Chapter 145: Inflation
Forced Requisition continues.
The next afternoon, Gu Yansheng was working in the office when the door was suddenly pushed open. Kobayashi Nobuo stormed in furiously, bringing two gendarmes with him.
“I told you to stop! Are you deaf?”
Gu Yansheng put down the document in his hand, slowly capped his pen, and walked out: “Mr. Kobayashi, why so angry? Please sit. Xiao Lou, serve tea.”
“I told you to stop! Now! Call right now!” Kobayashi Nobuo was furious, slamming the table repeatedly.
Gu Yansheng sighed, picked up the phone, called Kagesa Sadaki, and after connecting, said with considerable resentment: “Mr. Kagesa, is there a final decision on the grain requisition now? Lieutenant Colonel Kobayashi brought troops to my office to question me. I don’t know whose orders to follow.”
“Give him the phone.”
External conflicts turned into internal enemy conflicts. Gu Yansheng handed over the phone.
Kobayashi gave Gu Yansheng a hateful glare, took the phone, and started arguing heatedly with Kagesa Sadaki in Japanese, spouting rapid-fire words.
From the outcome of the argument, it seemed Kobayashi lost. Words like “baka” and “yarou” and other insults, Gu Yansheng could still understand.
Kobayashi slammed the phone down hard, nearly smashing it.
He pressed close to Gu Yansheng and asked: “Don’t you know how much damage the forced requisition will cause to Shanghai’s economy?”
If he still had to ask him, that meant he had lost.
Gu Yansheng showed no good expression either. “Mr. Kobayashi, what if I do know? I’m in a difficult position too! Your Gendarmerie Headquarters changes its opinions every moment, one opinion after another. Can’t you unify your commands before issuing them?”
Kobayashi stared intently at Gu Yansheng, his eyes practically shooting fire. “You idiots!”
Kobayashi stormed out in a huff.
Liu Xiaolou watched nervously from the doorway. “Division Chief, there won’t be any trouble, right?”
“Of course there won’t be.” Gu Yansheng’s expression returned to calm, very nonchalant.
“Kagesa is a soldier who wants to support the Wang Faction’s establishment. Kobayashi is a scholar who wants Shanghai’s economy. If Kagesa could give Kobayashi two or three years to develop Shanghai’s economy without interference, perhaps Kobayashi really could become the Japanese Army’s money bag.
But now, both men empty their pockets—they’re cleaner than their faces, no money. No matter how much they argue, it’s useless. The Wang Faction’s establishment is the only measure of whether Kagesa’s work succeeds or fails. If there’s anyone who wants the puppet government established more than the Wang Faction, Kagesa has to be one.
Kagesa won’t care about him. Kobayashi is doomed to fail.”
Forced Requisition continues.
Citizens frantically queue for grain, merchants frantically sell grain, the joint enforcement team frantically moves grain from warehouses, Sha Shun and Zhang Xiaolin use various channels to frantically transport grain, SH City’s stored grain is rapidly depleted.
Grain from out of town dares not enter the city anymore, and internal grain stocks are being consumed without production.
Over five consecutive days, everyone in SH City went crazy for grain. Finally, the joint enforcement team completed one round of inspection. All registered warehouses in SH City had their stored grain completely cleared out.
That evening, Wen Yan came to report that the city government’s warehouses were already piled with twelve thousand tons of grain.
“I also greeted the major merchants along the way. This is the total of bonds I sold in the past two days, including those signed with grain merchants—currently 43.76 million in bonds.
Excluding the grain merchants’ portion, the merchants’ donations are about 38 million. All the money, as per your instructions, foreign currency untouched, all military scrip exchanged for foreign currency on the same day, now all deposited in HSBC Bank.
Sales progress is slow; convincing merchants one by one takes time. It’s estimated that after visiting all the merchants in the SH urban area, this number should double.
“Good.” Gu Yansheng was very satisfied with this progress. “I’ve seen the newspapers these past few days; grain prices are rising instead of falling.”
Wen Yan nodded. “At first, with our forced requisition, grain merchants urgently sold grain, so grain prices were quickly suppressed. Merchants desperately sold grain to offload before our requisition, but after these days of requisition, those that could be exchanged for bonds have been. Stored grain on the market is rapidly decreasing. Although citizens grabbed grain for a few days, some didn’t stock up, and there are quite a few of them.
Especially those enterprise factories with canteens; it’s impossible for them to stock as much as individuals. They usually purchase daily or weekly.
Because they have demand for buying grain—even desperation to grab grain—it pushes grain prices up. Moreover, there are far fewer merchants with grain to sell now, so prices are skyrocketing, rising very quickly, several prices a day—accurately, several per hour.
The price for the person queuing in front and behind can differ by hundreds. Now, those actively selling are a bunch of desperate merchants selling secretly. Their small warehouses are hidden; it’s hard for us to check even if we want to.”
“How much now?”
“Sixty kilograms of rice used to be twelve bucks; now it’s two thousand four hundred.”
Wen Yan added.
“Fortunately, Division Chief, you had foresight and told me to exchange the military scrip we got for foreign currency and take it out the same day. Otherwise, the actual value of the military scrip in our hands would shrink massively.
When I went to exchange today, there was a huge crowd at the Economic Department’s door. From the looks of it, panic has already set in.”
“It’s started.” Gu Yansheng smiled.
Inflation began.
Since you want chaos under heaven, let’s have chaos. First step: scrap the military scrip.
Grain prices inflate, then affecting pricing of other goods.
Flour at 2000, bread can’t be 50; bread at 3000, labor, utilities, rent, rickshaw pullers who need to eat—all prices must rise. This step is unstoppable.
Wen Yan continued, “I asked people at the Economic Department; they’ve contacted Lieutenant Colonel Kobayashi at Gendarmerie Headquarters. He seems to have implemented something called floating exchange rate, but it updates prices daily and now can’t keep up with reality at all.
Some donating merchants called or even came to city government crying, begging me: what will our bonds ultimately be redeemed for? Please, don’t let it be military scrip, or they’ll be ruined.
The Japanese pushed military scrip, and they held quite a bit. This time I went door-to-door fundraising; many gave me large amounts of military scrip. Now, they’re the ones who want military scrip least.”
Gu Yansheng smiled faintly upon hearing this: “You can tell them the new government will have its own currency. The bonds in their hands will be the safest thing. Let them rest assured; having helped the new government, we will surely remember this favor.”
“Good, then I know how to reply.” Wen Yan took a wooden box from his briefcase, containing a seal and a key.
“Mr., besides the bond accounts, those merchants were too enthusiastic, insisting on giving me things or they wouldn’t donate. I couldn’t refuse, so I accepted some gifts—not much from each, but quite a lot together. I opened an anonymous safe deposit box at HSBC Bank and put them all in there.”
Not easy. Gu Yansheng was so moved he nearly teared up; finally, return money from Wen Yan.
Last time he asked about Hongkou Inspection Department; Wen Yan had been in charge for two months but hadn’t turned over a dime. He thought Wen Yan didn’t get it, working diligently for the Japanese.
Turns out he was watched by Agent Headquarters, dared not make big moves; small money barely covers subordinates, understandable not turning over to Gu Yansheng.
Now the road is cleared for him; finally seeing money.
If helping Japanese doesn’t involve taking money, Gu Yansheng would fire him first.
“What things?”
“Antiques and calligraphy, ginseng and deer antler tonics, some gold and silver jewelry and such. Merchants said for my wife, various excuses to stuff me.” Wen Yan smiled embarrassedly.
Gu Yansheng also smiled, pointing at the box: “Then take it yourself. Tonics I can’t finish; you’re middle-aged and need supplementing. Pick a few jewelry pieces for your wife; I don’t need them.”
“Mr., this isn’t good.”
“No need to refuse.”
Wen Yan was about to say more, but Gu Yansheng waved: “I don’t lack these. First pick some for your family. Leading a team, you must share with subordinates. I’m like this, you’re like this; bring the rest to me.”
“Thank you, Mr.”
“Mm, go do your work. Stop grain requisition for now. Continue pushing bonds with merchants urgently, but no more military scrip payments; must be other assets. Let them exchange military scrip with Japanese themselves. I estimate Japanese may intervene on military scrip later; we can’t hold it.”
“Yes, understood.”
“Right, how much cotton yarn?”
“Quite a lot, around two thousand bales.”
“Good, go.”
Kobayashi’s been quiet these days; still hasn’t found talent to convince Kagesa.
But even convincing now is too late; momentum is set. Even the king or his father couldn’t change it. Only if Rice God came, raining millions of tons of rice, could Shanghai’s prices be smashed down.
Inflation continues.
Shanghai’s goods prices completely disrupted; grain prices sky-high, pushing up all other prices.
Next came military scrip shortage; citizens’ military scrip couldn’t buy anything, so they flocked to Economic Department demanding foreign currency exchange.
SH urban area’s grain gone, but Concession has grain; exchange to foreign currency, still smuggle rice back from Concession.
But Kobayashi’s foreign currency from Mainland Japan limited, can’t withstand citizens’ runs. Even after several floating exchange rate adjustments, still forced to close doors by crowds.
Announced temporary halt to all military scrip exchanges due to abnormal prices causing abnormal military scrip value fluctuation.
Kobayashi trying to preserve the scant foreign currency inventory in warehouse.
But this notice at Economic Department door directly caused military scrip credit bankruptcy.
Economic Department shut down!
“Military scrip became waste paper!”
This news spread, more people surged to Economic Department’s exchange points everywhere; closed doors smashed open by angry crowds on site.
Inside equipment, tables, chairs all grabbed clean.
Gendarmes maintaining order arrived later; citizens scattered.
No food, no grain, military scrip turned waste paper; ordinary families might last days with prior buys, but factories providing work meals stopped first.
Far-reaching impacts began.
“No food, then strike!”
Cotton yarn factories, grain factories sparked first strike wave; they suffered heaviest in this event.
Merchants may be pro-Japanese, but workers aren’t; no food, no one can make it work.
Soon other factories started striking.
Protests on streets protesting, looters looting.
City government entrance daily filled with crowds shouting for grain shortage solution.
Shanghai’s chaos unstoppable.
Newspapers curse daily.
Ring ring, ring ring.
“Director Gu, come to Gendarmerie Headquarters immediately.” Gendarme Commander Miura Jiro’s voice on the phone.
“Yes.”
Things blown up big; Gu Yansheng hung up, redialed Mr. Hase.
“Mr. Hase, Gendarmerie Headquarters wants me over. Honestly, I’m worried they’ll trouble me.”
Hase Jinagawa straightforward: “No worry, I’ll go.”
“Good.”
Gu Yansheng calls his backers; Hase Jinagawa one, Minister Zhou one.
Called Minister Zhou.
Minister Zhou: “Come to me directly; I’ll go with you.”
Gu Yansheng drove to him; upon arrival, both taken to meeting room. Hase Jinagawa already there, also in room Kobayashi Nobuo and Kagesa Sadaki.
But Kobayashi’s expression showed he’d already argued with Kagesa.
“Since all here, let’s meet. Sit.”
Miura Jiro seriously: “Forced Requisition incident brought serious problems to Shanghai’s economy. Now strike wave and rice shortage severe. Director Gu, you’re the handler; how to handle next?”
Gu Yansheng thought: “To solve, transfer rice from Jiangsu and Anhui into Shanghai. With food, workers stop making noise.”
Miura Jiro puzzled: “We send troops to requisition grain, then transfer from outside? What do we gain circling?”
Gu Yansheng frowned, more puzzled: “General Miura Your Excellency, Forced Requisition purpose to solve Pacification Army’s military supplies. Now rice piled in city government warehouse; problem solved.”
“But it created new problems.”
“Of course new problems; family has two pants, one Shanghai one Jiangsu. Now Shanghai’s to Pacification Army; Shanghai bare-assed? Wasn’t this foreseeable? Forced Requisition isn’t production; won’t create new rice.”
“Then how solve Shanghai’s problem?”
“Buy rice.”
“Money?”
Gu Yansheng didn’t answer, smiled pausing: “General Miura Your Excellency, I know you’re blaming me, but self-reflect: for a given result, where did I go wrong? I followed orders, implemented Forced Requisition.
But now, you seem to want me conjure nonexistent thing—either money or grain.
If already had, why Forced Requisition? Pardon my inability; can’t answer your question.”
