From: mpcgram-owner@papermoneyworld.net on behalf of MPCgram [mpcgram@yahoo.com] Sent: Thursday, October 12, 2006 10:49 AM To: mpcgram@papermoneyworld.net Subject: MPCGram 1508 ------------------------ / MPC Gram News Letter / ----------------------- =========================================== MPC GRAM =========================================== Vol 7, no 1508 Thursday October 12, 2006 Japanese Puppet Banks in China and an Old letter by Jim Downey Although most people view the German invasion of Poland in September 1939 as the start of WWII, an argument can be made that the Japanese occupation of Manchuria in 1931 marked the real commencement of the war (this is the approach of Schwan and Boling in Remembered). The occupation of Manchuria was the beginning of the Japanese attempt at extending its hegemony over eastern Asia. As the Japanese military spread throughout China during the 1930s, Japanese occupation of China's financial system followed. The Japanese set up a system of banks throughout China for the purpose of controlling China's currency and financial resources. These puppet banks issued a rather extensive series of notes and coins. Although the Japanese military was initially successful in occupying large portions of China, control of the Chinese financial system was not so successful. The collapse of the Chinese economy was a concern of the Allies, particularly the United States, during the war. The breakdown of the Chinese economy forced the War Department to pay US forces in China with US currency rather than with local currency which was the practice in the other theaters of war. The following information is taken verbatim from a classified United States intelligence report dated June 22, 1943. It is in the form of a letter. Interestingly, although the contents of the letter have been declassified, the identity of the sender and the recipient remains classified after 63 years! "A lot of people have been wondering about the currency warfare in occupied China which we thought you would be interested to have some details about. Most merciless and noteworthy among Japan's aggressive measures against China is currency warfare. The Japanese have been expanding their own banking and currency systems and those of their puppets on the one hand and making every assault against the Chinese legal tender on the other. Their purpose is to seize as much materials as possible from occupied China. Japan has adopted different financial and currency policies in the various parts of occupied China. The first invasion bank was created by the Japanese in China in October, 1934, two months after Japanese troops penetrated Kalgan, former capital of Chahar province. Capitalized at $1,000,000, the bank jointly operated by the "Central Bank of Manchukuo" and the puppet regime in southern Chahar for the purpose of extending the bogus notes of the "Central Bank of Manchukuo." It was reorganized in to the present "Mengkiang Bank" and was placed under the control of the "Mengkiang Government" upon the latter's inauguration after the outbreak of the war in 1937. Its capital was then increased to $12,000,000, and later increased to $60,000,000. Recent reports indicate that the capital has been increased to $150,000,000. The "Mengkiang Bank" has been issuing bogus notes, but has so far failed to curtail the circulation of the Chinese legal tender. Not satisfied with issuing bogus money alone, the Japanese have seized a number of native banks in Chahar, Shasi and Suiyan and reorganized them into three industrial banks. The so-called "Southern Chahar Industrial Bank" was formed by 13 native banks in Kalgan and Suanhwa (southern Chahar) with a capital of $1,000,000 of which $500,000 came from the "Mengkiang Bank." The third is the "Mongolian Industrial Bank." Capitalized at $1,000,000, the bank was reorganized from 18 banks in Kweisui, Fongchen, Tsining, and Paotow (all railway cities in the Inner Mongolian province of Suiyan). The situation has been more complicated in North China than in Inner Mongolia. It was not until 1938 that the Japanese ordered their puppets to organize the "China Federal Reserve Bank." Capitalized at $23,000,000, the puppet bank was created for drawing the reserves from all the existing banks in North China and issuing new notes. The first measure adopted by the Japanese after the inauguration of the bank was to prohibit the use of legal tender. The order had to be compensated, however, by depreciating the value of the "FRB" notes because the people preferred the use of legal tender. The Japanese then ordered the control of trade, forcing the use of the bogus notes as the sole medium of exchange. The position of the notes was comparatively stabilized late in 1939, as the Japanese extended the control of export trade throughout North China. The increasing inflow of Japanese goods to North China, however, resulted in the concentration of the "FRB" notes in to the hands of the Japanese themselves, thus producing harm instead of profit. Measures were adopted both by the Japanese and by the puppets in 1940 to combat the worsening situation, but little was achieved. continued in Gram 1509 ***************************************************** Championship Question Corner Question: Question 164, difficulty 2. Who was the emperor of Manchukuo? What was distinctive about the Manchukuo flag and why is that particular flag of interest to numismatists? Yesterday's Question 163, difficulty 2. Who taught an ANA Summer Seminar class on world counterfeit paper money? Question: Kathy Myers answered: The "gramster" must be away on a trip. Always seems that that's when the number of issues picks up. I am getting spoiled, again, by the frequency of reading the gram. Glad my hubby and Tony James responded to the question, as I never got back to the computer to venture my guess. I would have gotten it right, because I remember that the newbie in me was quit impressed to see that Joe is the expert in not just military numismatics, but world paper money as well...I don't know who comes up with the difficulty scale for the questions, but I think Question 164 should be rated higher than a 2. I just can't find anything in the question to help pinpoint an answer. Gee, the mind's a terrible thing to waste!? I guess, however, it takes an old fart to know one. [What a hoot! When I read your response about question 164 I laughed. I thought that possibly I should consult the Gram staff personnel cart to see who is responsible for assigninng question difficulty then I remembered that I am responsible for it all. The joke was really on me because at that moment I did not know that I had failed to enter a question 164 in Gram 1057. I had intended to go back and enter a question AND put in a news story about Wendell running for the ANA board. Instead I forgot them both though I did make comments on Wendell in my editorial.--Ed.] ========================================== Editorial ========================================== Jim Downey has found another great source of information. I love his column on this topic begun today. Besides the content of the column, I am intrigued by the source. I would love to know from and to whom the letter was sent. It would probably be anticlimatic. We probably would not know either of them. My brother in law's father who died very recently served in China during World War II. He was a physician somewho assigned to a Chinese division. I met the gentleman several times and had a few opportunities to talk to him about his experiences. Of course I now wish that I had talked much more and recorded the conversations too. He told me the division and the name of the commanding general. I went to the Internet and found cooberating information, but he was not interested in pursuing--or even reading--any of the information. I guess I can understand that since my own father was much the same was and I guess the Greatest Generation generally operates that way. I did as him how he was paid. He sat very quiet and seemed to travel to another time then said that they did not have any use for money and that he did not think that he had been paid in the field the entire time that he was there. I suspect that the first part is correct--he had no need for money--such that he forgot about ever being paid. I did not push it again since he had given the question careful consideratoin. ========================================= Mail Call =========================================== Dear Editor, The Grams are coming in fine now. It was just your long "vacation" that worried me. Thanks Bill =========================================== 2006 The London Paper Money Fair has moved to: Victory Services Club, 63 Seymour Street, off Edgware Road, Marble Arch London and the dates are: Nov 26. see: www.britishnotes.co.uk or www.londonpapermoneyfair.co.uk Nov 11, Boling house warming party and mini Fest (1600-2000). Nov 16-19, 2007 Pcda St Louis 2007 MPCFest: March 23-25 2007 details TBA. [Reservations received: John Cheney(T, k), Harold Kroll(T), Ski, Louise and Joe Boling (k), Warner and Jane (auxilliary)(T), Ian and Bella Marshall(T), Jim Downey(T), Howard Daniel(T,M), Bill Yanchick and Miles (T), Kathy and Dan Freeland (k,T), Sparky Watson (T), Roger Urce(T), Ray and Steve Feller, Fred and Judy (auxiliary) Schwan(T). [Totals: festers 19, new Festers 0, Tiger lillies (auxilliary) 2, k=king room] Eternal Festers: Mike Cummings, Robert Kutcher, Leo May. Coordinating instructions. Please try to coordinate ground transportation from Cleveland, Detroit or Toledo Airports to reduce rental cars. If you cannot find a ride on your own contact adjutant and transportation officer Sparky Watson (mark.watson@edwards.af.mil). Neither Sparky nor the Fest accept any responsibility for ground transportation, but we will be happy to try to coordinate a ride for you. This MIGHT include ground transportation being sent from Fest Headquarters, but you cannot count on this and you might have to wait depending on other demands. Memphis 21-23 June. ANA Summer semnar Session I: June 24-29, 2007* Session II: June 30-July 6, 2007 ANA Convention, Milwaukee. ========================================== for dealer Hot Contact list, ANA MPC museum holdings and other static information please click this link: http://www.papermoneyworld.net/Gramattichments.htm ========================================= POST / BASE EXCHANGE(PX/BX/NEX) Dump your dupes! Your classified advertisement for items for sale, purchase or trade will be run here for free. Send your ads to the gram. This service is for everyone, most humble dealer or most advanced collector. The point is to make the gram more interesting. In all cases confirm your order via email first. WANTED SECTION: Collectors may submit lists of items wanted for their collections for listing here. WANTED - JAPANESE INVASION MONEY (JIM). Collector/researcher of these notes by zone, type, and block letter, or number will buy or trade.  Checklist available, Anythinfg unusual is of particular interest. Mike Payton, 6609 Craig, Merriam, KS. USA 66202, papermoneymike@yahoo.com Dealers and collectors who have these items, are then encouraged to list them for sale in the above section as a reply. Wanted listings will run for a period of 1 month. ======================================= MPCGram Staff: Publisher, editor: Fred Schwan fred@papermoneyworld.net; Subscription Manager:Doug Bell- doug@papermoneyworld.net Tuesday Columnist : JoeBoling- JoeBoling@aol.com Friday Columnist: Warner Talso: wtalso@aol.com Fest Auctioneer: Larry "Ski"Smulczenski - skitex@cox.net, Critic:Harold Kroll - HARBONS@aol.com Scholarship Coordinator: Marcus Turner- marucs@papermoneyworld.net; Webmaster and Technical Advisors:Doug Bell "Wiz" - doug@papermoneyworld.net Russ Walsh -russ.walsh@gte.net Fact Checker: Warner Talso -Calendar Coordinator: John and Nancy Wilson -The Boss: Judy Schwan MPC Gram is published by BNR Press and papermoneyworld.com as a free service to the community of military money collectors. Your suggestions, criticisms, complaints, editorial contributions, letters, and even praise are very welcome. 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