When Chiang Kai-shek’s government lost their battle with the Chinese Communist Party in 1949, he and his followers fled to Taiwan with China’s entire gold reserve. But exactly how much gold departed China with the defeated Generalissimo? And how did the KMT government transport it to Taiwan so secretly? NewsChina tells the story of China"s lost hoard.
By Liu Mo and Xie Ying
Hidden in the Wulai mountain range of Taiwan is a 712,000 square foot cave, guarded by more than 100 police marksmen. However, this is not a military base. It is Taiwan’s own Fort Knox, a vast coffer holding over 400 tons of gold bullion, the island’s entire gold reserve.
Among the countless ingots are several gold nuggets weighing upwards of 30 pounds, acquired over decades by Taiwan’s Central Bank, a few of which are the glittering remainder of the hundreds of tons of gold taken from the mainland by Chiang Kai-shek’s defeated Kuomintang (KMT) regime during their retreat to Taiwan at the end of the Chinese Civil War (1945-1949).
Taiwan’s leadership, including current leader Ma Ying-jeou, have avoided questions about the nature and current location of this “lost” gold reserve from an inquisitive public both in Taiwan and on the mainland. Guo Biqiang, researcher at the Second Historical Archive of China told NewsChina that Lee Tung-hui, Taiwan’s former leader, claimed during his 1994 election campaign that “mainland gold” had been lost when a customs vessel ran aground in the Yangtze River during the KMT retreat. However, a book published in Taiwan last year debunked this myth, one of many which have grown up around Chiang Kai-shek’s secret hoard.
Wu Xingyong acquired much of the source material for his new book The Secret Chinese Archives of Gold from his father, who allegedly helped Chiang Ka i- shek manage the logistics of transporting China’s gold reserves off the mainland and ensuring its safe arrival in Taiwan, the final refuge of Chiang’s defeated KMT.
“Sixty years have passed. It is time to unlock the mysteries of a voyage which has had an impact on both sides of the Taiwan Strait,” Wu told NewsChina.
Monetary Maneuvering
Dubbed “Chiang’s treasurer” by Taiwanese author and historian Li Ao, Wu Sonqing was appointed the financial director of the KMT military in 1947, only to find that the intense fighting of the Chinese Civil War left China’s coffers “in disarray,” with 80 percent of the national budget funneled into the military.
An enormous budget deficit caused the KMT government to overprint money, resulting in rampant hyperinflation. In August 1948, the KMT government in Nanjing issued a new paper currency called the Gold Standard Bond, outlawing the private hoarding of precious metals and foreign currency, which was to be turned over to the government in exchange for Gold Standard Bonds.
However, the belated currency reform failed to halt hyperinflation. Gold Standard Bonds suffered a sharp depreciation, their drop in value eventually measured in minutes rather than days. According to Wu’s book, Gold Standard Bonds issued in August 1948 at a value of US1 million were only worth 20 cents by the spring of 1949, and almost nothing the following summer. Despite the apparent failure of their currency reform, the KMT collected immense quantities of gold by issuing the bonds. According to the former deputy director of the Shanghai Institute of Finance under the Bank of China, Hong Xiaguan, who edited The History of China’s Central Bank, the KMT government had acquired a total of 52 tons of gold bullion, with 34.5 tons collected in Shanghai alone by November 1948.
Hong claims it was this “nest egg” that enabled Chiang Kai-shek to establish his KMT regime in Taiwan.
An Unknown Voyage
Caught between a series of catastrophic military defeats and political infighting, Chiang Kai-shek relinquished power in January 1949. Three months previously, according to The History of China’s Central Bank, he personally instructed Yu Hongjun, the then chairman of the Central Bank of China, to secretly transfer the confiscated gold and silver stored in the Bank of China’s Shanghai vaults to both Taiwan and Chiang’s southern stronghold of Guangzhou.
“The transportation was done in secret,” 95-year-old Zhang Jifeng, a former auditor of the Central Bank’s Shanghai branch told NewsChina. “Information about each shipment was classified, and only a few top leaders knew what was happening.”