'One of the measures adopted by the Japanese authorities, in order to protect the IRB, currciiey, in com: clition with the' National Currency China, which is still the only one Fecounized by, the foreign banks, the so-called "Link System." Goods can only be exported and imported against Customs permits issued by the Federal Reserve Bank, to whom the foreign exchange bills have to bbe handed over, which are then cal culated at the "Link" rate which has Varied from 9d {0 as low ax 64d.
"la firm can obtain an equal value of import bills, can set that off ayainst its export bills, in which eave the rate of exchange' makes no difference, But unless there is this balance in imports und exports, business obviously becomes Impossible, at the ordinary fixed rate of 1s. 2d. And '4g most of the amaher firms' have considerable dimeulty in obtaining the same amount of cover for both imports and exports, this "Link System" must be regarded as a distinct indranee to foreign trad During the last year Jo ports into 'North China have been Wery heavy, How these are being Ananced is a mystery, seeing that at the present time the value of imports from Japan must greatly ex. ced exports from North China to there—at least, as far as ordinary private trading' is concerned. Despite li the talk about the success of the Yen bloc, the plain fact remains, that there is still no frac market between Yen and FRB, notes, Except for very emall quantities of a few hun dred, and then only for stated special requirements, it is Impossible to buy Yon with FRB. notes. The Japanese firms hero sell their goods in FRB. notes; indeed the chief customers of the numerous Jupanese shops. are Japanese, military people or civilians employed in some government ud: ministration or other, all of whom fire paid In FRB, notes. It is therefore obvious that the Japanese banks mist have some special arrangements With their nationals regarding ex= change, though what exuetly it is, is fuct known, Most Obscure The true situation with regard to the FRB, currency is most obscure. Nor have the efforts made in recent months by Japanese financial experts fo explain the financial situation North. China, in interviews to the foreign and Japanese press and vague statements in the Diet, helped to give cleat view of the situation. In one public interview by financial _members of the China Affairs Board it was stated that up to the end of 1999 the Federal Reserve Bank had issued holes to the value of a little over '$400,000.000.
'To cover this there were specie re-verves of: Gold Bullion "Account $28,000.00. and. Silver Bullion Ac-Goant "$16,000,000, ie, a total of $44,000,000 oF about 11 per cent. It Was further stated that' the Bank's specie reserve was far above the 49] pet cent. required by the Bank's re~ Eulations. "Though Now this latter Hatement can be reconciled with the figures previously given was not explained. Such contradictory explana-Yions scarcely tend to increase public's confidence in the new cur-Fency. The more one tries to go into the question, the more one gets the impression that even the Japanese Gnancial authorities themselves have clear-cut ideas as to the real financial situation in North China, A Complete Fullure from the mystery and confusion surrounding the FEB. currency, one thing, however, docs emerge quite clearly, and that is that the attempts fof the Japanese to establish a stable and independent eurrsney. in North China have so far been a complete failure. The FEB, currency has no standing of its own, but would appei 10 depend solely on the military Success of the Japanese the China adventure. It is, in fact, really tittle more'than a war levy, which may or may not be pald off in the long run by whatever Chinese governme:
control North China in the future. To regard it as a serious partner in the Yen bloc, which was ths original Idea behind the setting-up of the Federal Reserve Bank, would be, to say the least, very premature. "At present, anyhow, it remains an unknown quantity, and that is undoubt-easy how the public in North China, both Chinese and Japanese, regard it, "A curious situation now exists in regard fo the postage on letters from Korth China (0 foreign countries. When, owing to the fall in the dol-far, the Chungking Government dou bled the postage rates aprond, 12, on ordinary letters to $0 cents. the Pro-Yisonal Government of North China hot only did not follow suit, but aetually forbade the Post Offles here to fsue any similar notification. This was done, either in order to show their complete independence of the Chungking Government. of under the joptimistie delusion thatthe local Aollar note, of the F.UB. had an Jexternal value of 1s. 2d.
The result has been that many correspondents to England and Amer~ fea have been getting complaints, from the recipients of their letters, that they are being made to pay a surcharge for InsuMcient postage. Strangely enough. this does nol ap-Incr to be by any means teneral, and many letters still appear to' get through with only 25. cents_stamps. The position is all the more anomaly fous, us, in ronly to enquiries, one is informed unofficially in North China tone should put on the extra 25 cent one wants to be on the safe sid Tt would be interesting to know, how thie point Ix being dealt with by the, International Postal Union, as pre= sumably the Chinese government is til the only recognized postal thority with foreign countries.
Text read from the printed page and cleaned; old type leaves the occasional error.