This is a partial transcription of four letters sent from Shanghai in 1948, to some place in English-speaking North America; describing a situation of runaway inflation, revolution, and the hope, if necessary, of escaping to a better life. The observations of the obviously well-educated writer can be compared with the political and economic history of the period preceding Mao Tse-Tung’s victory over the Nationalists. Readers may note that further parallels exist with hyper-inflationary experiences in other countries.
As the decades pass, it becomes ever harder to access source material from countries which were less able of preserving it, whether through poverty of conflicts. In this article, with due respect for the moral and intellectual rights of the person concerned, a partial transcription is made of four letters sent from Shanghai in 1948, to some place in English-speaking North America, by which one may consider British Honduras and certain islands in the Caribbean to be included. The story has been found to be repeated by other writers, whose works have found their way into the Internet, and thus by use of exact words, or paraphrase, no specific person should be identifiable, unless a true name is given. To paraphrase J. A. Froude in his introduction to Oceana, (1886), “… although I introduce nothing which was not written by someone, I have involved my descriptions with details of time, place, circumstance, and initials, all … of which serve to put an arm’s length distance between the primary source material, and this final work.”
The observations of an obviously well-educated letter writer, an inhabitant of Shanghai, can be compared with the political and economic history of the period preceding Mao Zedong’s victory over the Chinese Nationalists. In this sense, the material here provided is largely descriptive, but by examining the postal rates involved, an estimate can be made of the inflation rate which the authorities were willing to indicate through the printing of new stamp issues.
The four letters that were reviewed were all sent by air-mail, apparently penned by a teacher: educated, observant, bourgeois, careful, and perhaps, somewhat psychologically affected by the difficult situation in which she is living. Her handwriting seems to be of the North American, Palmer style, and her English exceeds the level of many e-mails that American professionals send to their colleagues. Excepting the first missive, she uses stationery with a letter-head; while three different styles of envelope are used. The one which has her name embossed, has a tri-lingual (French, English, Spanish) label affixed, the other three, of two different types, were designed for air-mail, with the wording in English. Only one of these is of the standard light paper, with the blue and red border.
She identifies herself as “Miss” in her return address, which is not an absolute guarantee of marital status, but possibly a form of “Ma’am”. Doubt is created by reference to a child in her care, which must be a daughter, or other female relative. In the first case, considering the political situation, she may be either the guardian, or a mother left without a husband. Cultural questions are involved; we cannot know how much she has been westernized.
We know even less of the recipient. Also single, with an Anglo-Saxon surname, she lived in some relatively isolated capital of one of the administrative divisions of her country, a place which would not enthuse too many readers. In the final letter, the post-office has replaced the name of that place with something which is a total backwater to anyone, but those who live nearby. It will not be found in an atlas or a geographical dictionary, at least under ordinary circumstances.
Perhaps these women met on a business trip, or one made for a vacation. The names here are changed, the Shanghai resident will be called Lili Mei, a very common name, and her daughter shall be called Pauline, a pun, for this writer, on Chinese “Po Lin”. Her friend in North America shall be referred to as Mary. Considering the densely populated area of Shanghai, this should make it impossible for anyone to claim that the information is about a family member. Furthermore, numismatic items such as those viewed by the present author most often disappear from the pages of the internet, once a buyer is found, which makes it necessary that the publicly-viewable information be preserved for the wider public (with the only regret that the ownership information is lost to those who might most be interested). However, even with these name changes, it is possible to focus on the historical facts of the missives, which, however stated, are commonly known.
The First Letter
The first letter viewed was sent on May 15, 1948, with 4 postage stamps depicting Sun Yat-Sen, 2 with a value of 50,00 yuan, and 2 of 5,000 yuan. Lili complains that the “clerk” brought back the package that she had sent to Mary, “because it was not wrapped properly and then the postage was not right”. She goes on to say that she will send something which will be easier to go through the mail, “… and I hope you’ll like it better. It’s a tapestry, famous Nanking product, only not as good as it use[d] to be”.
“My summer plans are so uncertain on account of the political situation and my health condition. At present I am hoping to go to Kunming (south West [sic] China …. [where] they [have] spring weather all the year round. The only problem is … I have to take the route by air. It would be too strenuous to go any other way … .”
“Our own house in Kuling has not been occupied for more than 11 years. I’m sure it will need a great deal of repair before we can go in. … So if I can manage, I will most likely go to Kunming … . The trip will be 8 hours by air from here.”
“Pauline’s school will probably close around the later [sic] part of June so I won’t be able to leave before then. I will have to leave the house or rather the apt. to the cleaning lady and her daughter, as the cleaning coolie does stay in the apt. I am hoping that no [friends from the interior] will ask me to let them have [it] for the summer.”
That last paragraph is a bit ambiguous about whether the maid is the same as the coolie, or if the latter is a separate employee. At any rate, we have some indications about Lili’s economic level: one or two employees, with a child, living in, a house in inland China, money for an airplane trip to go on summer vacation on the coast, and no desire to let anyone potentially house-sit, or rent – whoever works in the house is more trusted than her friends. We learn that Lili has health problems, and that there is a school-girl in the home, who has a school-year that ends at the same time as in North America, at least when the present author lived there. The value of postage paid will serve as a rough measure of inflation The political situation may or may not have been mentioned in previous correspondence, It is only mentioned as a potential obstacle to the vacation.
The Second Letter
A second pair of pages was penned on June 24 and 25. The envelope contains 4 stamps, 3 of 50,000 yuan, 1 of 20,000. This gives an inflation rate of 41.66 % in 41 days, which does not of itself show hyperinflation, defined as 50 % in a month. However, from the text below, it can be surmised that the postal rate is a bargain.
“It was about this time last year that I got on board the freighter. … [T]he fact that I am home is enough to satisfy me. I am not as restless as I was in the sanitarium and I am much happier home inspite [sic] of the chaotic conditions here.
“Fom the paper I realize our situation here is going from bad to worse especially the wild inflation. Two days ago, I changed some U.S.[currency] and got $2,700,000 Chinese national currency for $1. U.S.! It is really unbelievable. Of course prices have gone up sky high in all commodities. And yet if one is using U.S. [currency] things are quite cheap. For example my rent is $4,000,000 C.N.C. but if you convert it into U.S. it’s not quite two dollars. All my rooms are bigger than at McGiffert, in fact twice as big. So you see things are much cheaper here than in the States.
“Pauline’s school will be over this week-end, much earlier than I thought … She will … have to stay in the hospital for a week. … [Two friends] have asked me to join them in Kuling but the easiest and less strenuous trip would be to Peking. …
“Did the parcel I sent you last month reach you yet? The blue silk was sent to your home address …
(25th) I just had a phone message telling me that the exchange rate has gone up again. $3.800,000 C.N.C. to $1. U.S. … …. with the situation so bad … “
Here we have seen further evidence of a middle-class status, the sending of silk to America, more references to vacations, although the destination seems to have changed, always depending on the “situation”, which this time has been described as “chaotic” and “so bad”. Reference is made again to Pauline, her health, and also to that of Lili herself.
The Third Letter
It is September 18, and the letter was written a day earlier. Inflation, to judge by the value of the postage paid, is now serious. There is one stamp of 1,000,000, and there are 2 of 50,000 yuan. The letter was written September 17, mailed on the 18th, giving 123 days since the first letter. This is exactly 10 times the amount paid to send the first letter, or 999 %. This is definitely hyperinflation. In the about 85 days since the June letter, postage has gone up 647%. At 50 % a month, only about 336% would be the expected result for 90 days, and 505% for 120 days.
Lili acknowledges receipt of a letter that Mary sent September 10, so we get 7 days for air-mail between the 2 hemispheres. Lili says she came back from Peking by air 3 weeks ago with Pauline, and that the doctors there only found trouble with a removable organ, which would be extirpated a couple of months later. The understatement is in the words, “The doctors couldn’t find anything wrong with her, except ….” In the period that she has been back, many friends have visited, some who have returned from the United States, but others who are going, specifically on the ship S.S. General Gordon. The destination is not a place the reader would guess, “… but none goes to New York”, and it isn’t California, either. There is no mention of the port-of-call.
“You probably have read from the papers that we changed our currency since the 19th of last month. … Of course this means that we had another discount on our bank account. All our money suffered when we changed from two Chinese national currency [sic] to one Japanese military note. Then when was was [sic] over we changed back (200 military notes to one C.N.C. ), and now we have to change into gold yuen [sic, at all times] at the rate of $3,000,000 C.N.C. to one gold yuen. So if one had $200,000,000 C.N.C. at the outbreak of the war, one has $1.00 gold yuen now! Very often I felt guilty of keeping my money in the States and yet with this situation going on how could I do otherwise! This may be wrong from a patriotic point of view. But as far as security is concerned I think I was justified in doing it. Because I don’t want to be a burden to any one person or organization when I’m in difficulty. Now the rate is $4.00 gold yuen to $1.00 U.S. and no more black market.”
It is worth pointing out the postage stamps that Lili used do not reflect any new currency. That would be seen in the last letter, which contains old stamps with new values. The exchange rate also is interesting, as it is the same that Germany had for many years after the Second World War, and reminiscent of the post-Weimar hyperinflationary currency.
This letter included a picture of Lili, taken between 1946 and 1947, although it cannot be guaranteed that it originally belonged there. It is not possible to determine where the photo was taken, but based on the type of sidewalk, trees, and cars, the construction of the suburban houses, and a possible entrance to a garage, at least a private driveway, it would be somewhere in the United States or Canada.
In the photograph, she is wearing a long, expensive looking overcoat, open, reaching to just below the knees. The dress goes to about a foot above the shoes, no belt, neckline as far up as possible, making it look rather like a nun’s habit. The shoes may contain medium high heels, but not of the spiked kind. She wears glasses, and is possibly squinting, because the sun is in her eyes for proper lighting. Her left hand supports a large handbag; the right is plunged into an overcoat pocket. The hair is parted in the middle, the facial features are not clear enough, but suggest seriousness, if not severity. She might be anywhere from 25 to 50. It is impossible to give an opinion of her height.
The Final Letter
We now come to the fourth letter of what was obviously a larger group. It was written between the 9th and 13th of December, and mailed out on the 14th, 215 days after the first one here analyzed. This is a difference of 214 days. It has so many postage stamps, that they are affixed on the reverse side, 13 of them 2 of 3,000,000, 6 of 50,000, 2 say 70.00, but have a new value of 50, 3 say 17, but have a new value of 5.00. Based on the previous letter, this author guesses that $3,000,000 is equal to $1.00 of the new values, If this assumption is correct, in old values, the postage paid was $ 351,300.000. This gives an inflation rate of over 300,000 % in 7 months.
Lili has booked passage on the President Wilson, which is to leave Shanghai in January of 1949, but she cannot get a passport for Pauline. She believes she will not be able to finish all the necessary procedures in time, and so, if Pauline cannot accompany her to the United States, “we may go to Hong Kong first. A friend is going by plaine to-morrow [sic] to Hong Kong and make necessary arrangements for our living quarters. … then we will see …
S.S. President Wilson. Copyright © Leslie Jones.Courtesy of the Boston Public Library, Leslie Jones Collection. Some Rights Reserved.Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0) [Description of licence at link “Some Rights Reserved”.]
“I keep hoping that things would be better so that we don’t have to leave Shanghai. And if someone is willing to take Pauline away to a place of safety I’d rather stay put in Shanghai …
“I also hope the U.S. will stop their aid as this would only prolong the war and I doubt very much if the present regime is worth supporting. It had 20 years’ chance to try out their principles and they have failed. And because of their corruption and inefficiency, have brought the whole nation to such a desperate state. It is time for others to take over and make drastic reforms economically and politically. I feel that who ever [sic] comes to rule would be a relief as the present situation is such that it couldn’t be any worse. The present government has lost all confidence and support here, which I regret to say.”
Lili now thanks Mary for a cheque, and says that she has sent her an item of jewellery which she brought back from Peking. The content is as confusing as the political situation:
“I have sent you [an item] which I brought back from Peking for fear that you would send me things. And then I don’t know whether you have brought yourself a watch yet.”
She goes on to talk about a purchase of watches overseas, the quantity and intended recipients are not very clearly expressed, but it is clear that she has one more than she needs.
“I am sending [the two items] to you because somehow I feel if anything happens and that I will not see you again I would like you to have the watch. … “ A total of one and a half pages were dedicated to this issue. She ends with another historical note, continuing with her unaccustomed streak of errors.
“There has been so much tragic mishappenings both from planes and boats. The last few days quite a few planes had crashed and a big boat “Kianga” sank outside Woosung where more than 2500 lives have been lost.”
She ends the letter by saying that she is including a copy of a picture taken for the purpose of her visa or passport to the U.S., so that Mary will know “how I am”, or, how she looks. It is remotely possible that it is the picture mentioned above, but the author doubts it, because the dates do not coincide, no is the image previously described suitable for immigration purposes.
Inflation did not end in 1948, but in 1949. While looking for further evidence in this somewhat unscientific method of measuring inflation, an image of a letter to some part of the Americas was found on the web-site, stampauctionnetwork.com, showing 16 stamps, originally worth 30,000 yuan, overwritten with the value 100,000 yuan, the total value thus being 16 million yuan, 5 times more than the value of the letter of September mentioned above. This is 75% of the true inflation rate, as measured up to its end in mid-March. If this letter had perhaps been heavier, with a 33% higher postal rate, (or conversely, if there was a lag in adjusting for inflation), the values would coincide. [More examples shall be sought.]
The hyper-inflationary environment which the author of the letters lived through is apparent. Palpable, but not so descriptive, until the final letter, is the political situation. The conclusions she makes are both naïve and erroneous, based on the present author’s own experience. One can never be sure if the nadir of a bad situation has arrived. Looking for salvation in whatever novelty comes along is surely a sign of faulty thinking. If she never managed to leave China, she would probably not have had the opportunity to enjoy the vibrancy which finally came to the Asian Giant, unless she had renounced the good life that she had lived up to that point in time.
The practice of the letter-writer of saving money outside of her mother country as a hedge against inflation would no longer be so easy. More and more countries exchange information on bank transactions from abroad, both as a protection against money laundering, and what is often misnamed tax evasion, when the terminology tax avoidance might be more accurate. The writer had qualms about this, but followers of the news from countries experiencing political and economic uncertainties may find that this practice still exists, although the numer of safe havens for their money is rapidly dwindling. If Lili Mei never left Shanghai, would she have been able to recover the money from overseas, if it had been needed? Would she accidently have denounced herself to the Communist authorities as a hoarder, had she naively tried to ask about the possibility? To have suffered so much as a result of hyperinflation, and then to face the consequences of her apparent lack of patriotism, that might have led to an extremely low morale.
On the less personal level, looking at the value of postage paid, while assuming a constant weight to a specific world postal region, a reasonable coincidence has been found between the true inflation rate, and the price increases in sending mail.
© Paul Karl Moeller, January 6, 2014, March 12, 2014.
For Nanking tapestries, referred to as “famous”, see Ward, Ralph A. A Day – or More, in Nanking, China, Brief Guide Book in English, Nanking, 1938. Item 79: “Nanking Tapestry”.
The Kianga is also known as “Jiangya”. Li Heng. “Jiangya” Shipwreck in 1948- A Tragedy More Serious Than Titanic“.Last updated at: (Beijing Time) Friday, November 23, 2001 PD (People’s Daily) Online Staff. A similar accident happened the following year, at the same city, and again compared to the Titanic. The story was related to this writer by the son of a friend of a Shanghai industrialist, who had, according to the tale, paid 10 times the usual fare to get out of Shanghai, when the ship Tai Ping was already more than full. However, instead of leaving around 6 P.M., it kept on loading more and more refugees, and did not set sail until around midnight. It sunk en route to Taiwan. Wikipedia has it as the result of a collision, it was told to this author that the ship sank due to a storm. For this latter event, see Xinji Letu. “The Sinking of the “Chinese Titanic“. Beijing Today. July 8, 2011.
The letter writer has kept with the conservative practices befitting the auditing industry. Her number of 2,500 victims is the rounded figure given on the link to People’s Daily, which gives 2,353 victims. Higher numbers are given elsewhere. A page titled “Greatest Maritime Disasters” gives between 2,750 and 3,920 victims, while a page in Spanish gives 3,500 to 5000. An example of flight from the Chinese mainland is given in the bibliography in Cochran, The Lius of Shanghai.
The following on-line references confirm support the text supplied above. The references which are specific to Hong Kong are mentioned because of the Japanese military occupation there, means that a common currency was in use both in the occupied British colony, and in Shanghai. Wikipedia, Haettich, and Burdekin with Hsin-Hui [Bibliography], mention the 3,000,000 yuan exchange rate.Zhaojin gives information paralleling the above, including the 4 to 1 gold yuan per U.S. dollar. Howe, p. 39, n. 14, quotes a woman with sentiments similar to Mary’s, everything had been lost, how could Mao Tse-tung be worse? Cienciala also mentions people looking hopefully to Mao, because he had avoided mentioning aboliton of private property.
Some mention of escape from Shanghai to Hong Kong is found in Liverpool and its Chinese Seamen. “What happened after the forced repatriations?” n.d. http://www.halfandhalf.org.uk/atr.htm
Angus, Maddison. “Chapter 2: Economic Decline and External Humiliation, 1820-1949″ in OECD Development Centre Studies. Chinese Economic Performance in the Long Run, 960-2030 AD. OECD Publishing, 2007. Pp. 51 ff.
Bengolea, Eduardo. Re: Las Sobrecargas – Las Razones : Los Hechos Económicos. 30 Oct 2011.
Burdekin, Richard C. K., and Hsin-hui I. H. Whited.
Exporting Hyprinflation: The Long Arm of Chiang Kai-shek. Claremont McKenna College and University of Southern Colorado. June 21.
Cienciala, Anna M. “The Chinese Revolution and Chinese Communism to 1949”, ch. 9 of The Communist Nations Since 1917. 1999. http://acienciala.faculty.ku.edu/communistnationssince1917/ch9.html
Coble, Parks M. Chinese Capitalists in Japan’s New Order: The Occupied Lower Yanzi, 1937-1945. University of California Press. 2003. p. 91.
Cochran, Sherman. The Lius of Shanghai. Harvard University Press. 2013. P. 200.
Davis Hanson, Victor. National Review. Changes in the Pacific: A Return to the 1930s.
Ebeling, Richard. The Freeman.The Great Chinese Inflation. Inflation Undermined Popular Support Against Communism. July 5, 2010.
Haettich, John F. Addingupthefacts.com. “Hyperinflation Case Studies” > “China”.http://addingupthefacts.com/hyperinflation-case-studies/
Hernández, Roberto. El Comercio Exterior de China Hasta 1948. El Colegio de México. Sin fecha.
Hewitt, Mike. Market Oracle. Hyperinflation in China, 1937 – 1949. May 22, 2007.
Hewitt, Mike. DollarDaze. Hyperinflation Around the Globe. October 14, 2007.
Howe, Christopher, ed.. Shanghai: Revolution and Development in an Asian Metropolis. Cambridge University Press. 1981. http://books.google.com.ar/books?id=7qxBefeT9HAC&dq=inflation+shanghai+1948
King Fairbank, John, and Crispin Twitchett, Denis, eds. The Cambridge History of China: Republican China, 1912-1949. Part 1. Cambridge University Press. 1983. Pp. 114, 372-3.
Currency and Coercion: The Political Economy of International Monetary Power. Pp. 51 – 61. Princeton University Press. 1997. http://books.google.com/books?id=kdXVqWtfyLMC&dq=Jonathan+Kirshner&hl=es&source=gbs_navlinks_s
Kwan, Stanley S. K., and Kwan, Nicole. The Dragon and the Crown: Hong Kong Memoirs. Hong Kong University Press. 2009. Page 37. http://books.google.com/books?id=_APTGz-sdAcC&dq=Hong+Kong+dollar+military+yen+1942+rate&source=gbs_navlinks_s
Littlejohn, Justin. “Chinese Shanghai“. The Spectator. July 22, 1948. P. 8.
Matthews, Clifford, and Cheung, Oswald. Dispersal and Renewal: Hong Kong University During the War Years. “Wartime Intelligence in China” by Oswald Cheung. Hong Kong University Press, 1998. p. 335.
Special Correspondent. The Argus (Melbourne, Australia). — Japs are Fighting the War with Bad Money.: Currency Manipulation and the Use of ‘Military Yen‘ are Impoverishing Occupied Countries. 21 November 1942. Page 2, Supplement.
Wikipedia. “Hyperinflation” : “China“.
Wong Yat-hei. South China Morning Post. “A yen for justice“. 6 October 2011.
Yan, Xun. “How the Chinese inflation developed during the Second world war and how it is affected by the progress of war? A regional comparison”. Work in progress. EH590 Thesis Workshop, LSE.
Zhaojin Ji. A History of Modern Shanghai Banking: The Rise and Decline of China’s Finance Capitalism. Armonk, New York: M.E. Sharpe, 2003. Pp. 227 – 236.