On August 19, in a last desperate measure to restore economic stability, Chiang played what the Chinese newspapers would later call his “last trump card.” He announced the replacement of the old currency by a “gold yuan,” which would be convertible from the old Chinese dollar at the rate of three million to one and pegged at one gold yuan to four American dollars.

Under penalty of death, all Chinese holding gold, silver, or foreign or Chinese currency were required to surrender their wealth to the Central Bank in exchange for the new gold yuan. To coerce the reluctant citizenry into complying with this draconian measure, Chiang Kai-shek appointed his Russianeducated son, Chiang Ching-kuo, commissioner of the program, sending him to Shanghai, where the pickings were richest. Approaching his assignment with vigor and severity, Chiang organized a large force of spies and police, who used Soviet-style methods to terrorize the public into compliance.

He declared his intention to search private homes for all currency and valuables that had not been turned over to the authorities. Then he sent trucks into wealthy neighborhoods to announce through loudspeakers that the trucks contained special instruments capable of detecting the presence of hidden gold, silver, and other valuables, even those buried underground.

These and other similarly heavy-handed tactics succeeded in frightening scores of law-abiding citizens into handing over their life savings for fear of arrest. Wages and prices were also frozen, and shopkeepers were forced to sell their goods at the artificial prices. To curb the black market, Chiang Ching-kuo had his secret police comb the waterfront in search of warehouses with stores of hoarded goods. Numerous culprits were arrested and a few of them, among them several prominent businessmen, publicly executed as a warning to others.

But the gold yuan slipped after a month, becoming as worthless as its predecessor. As ineptly handled as everything else the Nationalists did, the attempt at reform failed, because the government had done nothing to increase its revenues or decrease its spending. Moreover, the “reform at pistol point” had antagonized the business community in Shanghai and brought about food shortages and the ruin of many shopkeepers and merchants. Worst of all, Chiang Kai-shek had irreparably alienated the last of his supporters, the urban middle class, who had surrendered their life savings in hopes of resuscitating the economy. Instead, they had lost everything; they’d been robbed and “shaken down” by their government.