Log In

Kung Hsiang-hsi Edit Profile

also known as H.H. Kung

banker , politician

Kung Hsiang-hsi was a financier, minister of industry, commerce, labor, finance minister and vice-premier of the Republic of China.

Background

Kung Hsiang-hsi was born into a pawnbroker family on the downturn in the late Qing dynasty, Kong Xiangxi allegedly claimed direct descent from Confucius by falsifying the genealogy after getting rich.

Education

Kong attended a missionary school before studying at the North China Union College in 1895. In 1899, he set up a branch of the Xingzhonghui. During the Boxer Uprising, he saved some missionaries and afterward helped Li Hongzhang settle religious atrocities in Shanxi. In 1901, he entered Oberlin College in Ohio and obtained his B A. in 1905. Inspired by Sun Yat-sen, he opted for mining instead of social work at Yale. He tried his hands in business by importing tea from China. In 1907 he obtained his M.A. and returned to China to set up the Oberlin Memorial School.

Career

Kong was skillful in shifting between business, politics, and educational enterprises. During the 1911 Revolution, he set up local militia to defend the local township against disbanded Qing troops. Following the failure or the Second Revolution, he went to Japan to continue missionary work and joined Dr. Sun's China Revolutionary Party, helping to solicit donations. In 1915, Kong returned to China to manage Oberlm Junior University, formerly Oberlin Memorial School. In 1919, he built roads to facilitate relief work in Shanxi. Meanwhile, he started a trading company and a bank, exporting iron to the United States and importing soap, matches, candles, and kerosene into China. Soon he also invested in Shang-hai property and diversified into textiles and herbal medicine. In 1922, he helped arrange the return of Qingdao to China, thereby establishing relations with the warlords, father and son Zhang Zuolin and Zhang Xue-liang acting as their go-between with Sun. Kong maintained good relations with other warlords like Yan Xishan and Wu Peifu in north China. Then in 1924, as Sun's envoy, he recruited warlord Feng Yuxiang into the revolutionary camp. In 1926, he became the finance minister of Guangdong, giving financial backup to the Northern Expedition.

In 1927, he became minister of industry, commerce, and labor at Nanjing. He helped Jiang Jieshi to win over Wang Jingwei and Song Ziwen, convincing the latter to be finance minister. He also persuaded Feng to abandon his sympathy for the Communists and to accept Jiang's leadership instead of allying with Wuhan. The Kong couple were matchmakers for Jiang and their sister Meiling, convincing their mother and brother Ziwen to give consent. In 1928, his conservatism was revealed in the promulgation of the Trade Union Law to subdue frequent strikes. He worked with Song Ziwen to issue government bonds worth six million yuan to support the silk industry. The resumption of stability in the Yangzi estuary attracted foreign investment, so China was relatively unaffected by the world depression of 1931.

Kong stepped down with Jiang temporarily in 1927 and 1931. In April 1932, he replaced Ziwen as president of the Central Bank. Jiang also transferred arms purchase from Ziwen to Kong on his mission to the West. Upon return, he convinced Jiang to start an air force academy. In 1933, he replaced Song as finance minister and vice-premier. Jiang preferred him to Song because he was diplomatic and amiable while Song was temperamental. Kong also supported his anti-communist campaigns and consented to all his requests for funds. To do so, Kong had to appease Japan and to tighten government control of the banks and taxes. He increased the Central Bank's holding of government bonds from 13 million to 1.73 billion in 1934. He set up tax offices in 17 provinces by 1936 and initiated income tax and profits tax in 1937. To divert popular support for the Communists, he reduced taxes for farmers and small businesses and abolished levies in rural areas. He won over the warlords by giving them a 40% rebate from tobacco and liquor taxes, stamp duty, and business registration. To appease Japan, he reduced the import duty on some textiles in 1934, to the detriment of Chinese manufacturers. In 1934, Kong passed the saving banks law, requiring banks to invest a quarter of their capital in public bonds, to be held in trust by the Central Bank. Then in 1935, the government seized control of the Bank of Communications and Bank of China by appointing directors to the banks, among whom were the Song brothers and triad boss Du Yuesheng. Other banks were to follow suit. The wbanking coup" effectively put 66% to 70% of the banking sector under government control.

When the United States abandoned the gold standard in 1933, raising the price of silver in China and effecting an outflow, Kong imposed an embargo, only to push silver export underground. Facing currency depreciation and inflation, he dropped the silver standard, but inflation worsened as the fabi in circulation tripled from late 1935 to mid-1937. His ministry of finance reports did not feature payments and receipts for 1936 and 1937. Moreover, his belated announcement of foreign-currency exchange control in March 1938 allowed an outflow of foreign currency. Allegedly, he manipulated the bonds market, utilized treasury funds for per-sonal speculation, and collaborated with Du Yuesheng in opium trafficking. His banks relent capital from the Central Bank to the ministry of finance at a higher rate. He was attacked by the Central Committee clique, the Zhengxue clique, and Professor Ma Yinchu for speculation.

During the Xi'an Incident of 1936, he favored arbitration with Zhang Xueliang, negotiated with Yan Xishan and others to save Jiang, and consoled the financial circle in Shanghai. He asked for a pardon of Zhang from Jiang but to no avail. To reinforce defense against Japan, Kong purchased arms from Europe and arranged German officers to train the Chinese army. He also obtained a loan of ten million dollars from the United States in 1937. Upon return to China, he took over as head of the united office of four banks from Song Ziwen, widening their rift. In preparation for Japanese invasion, he moved factories and iron smelting and mining equipment inland. To facilitate trade and transportation of supplies, he built railways and roads there. In 1938, he lent government support to the industrial cooperative movement initiated by Song Meiling. As a result, government expenditure rose one third from 1937 to 1939.

In response to poor harvests and runaway inflation in 1940, the government monopolized the selling of salt, sugar, tobacco, and matches in 1941, with Kong chairing the commission in charge. Starting from 1941, newspapers launched attacks on Kong and his family. In 1942, his protege, Lin Shiliang, was convicted of corruption and executed. Other cases involving his proteges followed in 1943. Still, he became president of the Bank of China in 1944. Meanwhile, Ailing, Meiling and his son Lingkan visited Brazil, reportedly to transfer assets there. Accusing him of corruption, President Franklin D. Roosevelt demanded his removal. Kong resigned as finance minister. Then in 1945, Song Ziwen replaced him as vice-premier.

Amid demands to investigate his crimes, he transferred his assets to Hong Kong and overseas in 1947. In 1953, he was on top of the GMD’s list of expelled members but in 1963, he visited Taiwan at Jiang s invitation. In 1966, Kong finally resigned as director of the Bank of China, giving up all official posts. He lived in the United States till he died in 1967.

Personality

Kung had a habit of smoking stogies. TIME magazine claimed that Kung smoked "15 Havana cigars" a day.

Connections

Kung first married Han Yu-mei in 1910, but she died in 1913. In 1914, Kung married his second wife, Soong Ai-ling, the eldest of the Soong sisters. Kung and Soong had two sons and two daughters: Kung Ling-i (Kong Lingyi), daughter David Kung Ling-kan (Kong Lingkan), son Kung Ling-chun (Kong Lingjun), daughter, also known as Kung Ling-wei Kung Ling-chie (Kong Lingjie), son. His son Gregory Kung (Kung Teh-chi) (Kong Deji) was born from his marriage to Debra Paget. The children all have the generation name ling in their names to indicate that they are 76th generation descendants of Confucius.

The Kung family residential compound, a well-preserved example of mid-Qing dynasty architecture, is now a tourist attraction in Taigu County, Shanxi.

spouse:
Han Yu-mei

spouse:
Soong Ai-ling
Soong Ai-ling - spouse of Kung Hsiang-hsi

daughter:
Kung Ling-i

daughter:
Kung Ling-chun

son:
Kung Ling-chie