The disastrous monetary policy that brought down the Nationalists
“The rickshaw passenger is not much heavier than the money needed to pay for the ride,” a British-accented announcer intones over a sensational black-and-white newsreel of a Shanghai man riding a rickshaw with bricks of cash spilling from his lap—“literally loaded with money” simply to buy groceries.
It was the summer of 1948, and from the outside looking in, Shanghai seemed to be faring well. After over a decade of war, the shops were once again full of products. Yet as historian Stella Dong notes in Shanghai: The Rise and Fall of a Decadent City 1842-1949, “This was an illusion.” Inflation was so rampant that shops in most major Chinese cities closed in the middle of day so they could readjust their prices.
“If ordinary people looked more rich, it was only because they had no choice but to spend every last dime on consumer goods before it lost value,” writes Dong. As cigarettes rose to 18 million yuan per box and a gallon of gasoline hit 3 million yuan, middle class savings were all but wiped out. The lower classes suffered even more, with a single grain of rice reaching over 100 yuan.
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Hyper Inflated is a story from our issue, “High Steaks.” To read the entire issue, become a subscriber and receive the full magazine. Alternatively, you can purchase the digital version from the App Store.