Thely plan, however, was frustrated by the Chinese Government. issuing] special regulations for the control of foreign exchange. Moreover the at tempt to collect National Government notes was impeded in the beinning by the necessity of first call-{ng in the large amount of yen notes circulating in North China, said to have amounted to ¥.60,000,600.
"The failure of the notes of the:
Federal Reserve Banke {0 assert them. selves 0 far ax the sole currency of North China is due to three further Feasons:—(1) Considerable parts of North China, often those from which export produce is shipped, are. still Inthe hands of the Chinese, the so-called guerilla areas, Here the new notes cannot be used fund anyone caught with them in his assession is promptly shot, In con-'Requience all purchases from these areas have to be made in the old notes. (2) The Federal Reserve Bank Itself has: been unable to sell foreign exchange Against Its notes. The originators of the scheme undoubtedly hoped to be able (0 Tay hands on the silver reserves still remaining. in North China, Amountiny to $60,000,000, and to have fused these as reserve for obtaining foreign exchange. But this silver 1s in banks in the foreign concessions in Tientsin. So. far it has not been itiven up. (3) The refusal of the foreign Yanks to deal in FRB. notes or to sell foreign exchange for them.
Warned Against Proposal The Japanese military authorities who were responsible for the establishment of the Federal Reserve Bank, against, it is said, the advice and warnings of financial elreles in Japan, have used peculiar methods to. ty" and drive out the old notes. It was Aecreed, under "threat of severe penalties, that the old notes could only be exchanged for new notes at 4 discount of 10 per cent, (90 cents ERB. for $1 old money), Another decree was issued that after March 1939" the old "notes would be illegal nese banks and dealing in tthe risk of "severe—punishment, Those measures have so far totally. failed in their object.
Then too, the introduction of the! new currency has seriously affected Japanese trade. At rst, as long as the National Government currency: was practically ona par with the Yen at Is. 2d, the Japanese banks were quite content to treat the PLB. notes us part of the yen bloc and to exchange them at par. But when Tater, chiefly rix a result of these Japanese ancial manipulations, the National "Government's currency broke and fell to round eight pence, things took on a different aspect The banks began to lose heavily and had to stop accepting FRB. notes, thus seriously curtailing the Japanese Import business.
From all this it is obvious that at present the notes of the F. R., Bank cannot be called a stable' currency and are actually nothing more than akind of gambling counter.
Text read from the printed page and cleaned; old type leaves the occasional error.