Tobogganing in China

For ten months, currency in Free China had remained steady at a black market rate of 200 Chinese dollars to one U.S. dollar. This gave rise to a faint hope that the rate might be stabilized, a start made towards a basis for postwar trade. Last week this hope went aglimmering. The Chinese dollar, which slipped after the fall of Kweilin and Liuchow, tobogganed to one-third of its previous value. Last week it took 600 Chinese dollars to buy one U.S. dollar. Businessmen, who have long staggered under loads of currency on their way to the bank, now hire coolies to carry the day's receipts.

In Chungking, where the fantastic inflation has caused businessmen to fear the financial worst, best guesses on the cause of the drop were: 1) military defeats, 2) diplomatic differences between the U.S. and China. But businessmen gloomily predicted that the end is not yet in sight. An ounce of gold (cost in U.S. dollars: $35) now sells for 30,000 Chinese dollars. Thus, the free exchange rate must go above 800-to-1 before it is proportionate to the gold exchange rate.

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