Although it was believed by Chinese banking circles that the Japanese might have transported about $30,< 000,000 or more Chinese Government bank notes from north China to Shanghai in order to buy foreign exchange, it was not thought likely that the long queues of people waiting outside the local branches of the Bank of Communications and Bank of China to have their notes exchanged into notes which do not bear names of northern districts are part of an organized move.
The reports that the Japanese had transported $30,000,000 Chinese notes bearing the name of the port of Tientsin to Shanghai to buy foreign exchange led many people to believe yesterday that the big crowds which thronged the two institutions must be organized and paid to go there to have northern notes exchanged but Chinese bankers did not think that way.
Tt was stated that-as soon as they heard the report that the northern notes had been sent here they started restricting people to exchange notes bearing the characters of "Tientsin" and other northern notes. It the Japanese ever had. succeeded in sending northern notes to Shanghai most of those notes must have been stored somewhere and could not be used for buying foreign exchange as foreign banks here do not accept northern notes in such transactions, it was said.
Apart from that the restrictions laid down by the two banks concerned have been so strict that no large quantities of Tientsin notes could have been exchanged in favour of any organized group, it was asserted. A man could exchange only $10 Tientsin notes and so even a big organized group of people could only have a few thousand Tientsin dollars exchanged.
It was believed that most of the persons forming the queues during the past few days are poor people who possessed a few odd Tientsin notes and assistants of small exchange shops who are making a: lucrative business by accepting Tientsin notes at a reduced rate from customers who did not care fo go to the banks. A person who possessed a $10 Tientsin note might sell the notes to the exchange shop for only $9 or less. A shop might accept many such notes and send several assistants to the banks to have them exchanged realizing a profit for $1 or more for each $10 Tientsin note they bought, it was stated.
Utter confusion reigned in the gold market here yesterday when the most violent changes in prices ever known in its history occurred. There was great confusion in the same market on Thursday when northern merchants accelerated their buying activities to such an extent that the price for the 10-ounce bar once broke the $4,000 mark which was never quoted here before. Yesterday morning, the price once again increased to $4500 but early in the afternoon a downward trend was suddenly followed. It went up again but the late afternoon quotation was $2,500 indicating that buying activities were discouraged for some reason or other.
Prices of Chine: Government bonds also dropped violently yesterday -morning, registering decreases ranging from $1.70 to $3.80 but at about noon they also suddenly followed an upward trend. Their prices then showed an increase of about $1.
The Chinese press and official comments as a whole urged people not to worry about the situation asserting that it was a temporary phenomenon which did not affect the Chinese dollar as a national currency. Bonafide merchants were said to be still able to obtain foreign exchange at the official rate quoted much higher than the rate quoted in the "black" foreign exchange market. To restrict foreign exchange transactions in Shanghai was to the advantage of the country at war, it was explained.
Despite all these comments which indicate that the present situation would benefit China and her people in the long run, the fact cannot be denied that considerable anxiety is prevailing in the Chinese community here. The Chinese are led to think that as Chungkings influence does not reach Shanghai they are entirely left to their own fate.
Text read from the printed page and cleaned; old type leaves the occasional error.