Monday, Apr. 25, 1949

Nest Egg

Just before his retirement to his native village of Fenghua last January, President Chiang Kai-shek thoughtfully moved some $300 million of Nationalist gold, silver and foreign exchange from Nanking and Shanghai to safer vaults in Formosa and South China. There it was put under tight control of generals and officials loyal to Chiang. If the Communists toppled the peace-seeking government of Acting President Li Tsung-jen and tried to occupy all of China, the gold and silver would serve Chiang's still-faithful followers as a nest egg for further resistance against the Reds.

Last week Acting President Li wanted the nest egg back. He needed it, he said, to curb inflation--although a lot more was obviously needed for that Herculean task than the Gimo's reserve. Li also wanted the treasure to pay Nationalist troops along the Yangtze in hard cash, thus boost their morale. To Fenghua went old Marshal Yen Hsi-shan, governor of Shansi province, to plead with Chiang for return of the funds.

The Generalissimo listened politely, but he refused to let go the cash. If Li surrendered to the Communists, it would be lost. If Li meant to fight on for "honorable peace," it would always be handy.

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