Forgotten Ally: China's World War II, 1937-1945 (47 page)

The Henan famine was an example, albeit one of the most horrific, of a wider phenomenon: the unraveling of the Nationalist state after 1941 following China’s entry into the global war. In retrospect, it is surprising that there were not even more famines during the war years, although the massive impoverishment of the countryside was a clear consequence of the conflict.
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Two decades after the war, Arthur Young reflected, with some understatement, that “it was unfortunate that the National Government failed to deal more effectively with agricultural problems.” He observed that when the Communists had come to power after 1949, they had immediately instituted a land tax, and also that once the Nationalists had moved to Taiwan in 1949, they managed to institute a land-reform policy that did indeed draw revenue successfully from the agricultural sector. Young acknowledged that part of the reason for the failure in wartime arose from tensions between classes, since landlords strongly opposed the idea of their fields being taxed. The other reason was the government’s “urgent problems of survival.”
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The Henan famine showed that the consequences of the financial squeeze on the Nationalists were something like a Greek tragedy: individuals could have behaved differently, but overall the result was inescapable. (In contrast, the Chinese famine during the Great Leap Forward under Mao in 1958–1962 could have been ended by a top-level policy change, and eventually was.)
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Corruption, carelessness, and callousness all played their part. But in the end there was no obviously better choice that Chiang could have made. Young acknowledged this, writing that the sight of speculation and hoarding caused “local people to have an adverse attitude to the National Government. Thus, it helped to soften up the country for the communists.” Yet he maintained that “as a fiscal measure, it [the grain tax] was an indispensable means of covering war costs, and an item to the government’s credit.”
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The continuing resistance of the National Government may well have been dependent on the grain tax. But those who paid the price were the peasants Theodore White saw dying in the fields of Henan.

As the war situation worsened, so did the economy. The introduction of the grain tax in kind in 1942 had worsened the situation for the peasants, but had at least succeeded in lessening the effects of inflation on food prices for the army. However, inflation soon began to take hold again. Part of the cause was the Japanese-influenced dilution of the currency, and Arthur Young, whose sympathies were entirely with Nationalist China, fully acknowledged a variety of other reasons, including scarcity of goods, the refugee crisis, and the reduction in the labor force because of recruitment to the armies. Yet overall, his judgment was that “China’s wartime inflation was caused chiefly by monetary excesses.”
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When Chiang’s government found itself in difficulty, it turned to the printing press to produce more banknotes. Between mid-1941 and late 1944 prices rose by 10 percent or more per month.
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In February 1940 a
shijin
(approximately half a kilogram) of rice in Chongqing had cost 2 yuan; by December (during the year when the Burma Road had been closed over the summer) it was 18.35, and by the start of 1942, just after Pearl Harbor, it stood close to 40, a twentyfold increase in just two years. In the last year of the war, prices would rise even faster.

During the war years China did not quite experience the kind of massive hyperinflation that marked the Weimar Republic in Germany or Hungary in the interwar period, something that Young noted was “to China’s credit.” (It was during the Civil War of 1946–1949 that prices would finally run out of control.) But the rise in prices had a tangible effect on the already miserable living standards of many groups whose support the government needed to survive, and made the difference between the haves and the have-nots starker. The very rich, who could convert their holdings into foreign currency and send it abroad, did so. (In Young’s estimation, some $300 million left China in this way during the war.) Senior army officers could use their status to reward themselves financially, as their units’ pay was delivered in a lump sum for them to distribute. But the inevitable result was that junior officers and privates found their allotted pay reduced, and that its purchasing power shrank month by month. The grain tax might mean that rice was provided for them, albeit in grudging quantities, but they still had to buy meat, vegetables, toiletries, and clothes. By June 1944 the monthly cost of living for ordinary soldiers in Chengdu, one of Sichuan’s major cities, was over eleven times their pay.
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This meant that they had to turn to various desperate measures to cope.

Chongqing’s press was heavily censored. But a saying of the time had it that the lack of newsstands was compensated for by the number of teashops and the stories that circulated within them. One story making the rounds illustrated the effects of the rocketing price index on people’s everyday lives:

In a certain agency in Chongqing there was a colonel who up to then had worked in the city, and had a wife and three children. His life was very tough! One day the agency sent him to a place outside the city to carry out an inspection, which would require a month. His home only had one quilt, and he did not have the money to add another one. The weather was cold, and if he took the quilt with him, then his family would freeze. So the only thing to do was not to go. “The duty of a soldier is to follow orders”: the senior officer knew that he had deliberately opposed his order, and because the senior officer did not believe that one man could be so poor that he could only have one quilt, he cashiered him.
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The details of the story might have owed as much to mythmaking as fact, but there was no doubt that inflation seriously damaged the prestige of the army as a profession. Arthur Young reported tales of officers deserting because their low incomes made them look foolish. Another teahouse story told of an officer who was caught by a superior hauling water to make cash on the side. His commander told him to carry on, but “take off your lieutenant colonel’s badge first.”
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The Nationalist armies were suffering from the rot that sets in when an army is left on the defensive for too long, unsure of its purpose and forced into endless waiting. These soldiers could not know that within a few months China would face the greatest enemy assault since the brutal summer of 1938.

While the army fell victim to inflation, and scarcity of goods and starvation reigned in the countryside, life in the cities also became pinched and wearying. Graham Peck noted that those with money and black-market connections could obtain luxuries including “expensive imported clothes, canned goods [and] liquor,” but that “many wandering beggars from the country had begun camping in the official auto-dugouts [shelters] on the edge of town.”
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Chinese observers also recorded the depressing reality of everyday life for those on fixed salaries, without entrepreneurial connections. One notice in a university canteen attracted hollow laughter: “Don’t try to eat enough to be full.” Another, more intentionally dry wit noted:

There are a lot of mice in Sichuan. There are a lot of sparrows too. If somebody could invent a trap for mice and sparrows, then the traps would be on sale everywhere. But Sichuan people couldn’t catch sparrows. They didn’t find out whether the flavor of sparrow was good enough to eat.
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The civil servants who kept Chongqing’s government running also found themselves on the wrong side of the growing gap between those privileged few who could use connections and the black market to get hold of quality goods, and the vast majority who could not. Between the start of the war and the end of 1943 the income of teachers had risen only a fifth as much as the cost of living, and that of government officials only a tenth.
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The middle class had once put its hopes in the Nationalists to bring about a modernized, stable China that would enable them to fulfill their aspirations. Inflation destroyed the savings of many of these Chinese. Arthur Young told the story of a family who had been saving a large amount each year for college fees; when their son reached the age of eighteen, “they took all the funds and bought him a cake.”
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Young also paid particular attention to the disastrous effect that inflation and corruption had had on China’s educated intellectuals, who became “disillusioned and antigovernment” and whose complaints were then suppressed.
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One dissatisfied official described his home life in a sarcastic poem, griping that “the holes in the clothes on your body increase, so it’s lucky that Sichuan doesn’t get very cold,” and that “the whole family is crowded in one small half of a room, all constantly crying out like birds.”
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The financial crisis also had a disastrous effect on the Nationalists’ hopes of using the war to build a new, more integrated nation. From refugee relief to Du Zhongyuan’s far-off visions of a highway and airline network for China, all plans were now hostage to the reality of limited funds and soaring inflation. By 1943, even when adjusted for inflation, the government was spending just 25 percent of what it had been in 1937 on military and civilian expenses.
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Resentment toward those who could avoid the financial crisis grew. While few accused Chiang Kai-shek himself of being extravagant, stories alleging his wife’s profligacy abounded. American reporters on the ground, increasingly disillusioned with an ally whom they perceived as corrupt and unenthusiastic, used gossip about Song Meiling’s behavior as a symbol of a wider malaise within the government. In one story, boxes being sent across the Burma Hump for Madame Chiang turned out to be full of clothes and trinkets. (The rumor was embellished as it spread; before long, it was said that the boxes had been stuffed with “ermine brassieres.”)
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H. H. Kung, the husband of Meiling’s sister Ailing, was widely suspected to be the most corrupt man in China.

Naturally, many observers, including Americans such as Peck and White, threw the Nationalists’ failures into starker relief by comparing them with Communist successes. Yet all was far from well in Yan’an. The Nationalists’ subsidy to the region had ended in 1939, and the blockade that replaced it made the economic situation much more difficult. The bad harvests in 1940 and 1941 that caused the disastrous famine in Henan also affected the ShaanGanNing area. Because the Nationalist currency
(fabi)
was no longer freely available there, the Communists had to issue their own currency for local use, saving the hard-to-obtain Nationalist
fabi
to import goods that could not be produced locally. The result was massive inflation, higher even than in the Nationalist areas. By 1944 prices that had increased 755 times since 1937 in Chongqing had increased 5,647 times in Yan’an. The economy of Mao’s base area was in danger of collapse.
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Mao’s response was to stress the importance of self-sufficiency. If goods could not be imported or exported successfully, and there was a lack of convertible currency, then the region would have to supply itself. In December 1942 Mao published an important essay on the economic solution for the besieged region. His proposals were notably pragmatic. “We shall simply be resigning ourselves to extinction,” Mao wrote, “unless we develop both the private and public sectors of the economy.” Up to that point, there had been few taxes on much of the population of the region. Now heavier taxation was essential, Mao admitted, but in exchange the party must actively support the development of handicrafts, agriculture, and commerce so that the farmers can “gain more than they give.”
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The taxes were certainly heavy, and included major taxes in kind (grain, straw, and wool) on the peasants, as well as some taxes in cash. But the party took great care to avoid the mistakes that had caused such misery in the Nationalist areas. The poorest fifth of the peasantry were still exempted from taxes, although this further increased the burden on the middle-level peasants. For those paying grain taxes the amount levied shot up from less than 1 percent of the total crop in 1938 to 13.6 percent of the total in 1941. (It decreased somewhat in the following years.)
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Mao contrasted this policy with one that made “endless demands on the people,” stressing military and government priorities to the detriment of the wider population: “That is a Kuomintang [Nationalist] mode of thinking which we must never adopt.”
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At a time when the famine in Henan was reaching its height because of the massive demands of the land tax in kind, this was an important point indeed. Peasants forced to pay the Communists much higher levies felt bitter, but they escaped the harrowing deprivations experienced in Henan, where villagers gave their last grain to the tax collectors and were left to starve. The Communist policy was exacting, but it was progressive. It was also effective: during the war years, production of grain in Yan’an increased by almost 40 percent; more than fourteen times as many bolts of cotton were woven by 1943 as compared to 1938; and there was active development of salt, coal, and even basic oil and gas.
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Not that the Communists were above supplementing their income in more dubious ways: there is good evidence that they were also producing opium in the base area, strictly for export to the Nationalist and Japanese zones.
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