Legal tender is the legal tender issued by the National Government in China, from 65438 to 0935. The issue of legal tender ended the silver-based monetary system used by China for nearly 500 years. Later, due to the hyperinflation caused by the issuance of a large number of legal tender, it was replaced by gold certificates at 1948.
Currency background
1928 after the northern expedition unified China, the national government began to gradually implement the monetary reform, which was mainly implemented by Song Ziwen and Kong Xiangxi. The first step is to adopt state-owned shares in Bank of China and Bank of Communications by means of administrative order, and change the control right into full state-owned in disguise (the banks that were originally run by the government are now semi-run). The Kuomintang, together with the former Central Bank of the National Government, basically controlled the banking industry in China. 1929, American economy is depressed. In 1934, President Roosevelt passed the "Silver Purchase Act" to please the members of the domestic silver-producing States, and the Ministry of Finance bought silver as a reserve, which immediately caused the international silver price to rise. At that time, China was the third largest silver-based country, and silver outflow and deflation immediately occurred, which led to a sharp rise in interest rates and the closure of some banks. Therefore, monetary reform has become a top priority for national financial management.
End of currency period
During War of Resistance against Japanese Aggression and the War of Liberation, the Kuomintang government adopted the inflation policy, and the legal tender depreciated sharply.
1937 On the eve of the Anti-Japanese War, the total amount of legal tender issued was only1400 million yuan, and on the eve of Japan's surrender, the legal tender issued had reached 500 billion yuan. By April, 1947, the circulation had increased to more than 16 trillion yuan. 1948, the circulation of legal tender reached more than 660 trillion, 470,000 times that of War of Resistance against Japanese Aggression, the price rose by 34.92 million times, and legal tender completely collapsed. 1937 before War of Resistance against Japanese Aggression, the total circulation of legal tender did not exceed1400 million yuan. During the period from 1937 War of Resistance against Japanese Aggression to 194 1 Anglo-American War, in order to destroy the economy of China's rear area, Japan forcibly exchanged French currency issued by Japan in the Japanese occupied area, and then sent it to Shanghai to exchange foreign exchange of the National Government. The National Government obtained loans of more than 1000 million pounds and $50 million from Britain and the United States respectively, but they were still not enough to support the exchange rate of the French currency. 1940, cancel unrestricted foreign exchange transactions. So the value of legal tender began to fall.
During the Anti-Japanese War, financial expenditure increased and legal tender was issued in large quantities. By the end of the war, it had been issued to 556.9 billion yuan, about 400 times more than before the war. After 1946, the circulation of legal tender increased even more, from 556.9 billion in the victory of the Anti-Japanese War to 65438+604 trillion in August, which increased by more than 1000 times in three years, causing vicious inflation among the people. At that time, there was a paper mill that used low-denomination legal tender as raw material for paper making to make a profit. When Song Ziwen was prime minister, he tried to stabilize legal tender through financial policy, and sold the gold in stock and bought it back. However, because the circulation of legal tender is still increasing, it has not achieved results. 1948 After May, Weng became prime minister and Wang became finance minister, and began to plan another monetary reform, replacing legal tender with gold certificates.
Currency evaluation
Some people think that the legal tender issued by the national bank and guaranteed by the national credit decoupled the currency from the precious metals with fluctuating prices, which was a progressive financial system reform in China at that time; This is also a feature of modern national financial system. The issuance of legal tender unifies the domestic currency, while the control of currency issuance falls in the hands of the government, and the domestic hard currency such as silver is therefore concentrated in the hands of the government. Legal tender played an indispensable role in maintaining China's finance during the Anti-Japanese War. However, the actual effect of the implementation is that government-run banks plundered people's wealth and destroyed people's savings.