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Thursday, Aug. 30, 2007

Narcotics trade boosted army scrip


Staff writer

Japan used the opium trade of Shanghai's major dealer to prop up the value of its military currency in occupied China during the war, according to a leading expert on China's wartime economy, citing a former secret document.

The latest finding in the document on the Japanese-run opium firm Hung Chi Shan Tang, now kept in the National Diet Library, reveals Japan used opium to gain economic hegemony over Chiang Kai-shek's yuan-based legal tender in the 1940s, using it to bolster the military "gunpyo" scrip, said Hideo Kobayashi, a professor at Waseda University in Tokyo.

"It has been said that opium may have been used to support the value of (Japan's) military currency, but this is the first glimpse at how the system worked and the exact amount (of opium involved)," said Kobayashi, author of a number of books on the war Japan waged and the economy of occupied China.

Japanese forces issued gunpyo to procure materials in China, using the scrip to subvert Chiang's legal tender.

In the document, Hajime Satomi, president of Hung Chi Shan Tang, said his firm in 1941 started quoting opium prices in yen terms using gunpyo, instead of legal tender.

"This means that to buy opium, (locals) would need to buy gunpyo first by selling their legal tender," Kobayashi said. "This would push up the value of gunpyo."

He also said Tokyo was engaged directly in the currency operation involving opium.

A passage regarding a financial settlement for "Mongolian opium" that appears on Page 11 of the 21-page document reads: "The impact on gunpyo operations is so huge that the gunpyo vs. legal tender operations have been all entrusted to the China Affairs Board and the Zaimukan of the Finance Ministry."

The China Affairs Board was the wartime ministry on China affairs. Zaimukan was a senior Finance Ministry position.

The document shows the amount of opium exchanged for gunpyo was valued at "nearly ¥100 million" in 1942.

"This is a tremendous amount. Opium would make a perfect weapon (against legal tender) because its sales were huge," Kobayashi said.

To back up the gunpyo value, Japan shipped various goods to China, ranging from cotton to sugar to industrial chemicals, which were made available to locals in exchange for the military scrip at distribution stations in occupied areas.

Official records showed the value goods Japan prepared to support the military note stood at ¥200 million in 1942. Opium, despite its huge value shown in the internal document, is not shown in any other records, Kobayashi said, adding, "Opium was too dirty and it has been kept secret until now."



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