However, the veil of secrecy was broken by Reuters reporter George Vine, who witnessed porters loading strongboxes onto a 500-ton customs ship anchored in Shanghai’s Huangpu River on December 2, 1948. Knowing the KMT’s mainland regime to be in disarray, Vine assumed these small but apparently heavy boxes were filled with Shanghai’s gold reserves, and wired a report to his news agency saying that China’s gold was being kept out of Communist hands in a typically Chinese way – on the backs of coolies.
In his book, Wu claims that the KMT government chose a customs ship instead of a naval vessel to prevent infiltration by underground Communist Party members within the KMT. The ship’s crew did not know they were transporting gold until they accidently broke a box during loading. Mobilized by the Communist Party spies working among the crew, the customs ship later refused KMT cargoes, forcing the KMT government to enlist the help of its navy.
The news about the first transportation soon spread, and caused financial panic. Hunan’s local assembly decried the actions of the government, claiming that the gold was the property of ordinary citizens and that the transfer would “impair the people’s confidence in Gold Standard Bonds.”
Six months later, over 100,000 Shanghainese rushed to exchange Gold Standard Bonds back into gold or silver following a KMT announcement in November 1948, three months after the issue of the Bonds, that the Bonds were once again able to be redeemed for precious metals. According to Li Jinzheng, a history professor at Nankai University, five people suffocated to death in lines outside the banks along Shanghai’s Bund, with another 105 injured. Due to a maximum daily exchange limit of 50kg of gold and silver, many reportedly slept in the street or on barges to guarantee a place at the front of the next day’s line.
Despite this “gold rush,” only five percent of the gold reserve in Shanghai’s Central Bank was exchanged, according to a report in the Shanghai-based newspaper Shen Bao.
The remaining gold was later transported to Taiwan in four batches under the command of Yu Hongjun and Wu Songqing.
Another two batches stored in the US followed in August 1949. Based on historical records and interviews with witnesses, Wu Xingyong estimates that over 143 tons of gold, worth about US400 million at the time, were transported to Taiwan during the KMT’s retreat. Including foreign currency and silver with a value equivalent to about 109 tons of gold bullion, the capital transferred to Taiwan totaled about 219 tons. 18.8 tons was later sent back to the mainland to fund the KMT retreat.
Most of the hoard was transported directly to Taiwan by Shanghainese customs vessels or sent overland to the southeastern port of Xiamen, before being transferred to Taiwan by KMT warships.
In December last year, five letters in Chiang Kai-shek’s handwriting were discovered in Taiwan. These were revealed to be communications discussing the particulars of transporting the gold with KMT general Tang Enbo, at the time the garrison commander of Beijing, Shanghai and Hangzhou.
Though the exact quantity of the gold was not mentioned, in the last letter Chiang asked Tang to leave 1.25 tons of gold behind during the retreat, although the Communists reported seizing less than half a ton of gold during the liberation of Beijing, with the remainder unaccounted for.
All That Glitters …
Chiang Kai-shek’s military retreat was accompanied by around two million mainland refugees, who increased the population of Taiwan to a total of eight million people. The KMT government spent much of the transferred gold issuing New Taiwan dollars to support over one million former officials and their family members as well as to pay for a 700,000-strong defense force for the island.
A report by the president of Taiwan’s Central Bank in June 1950 revealed that the KMT government had spent almost all the transferred gold reserves by the end of May that year. Military expenditure in 1949 and 1950 exceeded total revenues. However, US aid paid to Taiwan during the Korean War pulled the island out of financial difficulties. Viewing Taiwan as a valuable platform for its Pacific operations, the US offered the KMT over US100 million a year, with payments beginning in 1951. Taiwan then concentrated its efforts on economic development and won global acclaim as one of the “four Asian Tiger economies” alongside Hong Kong, Singapore and South Korea, continuing to prosper even after the US withdrew financial support in 1965.
