Yang Ge And The National Government 's Wartime Fiscal Study (1937-1945)

As the American financial expert who stayed in China during the Anti-Japanese War, Arthur N. Young mainly focused on the inseparate activities of seeking for foreign aids and facilitating the monetary management. During the early period of the Anti-Japanese war, the National Government was eager to have the cash credit, which could be applied to prevent the devaluation of the fapi on a large scale. The internal and external value of the fapi determined the fate of the National Government. On the other hand, in the latter period of the war, whether the National Government could continually get the foreign aid depended on the achievements of the control of prices and checking inflation.How to use the foreign aids efficiently to conduct the monetary management? In response to the mentioned question, despite of selling the foreign currency to maintain the fapi at any cost in the early years of the war, Arthur Young ultimately concluded that inputting the international funds to support the financial market is an effecitve way. It’s proved that the fapi could be kept well at a comparatively small cost. The typical case was the Anglo-Chinese Stabilization Fund, which was highly praised by Young, actually had its influence in two years or more from June1938, when the HSBC and Bank of China started to provide funds and operate the market. However, in the operation of the Anglo-American-Chinese Stabilization Fund in1941, the National Government gradually abandoned this policy. Therefore the National Government adopted a stubborn attitude to the official exchange rate and lost control of the real exchange rate. As Young considered, it was one of the critical reasons that led to the collapse of the fapi system of the National Government.How to seek for foreign aid through the efficient monetary management which standarded for the national financial ability? After the outbreak of the Pacific War, or precisely speaking when the U. S.$500Million Dollars Loan was in discussion, the result of the monetary management affected the progress of the foreign aids to China in return. Although in this period, the factors that influenced the Chinese external credit were multidimensional, the failure of chekcing inflation through the U. S.$500Million Dollars Loan still was inneglectable. Young suggested the top leaders of the National Government many times to pay attention to the inflation which is going to the dangerous zone, meanwhile he also advised to use the U. S. aids to check the inflation. The failure was caused by both Chinese and American parties. In Young’s point view, when the dollar bond was issued, the National Government did not adjust the exchange rate accordingly or mobilize the social sectors effectively. In the adopting of the gold policies, the intentional obstructionism from the officers of the Treasury Department of the U. S. resulted to the failure of bringing them into play. All the problems above led to the increase of the inflation and the chaos of the society. Moreover they intensified the exsited contradictions between Chinese and the United States.In addition to the foreign aids and the currency, the other important contribution Young had made was the maintaining of the Chinese debt credit and the design of the postwar financial system. These two topics will be discussed in detailed in Chapter One and Chapter Four. The Young’s concept of the foreign debts prewar was continued to the wartime. In the course of the stop payment of the foreign loans, Young made the utmost possible efforts to carry on the debts repayment. He also did his best to reduce the conflicts between China and other foreign countries when the National Government decided to give up repaying the loans. It was adopoted by Dr. H. H. Kung. In regard to the postwar finance, Young emphasized that the National Government should help itself and then ask for the helps from other countries with the goal of financial stabilization. Among Young’s several concrete policy recommendations, the recovery and consolidation of the postwar financial system and the reform of the National Government was highlighted. At the same time, Young participated in the preparatory work of the International Monetary Fund and sought for aids from United Nations Relief and Rehabilitation Administration for China. These all laid a sound foundation of the relief and rehabilitation of China.