How One Man Took China’s Gold

Just 30 days later the same coast guard cutter used to transport the first 2 million taels, was used once again, this time to transport between 600,000 and 900,000 taels of gold (22-34 tons) and a large amount of silver.

Over the next twelve months the Nationalists moved millions of taels of gold, silver and foreign exchange by both air and sea to Taiwan.

Precious air-freight

Following the December shipments, more of the Treasury’s gold was transported by air. This was after Chiang had received official word that he had lost the mainland. Sources report that in February 1949, nine C-46 military planes each flew 14,600 pounds of gold (6.6 tons) to Songshan airport in Taipei.

The Captain who led the mission had no idea about his precious cargo until he was told by a central bank official who was waiting for him on his plane. The Captain and two other colleagues are both cited as recalling three separate missions similar to that described above. It is estimated that 667,902 ounces were smuggled out of Shanghai in this fashion.

The news of the first of these air-borne missions was leaked to a Hong Kong newspaper. In light of this Chiang ordered that the subsequent two gold transport missions take place in the immediate 48 hours following the first.

A well-kept secret

How did this go on for a year without anyone knowing? Dr. Wu writes that “the movement of gold was entirely controlled by one person, Chiang Kai-shek…Even the finance minister had no power to transfer it. Chiang conveyed his orders verbally, leaving no written record. Only he and my father knew about the movements.’

What happened to the gold?

It is a widely held belief that China’s gold was used to establish the Taiwan we see today. Just six months after the gold operation began, the New Taiwan dollar was launched. It replaced the old Taiwan dollar at a ratio of one to 40,000. It is estimated that 800,000 taels of gold (and US$10 million brought from Shanghai) provided the stability to a country which had suffered hyperinflation since 1945.

The remainder of the gold is believed to have been used to resettle the 1.5 million soldiers and civilians who had fled from China, following Chiang.

The KMT have since confirmed that 2.27 million taels of gold were taken to Taiwan but dispute that this was used as the foundations of Taiwan. However, Chiang’s son, Chiang Ching-Kuo later wrote, ‘if we had not had this gold in the early period of moving the government to Taiwan, it is unimaginable what would have happened. How would we have the stability of today?’

One wonders if the Chinese are now learning from their history. Following the theft of their gold the country became hostage to paper money. Whilst the government of today and the KMT are clearly at polar opposites, when it comes to the respect for gold and the strength it gives an economy, one wonders if they are so different after all.

This article is brought to you courtesy of Jan Skoyles  from The Real Asset Co.

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