The Early Economic Crisis
In the early days of the takeover, Taiwan experienced severe economic turmoil. The Nationalist government shipped massive quantities of Taiwan's resources to mainland China to support the civil war, causing skyrocketing prices and shortages of daily necessities on the island. Chen Yi's government implemented a command economy that monopolized major industries, and the monopoly bureau system provoked intense public resentment.
Hyperinflation wiped out Taiwanese savings overnight. Between 1946 and 1947, the price of rice surged dozens of times ov…
Hyperinflation wiped out Taiwanese savings overnight. Between 1946 and 1947, the price of rice surged dozens of times over, making it difficult for ordinary families to maintain basic living standards. Meanwhile, mainland officials and merchants arriving in Taiwan were accused of corruption and profiteering, further exacerbating ethnic tensions.
This volume uses economic data, folk accounts, and official documents to reconstruct how this economic collapse became a critical catalyst for the February 28 Incident.
What Chen Yi brought to Taiwan was the whole apparatus of controlled economy he had run in Fujian. The Taiwan Provincial Monopoly Bureau, established in November 1945, took over the Japanese monopoly system — tobacco, liquor, camphor, matches, weights and measures — while the Trade Bureau centralized the purchase and export of rice, sugar, and other staples. The official reasoning was not unusual for the time: goods were desperately short after the war, and a free market would let hoarding and speculation starve the poor first; only unified state allocation could hold prices and supply. Industries and plant left by the Japanese were likewise taken into state ownership, on the same ground that they must not fall into a few private hands. The difficulty was in the execution. Monopoly and centralized purchasing concentrated both profit and discretion in a handful of agencies, the seizure of untaxed tobacco, liquor, and sugar became routine police work, and the conduct of the enforcement agents instantly became the face of the entire system. On the evening of February 27, 1947, Monopoly Bureau agents confiscated contraband cigarettes outside the Tianma Tea House in Taipei and struck the vendor Lin Chiang-mai, then fired a shot that killed a bystander, Chen Wen-hsi. The shot that set the island alight was fired from the far end of this economic system. What the authorities reviewed afterward was enforcement discipline. What the public saw was a system that held their livelihoods in its hands and enforced them at gunpoint.
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