Paper Pangs

Two days after three bullets put the Premier of China to bed (see above), Acting Premier & Finance Minister Dr. H. H. Kung abruptly "Nationalized" the age-old basis of Chinese money, silver. Chinese could still hoard all the gold they pleased, but Dr. Kung made it treason for Chinese to hold silver which he ordered into the Government's banks. To a nation that has never had any great confidence in paper, the Chinese Government decreed that its paper is legal tender and not redeemable in either silver or gold.

Significance. As Dr. Kung warned Washington last spring, President Roosevelt's jacking up of the world price of silver (TIME, April 22) could only disorganize the price structure of China and drive her off the silver standard. The question was last week whether Mr. Roosevelt had driven China into the fiscal arms of Britain. Sir Frederick Leith-Ross of the British Exchequer has been in China for some weeks. He is rumored to have made available -L-10,000,000 as a "monetary re-organization loan" to Nanking, with Chinese currency to be linked with the pound sterling. This last week could not be confirmed, but British support was immediately obvious in an Order in Council legalizing Chinese paper notes in all transactions with British subjects. The Japanese Press in an outburst of anti-British rage freely aired the loan rumor. In any case 400,000,000 Chinese blamed 125,000,000 U. S. citizens for depriving them of hard money.

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