Inflation

No Chinese dragon's tail ever lashed in more vicious spirals than the current Chinese inflation. During five years of war China's cost of living index has soared from 100 to 3,400 and is still soaring.

Ruby Queen cigarets have risen from 8-c- per package of ten to $20.* Camels have gone from 40-c- per pack of 20 to $200. Throughout China today it is a commonplace to find chicken selling at $20 a lb., coffee at $150 a lb., coal at $900 a ton, bread at $5 a loaf, electric light bulbs at $140 apiece, gasoline at $70 a gallon.

As usual salaried people have been the worst sufferers. But wage earners have also had hard times. It was estimated last winter that, against a 40-fold increase in the cost of rice, unskilled Chungking workers had got only a 29-fold wage increase, skilled workers only a 16-fold increase. For a while most farmers and other commodity producers made great profits. But China's runaway prices have caught and passed many producers' incomes. China's inflation pains are not only severe but general.

The causes of the inflation are clear enough. Japan has captured China's chief sources of revenue (customs, salt taxes, seaboard factory profits). China has financed its war partly by greatly increased currency circulation. On top of this, the war has brought acute shortages in the basic fields of food, clothing and transportation, and also in most luxuries. Once prices began to rise, the Government let them rise for revenue, and presently they skyrocketed.

But China's shrewd, rotund Finance Minister H. H. ("Daddy") Kung knows that his ability to control prices in vast, loosely organized China would have been doubtful in any case. The Government has set open market ceilings. In some cities they function fairly well, in others badly, depending on the local administration. In the countryside they have little or no effect. Black markets are everywhere.

There are severe penalties for people convicted of hoarding. But this crime is hard to regulate when it is committed by banks, factories and trading houses throughout China. One of the strongest remedies for inflation would be increased transportation to move available food stocks to the interior. But China has found trucks and gasoline as hard to get from her Allies as bombing planes.

The Chinese Government seems to be moving toward establishing a Ministry of Economic Warfare with authority over the whole production-consumption cycle. But the restoration of China's economic stability may well depend upon the resumption of peaceful, productive life. Perhaps the only real aid to China's economy can come through aid to China's war.

* Figures are in Chinese dollars whose purchasing power is about equal to three-quarters of a U.S. cent.

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