From U.S. Gold Bricks to Central Mint Bars

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From U.S. Gold Bricks to Central Mint Bars – A Turn in China’s History(查看中文版)
By Dai Xuewen

From July,1945 to the earlier 1950, the Central Mint of the Nationalist Government had produced many gold bars in Chung-King, Shanghai, Cheng-Du and Taipei (hereafter as “CM Gold Bars”，廠條), the preliminary purpose was to stabilize value of legal tender, and, when the monetary system fallen apart at the late stage of the civil war, CM Gold Bars became an ultimate currency in the country, they were used as money by the people and ration for soldiers.

The unit weights of CM Gold Bars ranged from 1 Market Candareen (3.125g) to 10 Market Taels (312.5g). It was an unwritten rule that “10 Market Taels” was the maximum unit of all.

CM Gold Bars, however, were not the only or the earliest form of the gold released to the public by the Nationalist Government. Earlier in September, 1943, there had been gold bricks from the U.S., weighing over 400 Market Taels each. Then, Cut Lumps”(宰塊) and “Cast Nuggets”(鑄條) in a weight from 10 to 100 Market Taels were produced.

The U.S. Gold Brick (美國金磚)

A ban of gold transactions had been enforced for years since the Anti-Japanese War broke out, until September, 1945, when the Nationalist Government lifted the ban and started selling gold reserves to the markets. The Agriculture Bank(中國農民銀行) and the Domestic Goods Bank(國貨銀行) were assigned as the exclusive agents for the sales. The gold was sold in the minimum unit of 400 Market Taels which was in concert with the regular weight of an U.S. gold brick. Those U.S. gold bricks for sale were originating from the Yunnan Tin Loan Agreement of 1940 between the Chinese & The U.S. Government (中美滇錫借款合同). During the term of Agreement, more than 10 million US$ payable to the Nationalist Government were exchanged into gold in the US and shipped to China.

The gold was brought to market immediately upon arrival. But, due to the shipments were in delay all the time, the Chung-King market had to differentiate those not arrived from the arrived ones, and merchandized them in two categories “Futures Trades”(黃金期貨)  and “On-Stock Transactions”(黃金現貨), respectively.

The threshold had already outlined the policy behind, it was underlying on bulk trades in which the average people were not able to take part. The gold was expected to flow to consumers through gold shops which were the real buyers.

Cut Lumps (宰塊) & Cast Nuggets (鑄條)

The threshold was, however, too high to come across, even for gold shops, as a result, most of the gold went to speculators, instead of gold shops, let along distributed to customers. Thus, the threshold was reduced from 400 Market Taels to 10 Market Taels by the Ministry of Finance at the 23rd of October, 1944, and the Central Mint was commissioned to fulfill the increasing demands for the smaller gold pieces in two ways.

One was to cut the gold bricks into small lumps. When the cut was done, the inscription of 中央造幣廠 (i.e., the Central Mint) would be stamped on the surface of each lump. Due to no decoration or polish were given, evident traces could be found both on surfaces and edges.

Another was to melt the gold bricks and recast small nuggets. In addition to the mint name, the mint logo, and weight and fineness of each nugget would be stamped on its surface. Moreover, all of them were numbered in sequence. With a view to be in line with the name 鑄條 in Mandarin, “N“, stood for “Nugget”,which was used as a code and placed in the front of those numbers .

Cut Lumps and Cast Nuggets were both transition products descending from the aforementioned MOF order, and were both replaced by CM Gold Bars as soon as a new policy was made.

CM Gold Bars (廠條)

“The Gold and Fiat Money Equivalent to Gold Deposit Act”(黃金存款及法幣折合黃金存款辦法) hereafter as “The Gold Deposit Act”), was an important financial policy of wartime, which implemented in September of 1944. The Act allowed any term deposit no shorter than 6 months of fiat money equivalent to 1 Market Tael of Gold or more to withdraw gold when due. The threshold was further reduced 1 Market Tael, not only gold shops could afford, so did most individuals. With a view to a widespread gold distribution, this time, the deposits were undertaken by almost all the National banks and financial institutes, including, Bank of China(中國銀行), Bank of Communications (交通銀行), Agriculture Bank(中國農民銀行), Central Trust of China (中央信託局), Postal Service, Savings & Exchanges Bureau (郵政儲蓄匯業局), and their branches, in collaboration with the Central Bank.

In the beginning, people didn’t draw much attention to this new policy, until the material delays of U.S. gold shipments worn out their patience; during Feb.1-June 13, 1945, there was not even a single piece of gold arrived. Since then, futures trades were discarded, and the market overwhelmingly turned to deposit money for gold which was more favorable.   

The Gold Deposit Act had been relying on the arrival of 200 million US$ gold debited to the US$500 million loan aiding to China by the U.S. in 1942. Finally, its 1st shipment arrived in the mid of June, 1945, and all the others arrived no later than the end of 1946, which made the balance of approximately six million and seven hundred thousand ounces of pure gold. Hence, the government was able to repay those deposits and furtures trades.

The earliest CM Gold Bars were produced in Chung-King, they were 10,5 and 1 Market Tael, initially. Because the gold deposits were too popular, up to 2 million and 2 hundred thousand Market Taels of gold would have to repay if complied with to the Gold Deposit Act. The Nationalist Government, however, issued a mandate at July 30,1945, obliging any gold receivers of the Gold Deposit Act or futures trades donate 40% of the gold receivables whichever exceeded 1 Market Tael as war funds. This mandate saved for the government more than 8 hundred thousand Market Taels of gold.

With respect to the 40% donation, additional 4 types of CM Gold Bars were added, they were 6 Market Taels, 3 Market Taels, 4 Market Candarins and 2 Market Candarins; more small sizes were therefore appeared.

Since then, CM Gold Bars were distributed, in a way, direct and widespread. And, in order to gain people’s trust, weight, fineness, codes and numbers of each gold bar in associated with the mint name and logo, were all shown on surface by stamps. Such an ID system was generally adopted in all specimens.

CM Gold Bars were being used as currency, when legal tender was in serious depreciation which triggered inflation. The type of one-half Market Tael and 1 Market Tael were usually more popular due to easy to manage and fitting the average people’s needs. At the very late stage of the civil war, for similar reasons, a miniature bar weighing only 1 Market Candarin, i.e., 3.125g, used as soldier’s ration was cast by the Central Mint in Taipei.

Eventually, CM Gold Bars were not only of a kind of gold bullions used for retrieving money from markets, but also de-facto currency for price setting, value preservation or being transaction media, during rough time.

References:
1. 戴學文，《你所不知道的國府黃金》，波多西工作室，2017年4月再版；
2. 中國第二歷史檔案館編， 《中華民國史檔案資料匯編》 第五輯 第三編 財政經濟 (二)；
3. 黎東方，《平凡的我》，第二集，附錄一。頁317-320，台北國史館出版，1997年出版；
4. 李榮廷，「黃金政策之前因後果」，《民國日報》，1946.11.13。