z.d.c3q;:~atc
ta.orr of the rctan~;~rr~~=~n?t o: basir1e,3s;
thorouY change the direc
austerity,
on the par's a in work, s'tren~;the1
em}:)loyees, to increase; ef'f:iciencY ,~s,
.
,, ,, ?~~-ons red~ucc wages . Due to emi`rloyc..,
labor ~
disci~:~lin, under cer?"ta1,1 c.orrd.~. atlon
order to secure the co_o e;r
r~eco ;r~:i.z111.:', the s:.urCe of tz ?u'bles and iri has already been
diif'1CUI.ies, wage reducti01 Y
of capital in o~ferc oma.n~
U .CI"
Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
put into effect in many banks and money- shops ?
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
t . on rep resenti11 caital, haachieved some
'.~~~e bankers a.~aoca.at' ~. , p
. ., the ~ crraI,7crlt's fiscal 1~a~.~.cC' ~~~t pz~esent tx~ey-
re s a.ts in push~,nLhc, ~,ov
~~, ~ mowerrtent. s to the~,.r present inteznal
are C011r.~uiCtiYlg a bond...Yalu
,,,r tr~,ex~ laa~lku to c;onquer troubles, they have, on
troubles, besides ur~.,a.no
~ .~ ~ ?~c'~ ind,i~vid ,gal banks and rnoney10PS iii
the basis of ~.,utaal help, asSa.,,tG
? They ave also represented the entire body of
the Lurnover of eap~.tal.. ~ ~hc.,~ h,
_. , ~s in oor~erexlcer~ with the f a.nar~,ce worker s,
private banks and .~nonc,y snob
al cooporation to overcame px~eserlt ~~e,,r~aorar,Y
ui~io~l 01.1 labor anu capital
few . ar~l~s arid
i De pointed out Tat except for a f b
ler.isri capital, r~v:Ltheir aif airs,
tzoubles, ?~:~t it sY~oulc .money-shop. which have beurx to rep
r ~~ _? 'i,~ t.~. the general ruin of banks and mor~e;y-
and practicF~ si.mplicit;,~ anc~ ,. ~~.~~ ccr,
,eo nauh; sca.e have done nothing; at all.
shops have not tr ~. hard ~
., e's Bank has i b;3 ovm important task oi' reCOrl-
Thc L,jlines,.. opl
r ~ ' a~!_rs . rut bccauae the direct cause o:f
structin~r national ~.~ir~a~lcidl azf ..,
troubles is the bolrioinand ;.~lockad.e by U~
private bar1king's present tru
rt,r s bandit gang, the People's Bank is giving thErrt
z.rrlper~ialisrn and Shia
, .. es are : xter~~din _~ the period ? or snaking up
he utmost help . .~xa'j'pl
hanc~.l.i.nlimited ;iiortgagc's, ir~cr cam
rec c-
ipts and coverinthe defi,~.t ' ~J
~. 1t loans for joint loans on raortgagvs, railin~,
ing the time for inter-bd,~
.,cs tainst deposits, etc. `/'hose ltaeasuz+es
izlteres~~ rata on resera~ ;:.r, -
` d some banks and rnon~.y-shops to pass throngh the ter~rpo
as;~..a.redly er~ar~lc
,. -over easing of sera.aus co...~ditions. On
rary troubles and gave, an all -o
~ the rela.%cin g ~f'. discount laans7 t
3l i+~arc:~, ~.t sadder~a~,_ ~ supported
.,,a~~ ~gcd by the barll~ers' assocati011, thus alla~'~~-n~r ~, the
member banks as al.r ? , , . ,., What was
banks and money-shops to pass tnrou h
whale bony ofprivate
pitted on all sid. S to b a seriaus day.
act
Secur y
Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
4 of 'ate ba~Il~lrl~; are ser~a~~~s.
'GV:~thout do~~~l~t, the present braubles al pra.v
Btit liketiva.bl?Ietroubles will have a day of solutiOrl, as is indicated
' ents such as the ;;ta;~iailiZata.~.an ox' ~~r~a.ceu by !:'1-
by very recent de ~eJ.oprel
I1aI1G:1.al arid econ,o;nic r.lii':i.cat:Lone The iG1creasi..r1g oi' ante.-a.Lrcrat't work
will reduce: the threats old da~aa ..:r, off' air attacks , ['he grac,i Lu J,. restor-
b. by degrees irlcz'ecise the vo'1LUfle a1' ir1~,uStr ~.al
in off' e;1.cctrio pow;~r will ,~
px ' . r-~ industry has already ret,urrle(l. to its px'e_
oductioi,l. (the catc,on ~ea.v, tita.l
the dull seaso:il :L'ar 11iercarltiie goods' Will
'ebruax b level) . viUxeovr,
soon be over, and th4 .. Trade nuredu ,... , s planned move~iierlt of foods will
~
xch~: ~ -e,3 to increase. '.l'h~ lamely co,illple red
cause the voluin~ of . arkelJ e
p bonds and a gradual rductia:' of interest will
a~rnent t~ox' ~o~r~err~nent
r . ' ~-;nt of capital in all lines o::. b~.s~.ness. .'hese
also st:~nula~Le tree movetn,
without doubt hast.~rl. the betterment of private
turns of events will
~s uni'rec;ze the loans V~~}I~.ch for th,:, Circle i)c:in
bar~kin~~ and, by de~rec. ,
cannot b recoverec;t . ''ay the rise in deposits ire prijrate banks
;~,.r.d a,.n,~~~~ ,
lrrust say that beg;xnn111 is alreadj apparent.
ire, Lwro days, ro
Thereiare, just let the men el'lp~aed in privae bankirl? not lose
~~:i.sh the memory of an abnormal prosperity that
their confa.derace, not ch~~ ~x
.. recos~niz the lrlterests of ~:~Lil~lic and pri_
will nearer, return, genuinely r labor and capital, and the :overrkii.ent I s inoriet~ ry
vate , the px al.yta of where and .promptly to repleniSh Choir capital,
~~olic ~,~; and s-tx ~.ve ever
order and practice simplicity and austerity.
set their business in ,
ri'hen, not only ll present troable6 bo d~rerc,oriie, i~ut there will be
a?la ees of -private: banks and money-shops,
?'uture develop.n"nt, And the erJ. y
-
''k4 ~ I1 t O i1 i) au u
Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
, coi1
? ~" the z:'ii:i.r~.nce worker's'' .union., will, of coLtx se
under lead~rah~p o
, ~je nate of the warkin~-,;lass and the
ta.nue to manifest the pos~.t~. ~
.,
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
r
^i ~~ X41
the sacri?icial spirit which puts e~dui,ance oi' sui'f'ertt~; tirs,t and en-
joyrnerrt oi: happine3s afterward. The workers will join. with capitai to
overco111r; the obstac'l which lie along; the path to victory. An they
capital7 will strive to the ut host to help the uneillployed to :/.earn
and will give them necessary help towards livelihoOCt.
~/e hc:pe for the most ba;aic and ei'i icient method of overcol11J fl the
present troubles oi' private bankin.,>; -- a :)ro wpt setting; up of collective
discussion by labor and capital in private banking, in, older to over-
come the present temporary trcuble.~ , }nor tiii.s is just the tiriie for us
all to go forward. boldly, obeyrinin common the loban. of Gnair1aaf Sao;
"`./,hare arc: t]:?cUOlus; there is a wa,r; traere is hope."
7 April 1950.
Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
HUru ov:L'~ItO()i~''!'.H
. atec~. clo{ of )rivate
l ~t71~; pre~e11cancc;x~,.tx
sc.s o
~s to `have: expre,~,~e... ,c~ lny
~at,~kand. th rnanE~~ e ~~i1 ' unc:~,err
o in shanghai, I a~read,j r,s ,-
1,rtP
~~' ~3aril~.i {a,
or; [f' in Private
in the artic'l u t he 1J:Ll. ec ti
ShOpS VJeZ'e
ota dnr, ~
n~u nn~ia. t s I~~ra.vate baill~,and.. rrtan:,yr
c:1,Cli.1..L.~ I~l1d+^i:J ~ ~iL.?r
c,r, that o ~' ~ ~i ',sd 'rar~
~,Oi,iJC 1'cl~rndata.ori. of i:1.pez wall../ s~;~ ~, fe~ud~J.i , ar~
~,uil.t o;., ~i~~~~'; eCOr ' im~~cr:Lalist stxe1'~E~t,~
,;.a1J.sm? ,.rtes" lib Ors
:, e
~a c; cat
was ~ax7Jr.
.are and. feudal a trErir-,
e;cAe1J.ed and bL~x'ca~~.cxa.i,lc carcr~', : r and i7lOnc;~?sho})s h~.~cl.
bal.
~kS
te
acid
Vped. cat, ~~~~' the rank f it of ar iv ,
not yt b` the direr~.on and. Sorlt~ of their
-.~e,.~~ -thOrO.ughlY ref'ox'ri,~:d, arid Le
in hE.n~., .,o -t~iat t le;
.. ta~cn i
til
b~cn ~,rL,~Lp~1
~
,
t had nc>
were ~?l~u~ ousic~lea ~crnen mana.t., ~e i.~neciiate cause, vie
,s .. l dii'i'acul'tj.ES? i S to h t
into se1io' se as a xesul
n ed bornbi n, becau
mu;~t :first blalrie a-Ghis.r 1ndi5cr:LCrat
~, , - caus:.n~~ dii:x is ~al~ties
uric n;ta11at1011' W.ere d.arnageC ,
a~~ boii~'oiilt~', elec
. thus ,a was cre~~.tec~. near'-collpse f. ox
jor a1:~
striul prod.uctiO~~ , ~Za a- nuu the ti{sinews oipr`~.vate
er 'crLe;:e conditiaz's, the b
ucano:crtic activ~ur~ d . ~ d beCaus~ sank loans
:, rshop u was greatly curta1leC!, dry
ba.nk~~, a,.~d rnonc.y ''
(Cil ,. ?tat beCa~ne slufffish? kL sec-
ond .{- (ln~Joverable, the 1:,~urnasrer O~ odp~ banks -.nd rnor~cy~
rN'Y4'v a ~ ~ 1_I r~~ -II y~ ~ rh
V~.J
re were in hanho~ mope priZr,G V
ce cause w~s that the there vJCr
J
ded.. As off: FebxuarY this year,
na~f~ i~clujoint ,~taV~Ir
shopa than were nee
shOPb it:i ;han.f;hai
l7 pri~vatc ba.ks and money- ~, .. was jus.t tv71Ce the pre-
war ercial ) , and this ~. igu ~
a.vat:~ and ?re~.~;n coru tie
pr -~oveTnru.cnt ' s ef'f arts to liberate
resent, because o:~' r~,
number' ~.t p
all China, to restore ., ~eca~~struction are. a national
and. deVelop econo,1>lc r
~ Ce , to take ho1et of rnaG.etaz'y irl-
striv~c . for financba_.n ~o.Lblc, i,cndenc,~,
scale, to is -t~~uly a:r~ una r
and to stabilize prices there,
fletion,
CONF1ENTIL
Security InformatiOf'
Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
., over , Just the con.trar~T ? The present troubles ~i
are a~.read.,r o
b
.I- ~.?:,?; c. r..r?~ot be taken. to moan th'-, 'iJ l',;; troubles o~ })x~.r~ ?
kin 's preent troub1_cs and relief from concen c
private ~~ar~ s rarzkirl.Z
to
~:nd locj.ns on mort~rane, etc,, here has been a moy~..~.~.y~.~l~, ~y
membe;a. ban;,;s and arra.it~r:;a.n: 1,ra x sl
on bank dposits by
~. Ple's Bank has extc:z,.decL all ~~ossibl+:.; accc;.ciL,toaa?c~.c'1 .~L1
i;~haneaceop
`er
, . becau c ~~.,
.l ._.., r, -; r, GS ;end tc: proper amount reduced their wa;; c:S ar~ca
or
.,~ -: c., cft,eir v~? ork, strer.Lk '~her~~ed. thea.r lab
pr3 the e1. ~:.1c: ~.en .~
,,b-4nrr not only remain,, but are also ydite serious.
e how to overcome the tro ...l:~ a fOW efis t~-ii , ~n ~~iv~~ ~
I'herc~~. or
S an urgent problem for immediate attention.
erl), we must indeedenuine.~y
cussing this proal
,tt(h~n djS
},
t}~.~~)se barks which h4.ve f'or' r~lorc:~ than 1_U yeas
' 4r e ~i~ eC l~llly
~?~ax~cls c~.osa.n;..,, ~
inf'~.~.aion and the small and. lrieait;ua banks
ec;n sup}aox'~te~}. ~~;:Y currenc?~~r ? ~.ans ai e com}~arba.ve;l~r weak. ii,.u~,?r~1~er,
whoae capital and credit f Gu:~da t.
itlal'ia irl.Lhc 60 /u7 closed ~bat~l~;:s and rnaney_
laQk;l.T.lrr a'b ~;ciieral. Coild
.: that s r;.1.~thau~;Yr in. a i~e~r~ er~viron,~:ent still
straps , ~ti~Ve c:;r~laine~a vhat a ~
s uc.~ as lack oj' plannirt~; in the use of
maintained t:'te~~-r old c .: tai.,s,
. cverc; scrutiny wholly on a, personal basl.s,
perca~r~ital, losn~~ n~; v~.tr~aut s
: e;in ~~ o~ia5tt,uJ. of huma.r,, and i,iater.'~.a1. resources,
so~:~~and. ax 1 air, and b
etc.
. ed. out tht bt.c;ausc some o:~' the ca;pLta.l grou}?
It shoulu be po~.n... ~
i c?;ri~ratc banking havo a..re ~ ~.
business o~erati.ons aT1ci L ad sought tc~ rc;plenish capital, ovcrl'haa~1.
,.npl- .~ ra,tirrs and b~c,use some emplo;~eC;s
,.,icr c~~ f
a f ~~ -sY~o s to encuunte~.' ?b?(.)ublus and drift ta~-
or a.te bax,lca and r~tat,e~
riv
.
.
the con i active
' ~e economic enviroIerlt is also an objective
t the enta.
must recognize th
private bankin: fuel?'; but equally ixapor tanti, vgt
s a
an n
}
d ta
Declassified
V
I
lttV. r'i' ll l ~~ r I~R ~ A
i H;
id7 w+~. ~k l^
n Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
, ~ . cono,r~ic uni~'ica,tior~ at~c~
condition. ''horac~,c-;11 npleanentin0: i4 171~n
-
-~ and industry is a problem that has been pro
posed, proper ref oz~n of trade b the govErrunwnt (ol course includal,
osed, avid plar~rainstarted y
'ectivclY t0 understand the `unction oibankingj? And so, coolly and obo
onojnic activity, both now arid hereaitex,
is a
private banking in tkae entire ec its oven survival and possibility of growth,
arid tr:c cond..tions of a
l and labor in private banking; should at. once en-
s to this matter, some of the capital group
gage themselves an. k~
of ~tadvncc," and "retreat. ', 1 luysell' a
already mentioned the problem
)eCauS~= whether looked e..t from the
am in sympathy 'qrith such a study,
? ' ~~ benefit, or peronal ava.ntaF;e or looked
vie~r~po:~rit oi' the whole nation ~ attitude
at from the viey.-poin~t of the settling oi' the closed banks, the that pry-vats banking must
now 'adva.nc, while not casting aside an
order7_e6s , vacillation)
Berl 'tretreat" (but avoidin; a planless,
or y
/hould be adopted7. ruinous
s imposed on. us by the enemy', and the
because the hrd.~~hap
. ring the social and economic order are
situation in the process of chant,
' a has been liberated, trade aaid indu:~tr'y
transitax?~, after all Chan
~.. ~ 1 ,t1 ently carried through, the whole
properly reforted, and lart,d re....oz
.
econaluic picture should, gradually change for the better. For' this reason,
private bat"iktirto adopt a workable plan
objective conditions exist for pz
II sub ' ectively, there i'irot must be seli -renovatior1
oi' tl advanc ~~ . But J
an -capital cooperation. in a common fight.
d courage ar~ci coi'ic~enc;e are labor
a
at once a replenishing of capital. Along ~r ~, With
~~i'ter ;this titers must be a them:
"' it and. austerity must be attained to enstare
this, thorough s~>,~.>lac y
Declassified in Part - Sanitized Copy Approved for Release 2012/03/28: CIA-RDP82-00039R000200060017-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
?3 April 19~J?
- 9 r AA
t r
7py{1a y L , , r ~,. '$f7
Security ~nformatiort
Declassified in Part - Sanitized Copy Approved for Release 2012/03/28: CIA-RDP82-00039R000200060017-6
cc:Et'%I~
cruritY In~ormattof
ll never the rnana~,ernent off' buea...'be again are, incre of nap~e . In
conda.t~o : ~S,
w~.
aet old habits, judged by 'pz 'esent
Hess, besides carreceang off' p
mutual help might
f a nu~aber, of bankS feder&tin ,
the Tie Yxts'.i n t~u o
be ci,Upted.
I rnenta.on af;a~.ra here the ~noet e;f i'ective method off' ove -
~+'~,na~.1.y~
cr r j.Va'~e bar~king' S ~}~~reeent troubles ~Ghe pr~~1~-pt set~~~in~~ up of
coin~.n~, p
eccanfcrEnces on how to over-
ba~~kinlabor..c~,pital call
private came
pr e s e nt terrLporary tr0.b1es
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
CO
this as the great year of the Chinese people I s vt.ctory --
19)49 -~ th~,s w
.: i.,() "With troubles, witi~a. plant, wit:. hopes" is
had a.7.readt; papassed, and. 1.~, ,
.~ o ,.Ls. At this our bt'.nker friends perhaps have
already beckona,.nt
~ .,1c~1 baz~l.kin;.: since liberatiOn1, and this will
some need to rcva.eShall
perhaps have some nl,ea.nifg?
~.h,ai rleccr~ to be arked oi'f' i!:!.~to two
in Sl~art;
As is well known, 191i.9 .
p ~~ .., ,,r er':~oc~ oJ:' the reactionar';regirnafter
er:iocls~ before 27 ~ a.,~,., s p
? In trris
e eople the.its~lves ~;ru.spd povrer.
27 'May, the period when. ~n p
L: ' eI.ialist ~~ovtcr and -~ureaL~cratic capital ware
latter~ period, the :crap
ernocracy" f'ina~'lci.al sy s'~;sin was f o'ul~ldeCr ? The
New D
expelled, and the ~~cw U
C ~~~d s e~.u:La.tivc -i.~ersol,,; o.k. the rai,,ed rlatior~.al
culative acta.va.'ta.ea an p
spe
d ~o s~vGre :L etra.a.l1t, t111J
finance syst~Ji ti~rcre iaeatcn cao'utirrl ,~.11d o 'L' .,,
was already beirn , r'e--ordered, and, under the
is to S a!l t .l'l rit o a,t1h a..r1 Ste,
a.; atti~uude o1 serv:Lrl:; the pr;op:i.~ a.'r~.d
eor tt of hotri ls.or a.ilc ,~., i t~..L,
r, ss to support production was already by degrees
a directa.oof ba~a.rle~
trol policy under the people's government's silntataneous sager ra.~
polio ? .
pion and
s eakila.g frankly, it was pushed through by the Darl~yalg Sd~~
r f3u ~ p
y the 'New Democracy cu vxlv? ~~
-nn_ i~sically speaking, was create b
I I'
ratioll Shanghai. was alrea:. y expandir!.g; and ttl15 ,poll?
rr 1 Yl 71 n 5 t-l1b
-
ndar',~ce, ':l':-ese cases f.ily demonstrated. that privaucLllL
nht,ained at~u
LI J.
ec ? posits reu; l~Q banks and money-shops
r r,? St un and further
guidance ? So my essay will start from here.
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 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
II,
For convenience in writing, 1 w.~.11 subjectively demarcate the post-
liberation banking control work of the peoi~le's }os~erruneni;, into three
..
periods,
The f ij ~ t period froi:.. 2'i' ,r,ay to the nd of June 19L9, is the
period of the ~;, overnment's conf'j.scatictr, the bu.t'eaucratic capital in tiLe
financial system and attackiri : gold and silver speculation, i,ltrodL~cingg
People ' s Banknotes into the market tc, creakprereci~.iiSitE: condltiuns
? . p,.,.uction and maka.n! ecolority prcaperous, .L'l1e tools oi'
i'or expa,r.~c,a.i~ka >Jl d u
the Four Big Clans for scra,pink; the people's 1'at c,.kiU grease; -- namely
the the Chum;Ghuri , Chunk, Chiao, \rurl , > rh-chi, i-k' u; the rL:La.rlg$LL, 5u-
, ~,,
1d in the Shanghai market, and front that day onward,
notes a real .iootho
same titiie, all private bankin was ordered. to freeze all the capital be-
longing to the Four Big Clans and reactionary officials aric,. also all
'
property and credits belonging to same, for latci' disposition. This
satin the bureaucratic capital in the financial system
action of c on.~i s
and returning it to the peoPle'a,possession was indeed a liberation of
banking. Next cane the attack on ;.old and silver speculation. On the
the ''Certificate Center" gave the people's Bank-
10th of June a blow at
the moneybusthess 'began to have the prerequisites for expanding its
etc . , were; all taken over; th.:: Chung-ship, Ssu-ming,
Ya-twig, Kwangtung,
' the Kuo-huo (these fivbeing governnier1t--
'2'ung-sham;, resin-hua, any,
banks were all re-organizes, ai ter Being supervised
mercantile joint ~ ~
and xef arcited ,c t th.e 'uo-h~to, which was finally taken over. At the
~cr,
, girls Shanghai
n~ng, GhetcianF , Taiwan n
and those which appeared as privy Lae
-- five province and city banks
orts, such athe Shansi Ytt-hua,
operations. Besides this,
Declassified
Shanghai
n Part - SanitizedC opy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
of tho nation, thc: people's Aovernutent gave it
is the econoir1ic heart
spcial aaz,sraErstiota and ;3hanghai banks stopped i~usifess only two
-,
~~ .
of war were approachi.rig the city; and on 2 June
days because the f'laaaes
thane of negotiable paper. This ciid not happen any_
resi' ted the ex g
where else.
Jul... and ugust, is the period of preparation
1'l~~e second period, ,~
t
for the warn of control, and also of draf 'tin4' and publishin, the
' Controlling Private Bankinin the cast China
tt ~.Cernr:~orary ii.ethoc~ for
od for ~.,ontrolling Private banking in the :past
e th
~ blisheo on 21 ~~ugust? j~3c:for~pblicati.on, the
China l~eg~.on was pu
go .. the o nions o7' the banltin~; people, having
~~~ernrnent had. hwtibly sought pi
with arllc of'f'icers or~) July; arid an 11 August a dis-
called c~isc;uss~.on vti~.tl~ b
. ees. riot only ciid. it exhaustively set forth
cussi.on with bank employ
for th~ control of baa~k:~r~g, but also re-
the people's government policy f
ws as to sphere of operations, credit control,
ce~.:.ved from all sides V1 WS
the amount o. capital. ri allowing this, there were
and especially on
basis of the "Terrrporary iviethod for Con-
successively p~.iblished, on the
.. in the fast China ~tegion," the following:
trolling Private bariklrii?, of .', a. I ~ Re -istrs.tion and :~xa~iininof Gaptal,11 I1Vlcthod
tia~,iethod of Applying , for ~,
ants with Regular ~ccaw11ts," "Temporc~rY l,~iethad
of Combining ,Hidden Acco
of s n -~~Vlethod of `~urr:Ling over 1Jepo;~it
for l~estrai Wing Return o:t Cahequca. ,
al anion. therti were the draft provisians of the
Reserves," etc. Specx g
s with Regular kccounts," and off' the
nMethod of combining Hidden Account
Re gioli ? "
"~1'errrE~~orar;~
The
uMe hod of A)
th
in Qf the past concerned with hidden accounts; proniisifg
overlook? g
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 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
C11iiTTIA1
Security I of ormation
seventy-two banks and. money--shops had finished ao.ding
to their cai.)al (besides, s whose head. offices were not in shanghai,
~-t
had arranged this at those respective localities) and in the latter
One .-hundred.
- 33 --
c r;
;..iLu I
December, is the period
removing obstructions.
f for rnat;o'+
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redemption of portion of gold wher:r, for the iucr ea.ae of capital, there
was riot enough casi, on hang; fixing the sources of cash in the increase
of ca ita1; autirarii in borrcc'Ving vrhen cash/ wLLLS ueing exalined for the
01' capital, etc, They ci.id their best to take ir:tto consideration
increase 1
conditions. Tiris is not to be compared with. the forcirle meas-
actual
ures taken during the reactionary regime.
Furthermore , during; this period there was a big event. Namely on
12 the Peoxale's ;lank,s,eeing that pricc;s were then steady, but
August, c ~t,
that market -nar ins were shaky, irr order to avoid. stimulating prices
to look after the use of the capital of banks and money-shops,
and also
inter-bank short-term fixed deposits, and decreed that when
arranged
currency was short they could use deposit receipts acrd borrow from the
:Peop1eI3 Bank, On the very first day,
more than yO banks and money-
shops went to derjosit, This rneasure We S
stabilizing prices, and in the operations
of great help (at the time,
of banks and money*shol?s.
The second period, from BNp'terrrber to
pera or'tuirlg the work of supervising and of
in
The Method of Control published on 21 august, provided a time-
la.;irIt of 20 September for applying for registration and examining of
assets. By that timea banks and noriy-shops wlrrich had closed through
lack o1 L e,~ rounces or of w lllin .r ess to increase capital numbered 2U,
~'
including the Fu-haa, the Yangtze Industrial.
 x,, 1 ill
third o:i' epteinber the Peoplei3ank, mast (Jhina branch, began exarnin-
ins; as:>ets. L3ecause some banks u,rrrt rnoney-shops had not yet changed
the:ir habits of cleverly speculating, inor~ thLf 60 bai Mks were discovered
the east Gili.na branch ba,ik to be engaged, in illegaJ. practices, and
b;: cause oI' this the period of examining was extended by two months -
QVh6fl punishir.; these disobedient barnlcs, the last Gbinu branch also
ikinfrat.rnity; arid according to succes-
sive newspaper reports after 28 November, banks and money-shops de-
barred from exchanging ne;;otiable paper nuriiber.,d 22, those punished with
:r: ine :; and reprimands numbered 27. Besides, the (Jhun-nou and others
wj.fich were to have C)CC;n closea. perrnanr~ntiy number' d 7; but because of
appeals by employees, and an eipression of repentance and self-r rie~val
'by the capital side, this was chan.gc;d to temporary suspension.
Than after the Ta-she~; inone j-shop f'aileo, on 25 October, because
of losses in speculation, within Nove~1rber jour banks, the Hens;-ii, Hui-
?e:ng, Tung-hui, and (Jh'i-ch'an.:, were ordered to close becauof
illegal speculation. The same thin; happened at the beginning and end
of December to the two banks, Hua-mou and Yens;-t'ai, which were guilty
of gross disobedience. Of these 7 b`nks and..money-shops, save for the
Ta-shen i;, Hui-feng, and Hua-mou, which had. a:i.ready fully paid off their
deposits, the other four could not clear up or had not yet cleared up.
l 'i r. .'. ? 4q t, cyj'ri" ?. (4t f; n. -rp, , ,'A
Declassified in Part - Sanitized Corv Arroved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
.said conditions, the goverrurient's sending the officers 01' the
,,T'un-hui, and Ch'i-ch'ang to the courts for legal treatirient
because not only were they scoundrels in
destroyed the market's even keel and had
 production. At the same time, as regards the banks and money-shops
which had joined in the Federated Loan Office, it still permitted the,
in times of currency stringencjt, to ask the People's Bank for loans
times a month.
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This was the aspect of supervisian.
As reg~.~r'ds tIre removal of obstructions, on 21j. September', under
leadership by tLe People's i~ank, with the cotton textil.ndustr;/ as
objective, thc'tsh,anghai Bank and Trust i ederated Loan Ofi'icet' w a se t;
up. Ct wau .participted in by 172 banks and money-shops, organized with
)1 billion yii,an caoi.tal. ith a view to hel~l::'in;:rivate banking, the
People's Bank is to direct private banking's resources towards invest-
ment in production, and to pc:rrnit, in tunes o:i currency shortage, all
banks tid mon~' y-sh.PS which have entered the I"ederabion Loan Office to
a~k short,-term loans j rorfl t},re People's Bank, the amount to be limited
:
by their a7reed-upon loan,:,. next rather obscure?
At the saute tinge with the above, under leader 31.iP of the .eo1)le's
Bank, a ''Banking; . siness Interest-rate Comrnittee" waset up.
At the beginning of December, the P'eople's Bank, in order to pro-
mote production and ensure credit, started exchange of negotiable paper.
On 1L'. Dece;fiber, the Shan Thai Nanking Federated Loan Bureau was
inaugurated, This werlt a step further: than the Federa' bed Loan Office
which wastarted on 2L~ September. This organization incluatu the People
Bank and State-private joint banks En_'. money-shops, and trust companies,
l68 in number. It was organized 12 billion yuan of capital. Its loans
~~rere not lim ted to business enterprises, but they had to be used for
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
The) openirr f of the second federates loaning place, and the strtirzg
of no?tiable paper a,auridc~ntl.y derr o: f~ ' ~rtil bought with 1rilill.ion yuan; and the local
~-ier,
a e's bank assigned cadre. to help handle the transaCtiaiz.
government and pt:,opl
1~vo other big er bir; evcnt5 of this period should also be pointed out;
.,
l)the attack by ~~ the ;ov~rnment on 25 ovenbe. against underground mon.c:y-
~,tac
ctiocr not only had. considerable usefulness in stabiliZirl
shc;ps. This a
the active nature of the working clan, usirnthe pr ocedares of exarriin-
private bank~. 'n~ r operations, 2)Barrkin.g ern,:loyes stp by step revealed
ing the market, but also greatly helped the eXpansion of
prices and settling
ing and supervisin- to help the zovrflhr1e17.t carry trough h its pola.cio,,.
Since liberation, eration, anion ,; the r;overrnrnent enactcuerrts about banking, we
snould fully u r .rder:atand the r;overr nent's policy of control of banking.
The basic spirit o:.. th:Ls policy of control is nrrad rani.est in, the mbasic
?1of Program; "Legally operated. private banking
Lary policy a:r: the Con~,n ~~
receive the government's supervision and gL~idance."
busines,3 should
Declassified in Part - Sanitized Copy Approved for Release 2012/03/28: CIA-RDP82-00039R000200060017-6
he last 7 rrronthS show us that the work of superjrisicnr
The, facts a of t
is neCesary and should continue right on; the work of L uidancnas
as reaped its reward . should also review for a moment
been done, and h
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
J,;t l,L1CtR
.tWhLle pUS~1i1it
tY~e ~,av~~x'~,~rlen~tr ~ att1~ ~,hinteroa o~ X11 pOitCY' :L i an
. f uineS$, and of So1:Lc1'tude for
at' hu~nl~.y, cax ~ the III ~ .... l,ile thou t'ar Uoxatrol-
when dra ti'~~g the ~e~porary
~
' ? x' a ,'~l~lc~t pez~a:l.i~1nr; C~~a.o
in 'tie .cla'L' i~~na ;ciai'1,
lir.i~; Priv~.~tc ;~ank:trn
, UP L~lc ~'C;dcrated I~odt~ ureau.
'.~.n
beai..rlt ba ;Je'ttir1
iC3 ad rnon~~,Y-;~hop a ~
co~av
t-tackinunderr,z~auh1d m~,ner-Sho,a, '
an a
diecLtssian- ,up~J, to ear the v1 of all ~trl(1 .J.1 t _ e
the araal:Lrta.s'txa.tluri
C, fl
LhiJ
ja is were ;,para,.IeLY G~~~ YY C arS d.c,~?1,Y
vrhih for Ss ,uan,,T y,
tows .?~ ;~ hx'J.~Td''a`~, k.~ .
a1. ~,avez ~ea.v~~ ayir~}r~'~r~eua.c na~:~ce.
d fro a reac't:LUI'1J,]:y U, ah ult. t. ?'c
iear 1yu, wit ti tr'oub:Le6, W Ctfl p ,
.~;~~x' fah. %' ~..u over ~ year ~ ~,,f the better
HOW ,jr:~.Va-te bai:1.~:i)n~., ll'ld. r
~ uS~t co;~~lnh in ~.,
~.~, th hopes, ,~a, 1s ~ goal for
tend the ? overfUTLent' S ijSCai ~?olicy, is the
unrier~~tanu and x
the ywar 19U
COtIFIBENTIA1
Security Information
January 1950.
Declassified in Part- Sanitized Copy Approved for Release 2012/03/28 : CIA-RDP82-00039R000200060017-6
 1Vi I I F TI AN C.E I1 TI-I Y t ~ SINGE Li 11! U T'I ON
Shanghai has been liberated just one year.
economic heart off' the nation, and. at the same
hartgnai is the
erialistic and L).Lreaucrat1c cornpradore ppl sof0u3
t:Llfle the area where irrLp
. ~ ~ .1Fora whi:Le we cherish the strongest
,ar~over is the deepest. lhare
Y)
liarl~;hai's finance in tlic year since 'libc~x~d-
er~tht~s as?n in talking; aaou.. ~ ~.
= ~c indi relation the ugly face of ~ahsn~;hai'
tiara, we recall with ur11n.-Tl.~tc, x ~a
money market before 1ibr~ratior1.
~hanc;ha:i,'s ,ian~y ll'~.arket r.3ef ore Liberatio~l.
I. Nature and 1.~eal,l1xcs of
suffered irnpertelastic and bureaucratic cornpra-
i~ecause Shanghai had
whale Cerlt1.lry, there res..~lted a special ab-
d.o7:? capitalist re ~;ime s for a
Or. the one han~~-, imJ?erialists and
normal colonial form of econoairy? ..
rolled financial, cornrnunicationJ, public
bureaucratc cora.pr&dars cant
.~ . ~ara .. enterprises the necessary power for irr-
uti~.ities and other l~ripart~ ) ~
. ~ acrd fuel) , raw materials (c a Eton, fnod, etc.)
(hyd.roelectr~.c }ao~~~~~er
ther
'-Lal loolc~:c~ up to ;i.rnperialisrn? Can tr~a o
and even the market and cape. -
ita
l
o
hand, the bread laboring class endured the pains oi' oppreasion, exp
d in-
the eI1U.lne native capital traders an
+, c,n ~a.rld uneru~loyment, and g
Shanghai so-called pr?asperity'~; 't1~us 3hangriaa. wau iLt~,