The introduction of the new currency in North China has led up to the present critical situation in the finances of the country, it was learned in authoritative circles yesterday. The introduction of the new currency, sponsored by Japan, was said to have been the main fault. leading up to the present serious situation. The currency itself, it was stated, was non-convertible into paper currency, but was convertible at par with the yen into the Chinese National Government currency. The natural consequence of this was that the Chinese Government currency in the north, which was convertible, disappeared from circulation, mainly owing to it being bought up by the banks, with the Reserve Bank notes, and transshipped to Shanghai to buy foreign currencies, principally sterling.
This caused a tremendous demand for foreign currencies from the Central Bank of China, and it was stated that the daily application jumped from about £50,000 a day to about £500,000 a day. Naturally, the Chinese National Government was not prepared to support in this manner a currency issued by the Peiping Provisional Government through the Reserve Bank, under the auspices of the Japanese. The method devised ior checking the outflow of Chinese Government resources was to impose restrictions on the sale of foreign currency and make allotments weekly according to the Government's idea of the legitimate requirements of the market.
Text read from the printed page and cleaned; old type leaves the occasional error.