An Incredible Challenge; Completing A Set of Republic Of China Banknotes – (1912-1949)

The Republic of China emerged from the Chinese Revolution of 1911-12. Previously, various warlords and emperors ruled the citizens of this vast country. Later, mismanagement by the Republic’s government combined with two wars led to a multi-year inflation. This ended in ruinous hyperinflation and a change in governments. However, it also fostered the creation of some great paper money rarities. To my mind, the formidable task of acquiring an example of each makes the completion of a set of Republic banknotes virtually impossible.

Chiang Kai-shek rose to lead the Republic in 1927. Shortly after assuming power, he initiated a purge of his Communist opposition. This created an intermittent war that was to last twenty years. Tragically, initially in 1932 and later in force in 1937, the Japanese invaded and eventually occupied much of China until their loss in World War II. The combination of fighting the war against Japan and the conflicts and later Civil War (1946-49) with the Communists, drained the financial resources of Chiang’s government. With his war-torn country generating insufficient revenue he increasingly depended upon the printing press to finance the wars and government.

By the mid-1930’s the early signs of inflation began to appear across China. Earlier the yuan was on par with the dollar. In fact, most Republic banknotes are printed in English and are often denominated in dollars. As the wars wore on, and Chiang created more and more currency, the Chinese inflationary spiral took hold. In June 1937, one U.S. dollar was worth 3.7 Chinese yuan. By December 1941, the dollar was worth 18.9 yuan. Four years later, in late 1945, it took 1220 yuan to buy one U.S. dollar. After the war with Japan ended, Chiang was left to face a regrouped and strengthened Communist opposition. His final desperate attempt to conquer the Communists resulted in an incredible output of inflationary currency. Finally, in 1949, when the Communists under Mao Zedong overthrew the government, 23.3 million of the Republic’s yuan were needed to purchase one meagre U.S. dollar(footnote 1).

The ever-increasing inflation wreaked havoc on the Chinese People. Little by little at first, and overwhelmingly later, they saw the hopes and dreams for their future evaporate as the yuan lost value and their money and savings bought less and less. Finally, when the Communists gained power Mao replaced the Republic’s yuan with his new currency. Overnight, all earlier Republic paper money became worthless. Wealthy people became poor, and the poor became destitute. Everyone lost all hope for their future.

Fear and anger permeated the country. With their money worthless through no fault of their own, both the wealthy and poor discarded, defaced, burned and otherwise destroyed their Republic of China banknotes. Why not! The paper money only reminded them of the better lives they had. But now they were worth more for generating heat from a bonfire than as money. Ultra common banknotes met their destruction along with scarce or seldom seen ones.

The resulting effect of the massive and wonton destruction of the Republic’s paper currency created a silver lining for today’s collectors. It produced some truly elusive and highly desirable rarities. The elimination of most Republic banknotes claimed virtually the entire populations of certain notes. This is especially true for some banknotes displaying important place names, printing factories or official signatures. These were often printed in very small quantities which were further reduced by the carnage. This left some remaining survivors of utmost rarity, and their few extant specimens the Holy Grail of Chinese Republic paper money collecting.

Despite the long-held collector’s quest for high-grade banknotes, some Republic notes are unknown in uncirculated condition as their wholesale destruction left a virtual void. For this reason, it is not unusual for an extremely rare banknote property to only be found in Very Fine or even lower grade. Importantly, until recently many collectors ignored acquiring a note in low-grade no matter how rare. This, in hopes of finding a high-grade specimen. However, this is changing as many now recognize that an uncirculated note they covet may no longer exist.

Most rare notes only survived because they were in the hands of the few collectors of the time or were mounted in books or pinned on walls. Or, they were lost or misplaced only to be found years later. It is often the lucky collector who locates one great banknote in any condition. Further, today’s collectors now accept the fact that notes they seek may show evidence of being taped, mounted or have signs of repair. And if they don’t make the purchase, it may be years or never before they have another chance. Confirming their elusiveness, some rarities only appear on the market once every several years. Or in some cases it may be a decade or longer. Many are locked up in major or other important collections and will only be available when the collections are sold.

Pick’s, “The Standard Catalogue of World Paper Money” is the most complete and authoritative global currency price guide. It was published in two volumes and includes each country with prices in various grades for each banknote and their important varieties. Attesting to the low grade in which they’re found, Pick prices Extra Fine as the highest grade for some Republic banknotes. And in some cases, no higher than Very Fine or even only in Fine condition. Additionally, a few extremely rare notes are unpriced in any condition. This indicates the author’s problem of how high they should be valued.

Paper Money Guarantee Corp. (PMG) is the most recognized authentication and grading company for the world’s banknotes. They began in 2005 and have since viewed over 8 million paper money specimens from around the world. PMG tabulates each note in their Population Report (Pop Report) and updates it weekly. To date, they have graded a surprising, overwhelming 5.5 million Chinese notes. This gives one a sense of their enormous and widespread global popularity and appeal with collectors.

To highlight the great rarity of some Republic of China notes is their absence in PMG’s Pop Report. In 20 years of grading there are more than a few rarities that have a ZERO population while others have Pops of but a few. Even though there are notes that have long been known to be excessively rare and valuable, PMG’s Pop Report has uncovered some unrecognized and overlooked rarities that were once thought obtainable. This offers a window of opportunity for astute collectors or investors to acquire some very rare notes at incredibly low prices.

Fortunately for today’s collectors and investors, when a great rarity appears it may still sell for a reasonable price. This I believe is due to their typically being found in low grade and the widespread fixation on high-grade uncirculated specimens. Over the years, this has caused many important properties to slip through the fingers of unknowing and even major collectors who were waiting for a better example. But experienced collectors who recognized their importance enthusiastically competed for them, and even fabulous rarities may have sold cheaply.

Today, this is changing. The improved wealth of many Chinese citizens has created a legion of enthusiastic collectors of their nation’s historic paper currency. Finally, the multitude of new collectors are beginning to recognize the great desirability of these rarities. And despite their low grades they have begun to bid them higher in price in hopes of their acquisition. They realize it is better to possess an extreme rarity in any condition than to go without it.

For those who enjoy an ultimate challenge this series is a must. You won’t be able to complete a set of Republic of China banknotes! But you will experience one of your greatest challenges and will proudly form an exceptional collection containing great rarities that few others can ever hope to possess.

Footnotes and Credits:

1. Hyperinflation in China, 1937-1949, Mike Hewitt Feb. 28, 2007.
2. Origins of the Chinese Hyperinflation, Jay Habegger Sept. 1, 1988.
3. The Great Chinese Inflation, Richard M. Ebeling July 5, 2010.

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