K'ung, H. H. Orig. K'ung Hsiang-hsi 孔祥熙 T. Yung-chih 庸之 H. Tzu-yüan 子淵 H. H. K'ung (1881-15 August 1967), banker and businessman who married Soong Ai-ling and who entered the service of the new National Government in 1928 as minister of industry and commerce. As minister of finance (1933-44) he was responsible for the currency reform of November 1935 and for the major financial programs undertaken by the National Government during the Sino-Japanese war. He was also known as a staunch Christian and as the founder of the Oberlin-Shansi Memorial Schools. The Ch'üfu district of Shantung was the original home of the K'ung family, who were regarded as lineal descendants of Confucius. During the Wan-li period (1573-1620) of the Ming dynasty, the family moved to Shansi. In the late Ch'ing period, K'ung Hsun-ch'ang enjoined his heirs from accepting government service. His son, K'ung Ch'ing-lin (T. Jui-t'ang) laid the foundation of the family fortune by establishing and successfully managing remittance shops (p'iao-hao), centered at T'aiku, Shansi. He came to have business correspondents in Peking, Canton, and Japan. His third son, K'ung Fan-tz'u, served as chief clerk of the remittance business at Peking and later returned to T'aiku to manage the family interests. Near the end of the Ch'ing dynasty, the domestic remittance business was gradually displaced by semi-modern banking institutions. Accordingly, the K'ung family obtained from the British Asiatic Petroleum Company its general agency for Shansi, established the Hsiang-chi Company, and handled shipments and sales of petroleum products, as well as candles, dye stuffs, and related imports. H. H. K'ung, the son of K'ung Fan-tz'u, was born at T'aiku. His sister, Hsiang-chen, was born three years later. His mother, nee Chia, who came from a prosperous Shansi family, died when he was only eight sui. K'ung attended a primary school in T'aiku which had been established by Dr. Charles Tenney, who had been sent by the American Board of Commissioners for Foreign Missions to begin missionary and educational work in Shansi in 1883. In addition to introducing K'ung to Christianity, to which he became a convert, the American Protestant teachers at the school taught him English and provided him with the rudiments of a Western education.
From 1896 to 1900 K'ung studied at another missionary institution, North China Union College, which was located at T'ungchow near Peking. At this time, demands for imperial government reforms were increasing steadily, and K'ung soon joined with a classmate, Li Chin-fan, in organizing a secret society, the Wen-yu hui, which supported the republican revolutionary efforts of Sun Yat-sen. When the Boxer Uprising erupted in the summer of 1900, K'ung was at home in T'aiku on vacation. Yü-hsien, the governor of Shansi, executed 159 foreigners in Shansi, of whom 137 were Protestant missionaries or their children. K'ung used personal influence and family influence to shelter Western missionaries in the T'aiku area. His activities at T'aiku during that crisis later were recounted by the American missionary Luella S. Miner in Two Heroes of Cathay. K'ung then went to Peking, where Li Hung-chang (ECCP, I, 464—71) was negotiating with the Allied expeditionary forces that had occupied Peking. Through his friendship with Dr. H. E. Edwards, an English missionary, K'ung helped secure the reduction of the Allied demands on his native province. In recognition of these services, Li provided K'ung with a passport and honorary titles so that he could leave China in 1901 to study in the United States. Li also gave him a letter of introduction to Wu T'ing-fang (q.v.), then the Chinese minister to Washington.
In the United States, H. H. K'ung worked to improve his English and then enrolled at Oberlin College in Ohio. In 1905 he met Sun Yat-sen, who was traveling through the United States, in Cleveland. After being graduated from Oberlin in 1906, K'ung went to Yale University, where he received an M.A. in economics in 1907.
Because Shansi lacked modern educational facilities and because K'ung was an advocate of American Christian education, he returned to T'aiku in 1908 as a representative of the Oberlin- Shansi Memorial Association and established the Ming-hsien School, which provided both primary and secondary education for students from north China. Although K'ung maintained an active interest in the family businesses, he devoted much of his attention to the affairs of the Ming-hsien School.
Although K'ung is known to have been a supporter of Sun Yat-sen's revolutionary cause before 1911, the extent of his participation in the revolutionary movement has not been determined. In 1911 his cousin K'ung Ping-chih was killed in the fighting in Shansi, and H. H. Kung served for a time under Yen Hsi-shan (q.v.), who led the anti-Manchu uprising in Shansi. In 1913, after the republic had been established, he went to Japan to serve as secretary of the Chinese YMCA in Tokyo. Thus, he was in Japan when Sun Yat-sen and other Kuomintang leaders sought refuge there after the so-called second revolution of 1913 collapsed. At that time he met Soong Ai-ling [see article on Soong family), the eldest daughter of Charles Jones Soong. She had accompanied Sun Yat-sen to Tokyo and was serving as his English secretary. K'ung, whose first wife. North China Women's College graduate Han Shu-mei, had died of tuberculosis, married Soong Ai-ling in 1914.
The death of Yuan Shih-k"ai in 1916 brought the period of Kuomintang exile to an end. H. H. K'ung and his wife went to his family home in Shansi, where they remained until 1918, when they embarked on a trip to England, France, and the United States. Early in 1919 they went to Ohio, where K'ung made formal arrangements for cooperation between Oberlin College and the Ming-hsien School. American graduates of Oberlin volunteered to teach at Ming-hsien, or Oberlin-in-China, and outstanding Ming-hsien graduates were selected for study in the United States.
H. H. K'ung returned to Shansi in 1919. He continued to divide his time between the prospering family business and the Ming-hsien School until 1922. As a result of the Washington Conference of 1921-22 and attendant Sino- Japanese negotiations, Japan agreed to return its interests in Shantung to China. The Peking government gave C. T. Wang (Wang Chengt'ing, q.v.) responsibility for the transfer of authority in Shantung and named H. H. K'ung as his deputy. In 1923-24 K'ung's brother-in-law. Sun Yat-sen, who had married Soong Ch'ing-ling (q.v.) in 1914, enlisted K'ung's help in his efforts to reorganize the Kuomintang and to achieve national unification. K'ung served as a channel of communication with such north China leaders as Chang Tso-lin, Feng Yü-hsiang qq.v.y, and Yen Hsi-shan. K'ung presented Feng with a calligraphic copy of Sun's Chien-kuo ta-kang [outline of national reconstruction], and Feng recorded his favorable impressions of that work in his diary. K'ung Went to Canton in 1924 and joined the newly organized Kuomintang. He accompanied Sun to Peking in 1925, served as a witness to his political will, and remained in Peking after Sun's death in March to make arrangements for the private funeral. He went to Shansi to attend the commencement exercises of Ming-hsien, or the Oberlin Shansi Memorial Schools, and then embarked on a journey to the United States, where he received an honorary LL.D. degree from Oberlin College.
During the period of the Northern Expedition, H. H. K'ung became associated with Chiang Kai-shek and his rise to political prominence. After serving as director of the Kwangtung provincial finance bureau and as acting minister of finance in the National Government at Canton and Wuhan, he joined Chiang Kai-shek's opposition government at Nanking in the spring of 1927. He played an important role in inducing Feng Yü-hsiang to come to Chiang's support in June and in smoothing the way for Chiang's marriage to Soong Mei-ling (q.v.) in December. Soong Ai-ling advocated the union; Soong Ch'ing-ling opposed it; and their mother finally gave her consent to the marriage on the condition that Chiang Kai-shek investigate Christianity.
When the new National Government was inaugurated at Nanking in 1928, H. H. K'ung became minister of industry and commerce. In accordance with Sun Yat-sen's Principle of the People's Livelihood, he introduced labor arbitration and insurance systems, established a bureau of trade, and appointed commercial attaches to serve in Chinese missions abroad. He was elected to the Central Executive Committee of the Kuomintang in 1929. K'ung continued to hold office after the ministry of industry and commerce was merged with the ministry of agriculture and mining in 1931 to form the ministry of industries. However, when Chiang Kai-shek temporarily retired from office in the Winter of 1931 to conciliate dissident Kuomintang leaders, K'ung, as Chiang's close associate and brother-in-law, resigned from office.
In April 1932 H. H. K'ung was appointed special commissioner to study European industrial conditions. One of his most important assignments was to secure foreign aid for the development of an adequate national defense system in China. K'ung went to Italy, where Mussolini agreed to sell planes and send technicians to China to strengthen the Chinese air force. These negotiations also resulted in the establishing of the Central Aviation Academy at Hangchow and an aircraft factory at Nanchang. K'ung's mission then took him to Germany and Czechoslovakia, where he made arrangements for procuring arms and engaging military advisers, and to England, where he met with financial experts to discuss economic reform measures for China.
After returning to China in April 1933, H. H. K'ung was appointed governor of the Bank of China. In October, he became minister of finance and, for a brief interlude, vice president of the Executive Yuan, serving under Wang Ching-wei (q.v.). He thus succeeded his brother-in-law T.V. Soong (q.v.) in the top financial post of the National Government, which Soong had occupied almost continuously since 1926. Almost immediately, K'ung began Work on a comprehensive program designed to increase the National Government's financial control of the modern sector of the economy. H. H. K'ung began by holding a national financial conference at Nanking in 1934 to deal with the problems created by the more than 7,000 varieties of local taxes then extant in China. As a result of that conference and of action taking during the next three years, 25 provinces had abolished local taxes by the time the Sino-Japanese war began in 1937. K'ung also increased the ratio of government-owned shares in the principal semi-governmental banks. In March 1935 increases in the capital of the Central Bank of China (from CNS20 million to CNSlOO million), the Bank of China (from CNS20 million to CNS40 million), and the Bank of Communications (from CNS12 million to CNS20 million) were made. The increase of government shares in these banks was designed to bolster the capacity of the treasury to float bond issues and make loans and to increase government control of credit. K'ung's action was criticized by private bankers associated with the Bank of China and the Bank of Communications, for their institutions antedated the National Government, and they prided themselves on their reputations for fiscal responsibility and independence of judgment. These and other measures paved the way for the monetary reform of November 1935, when the National Government abandoned the silver standard in favor of a managed paper currency. That reform required the nationalization of silver, the withdrawal of silver dollars from circulation, and the creation of a foreign exchange reserve for the Chinese currency. The reform had been precipitated by the American silver-buying program, the National Government's defense requirements, and the need for a standard legal tender in China. The American program had increased China's depression problems and had resulted in widespread smuggling of silver to foreign countries. The National Government had enacted a silver-export tax and an equilibrium tax, but they had not been effective. Furthermore, China still lacked a standard legal tender. Although some progress had been made in that direction, a wide variety of provincial or regional currencies were still in use, particularly in the northwestern and southwestern provinces. The new system of paper currency, called fapi, was introduced on 3 November 1935. Holders of silver dollars were required to exchange them for the newcurrency. The notes of the four government banks—the Central Bank of China, the Bank of China, the Bank of Communications, and the Farmers Bank of -China—were declared legal tender for payment of taxes. The Central Bank became a central, reserve bank, with responsibility for preserving the stability of the national currency system and foreign exchange. The foreign exchange rate of the Chinese dollar was fixed at CN$lOO to US$33. The currency reform, although its long-term effects have been a subject of much debate, strengthened the economic position of the National Government and enabled China to survive the early stages of the Sino-Japanese war without a serious inflation and to build a national banking system that was independent of foreign powers. However, the success of the reform depended largely on the ability of China to convert its silver stocks into foreign exchange by selling silver to the United States. In 1936 the Chinese Silver Mission, headed by K. P. Ch'en (Ch'en Kuangfu, q.v.) successfully negotiated the purchase of 75,000,000 ounces of silver by the United States. H. H. K'ung also helped increase confidence in the new currency by ordering his own Hsiangchi Company to convert its deposits with the Asiatic Petroleum Company, amounting to some £23 thousand, into fapi at the official exchange rate.
In December 1935 Chiang Kai-shek succeeded Wang Ching-wei, who had been wounded in an assassination attempt, as president of the Executive Yuan. H. H. K'ung continued to serve in the cabinet, and during the Sian Incident of December 1936 (see Chiang Kai-shek) he assumed political authority at Nanking by order of the Central Political Council. Ho Ying-ch'in (q.v.), who had been assigned responsibility for military affairs during the crisis, advocated attacking Sian, but K'ung and his associates persuaded him that this course of action would endanger Chiang Kai-shek's life. The ensuing negotiations at Sian resulted in Chiang's release on 25 December and in the formation of a Kuomintang-Communist united front against the Japanese. In April 1937 H. H. K'ung was sent abroad as a special envoy of the National Government. His stated mission was to represent China at the coronation of King George VI, but the chief purpose of his journey was the procurement of war materiel and financial aid in Europe and the United States. K'ung's chief secretary on this mission was Wong Wen-hao (q.v.), then secretary general of the National -Defense Advisory Council. After arriving in England, K'ung held conferences with British officials and attended the coronation on 12 May. He made a brief trip to France, Belgium, and Germany before going to the United States, where he discussed China's financial requirements with President Franklin D. Roosevelt and Secretary of State Cordell Hull. He also received an honorary degree from Yale University in recognition of his achievements in education and finance.
H. H. K'ung returned to Europe soon after the Sino-Japanese war began in July 1937. He was aided in his renewed attempts to obtain armaments by Yü Ta-wei (q.v.), the director of the Chinese army ordnance bureau. K'ung remained in Europe, spending most of his time in Germany and Italy, until October. Germany, which had sent a number of officers to China to train Chiang Kai-shek's troops in the early 1930's, continued to maintain a military advisory group in China until 1938, despite the fact that the German government had signed the Anti- Comintern pact of November 1936 and thus was an ally of Japan.
After returning to China, K'ung instituted a series of emergency financial co
trols. He limited withdrawals of private bank deposits to curb the flight of capital. To support government economic progress a special loan committee was established under the Joint Administration of the four government banks and three adjustment committees were created for agricultural products, industries and mining, and foreign trade. The industrial and mining committee was responsible for the removal of factories from the coastal cities to the interior, and the foreign trade committee supervised essential exports of tung oil, bristles, tea, silk, and other natural products.
When Chiang Kai-shek resigned the presidency of the Executive Yuan in 1938 so that he could devote all of his time to military affairs, H. H. K'ung succeeded him. The cabinet came to include Chang Kia-ngau (Chang Chia-ao, q.v.) as minister of communications, Wong Wen-hao as minister of economic affairs, and Ch'en Li-fu (q.v.) as minister of education. Among other things, the Sino-Japanese war stimulated the development of an industrial cooperatives movement in China. The idea, first developed in conversations in Shanghai in the spring of 1938, attracted the attention of the British ambassador to China, Sir Archibald Clark-Kerr, who made a personal appeal to Madame Chiang Kai-shek. On the strength of the ambassador's interest, H. H. K'ung allocated CNS5 million to the cooperative movement. The Chinese Industrial Cooperative Association was established at Hankow on 5 August 1938, with K'ung as chairman of the board of directors. During the next year, the movement spread rapidly in the provinces of northwest China. The personal interest and prestige of Madame Chiang and H. H. K'ung were especially helpful during the initial stage of the cooperative movement, which continued to expand during the war years.
Although Chiang Kai-shek formally resumed office as president of the Executive Yuan on 11 December 1939, H. H. K'ung, who resumed the vice presidency, continued to serve as his surrogate until the autumn of 1944. During this period, he also served as president of the Chinese-American Institute of Cultural Relations, of which Ch'en Li-fu (q.v.) was the vice president. At the same time, as minister of finance, he bore the responsibility for foreignexchange control and for securing credits from Western governments to support the war effort. Such financiers as T. V. Soong and K. P. Ch'en also played important roles in directing China's financial programs. In February 1939 the United States agreed to grant China a loan of US $25 million, to be secured by shipments of tung oil. A second agreement, concluded in April 1940, provided for an American credit of US $20 million against tin exports from Yunnan, and a third granted US $25 million against tungsten shipments. Also in April 1940 the United States government and the British government granted credits of US $5O million and £5 million, respectively, to the Central Bank of China. These and other funds subscribed by Chinese banks were administered by an American-British-Chinese currency stabilization board, with K. P. Ch'en as its chairman. In February 1942, as a result of negotiations initiated by H. H. K'ung, the United States, which had entered the war against Japan, granted China a loan of US $500 million; in July, a British loan of £50 million was secured. A portion of the American loan was used to purchase gold bullion in the United States in an attempt to support the fapi.
A celebration in honor of H. H. K'ung's tenth anniversary as minister of finance was held at Chungking on 1 November 1943. This event received international attention, for no other National Government official had held a cabinet-level office for so long a period as had K'ung. More than 500 government officials and friends took part in the ceremonies, and laudatory messages came from Chiang Kai-shek, who had recently become Chairman of the National Government, and from such eminent Westerners as United States Secretary of War Henry L. Stimson. Such leading Chinese newspapers as the Ta Kung Pao, which often had critized K'ung's policies and actions, praised his achievements.
In June 1944 H. H. K'ung went to the United States as head of the Chinese delegation to the United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire. Chi Ch'ao-ting (q.v.) accompanied him as his personal assistant and secretary general of the Chinese delegation to the Bretton Woods Conference. As the personal representative of Chiang Kai-shek, K'ung met three times with President Roosevelt in Washington.
When the Executive Yuan was reorganized in May 1945, T. V. Soong, who had become its acting president in November 1944, was named president of the yuan and minister of finance. H. H. K'ung retired from political life in June and, at war's end, went to live in Shanghai. In the spring of 1947 he made a trip to north China, where he visited the Oberlin Shansi Memorial Schools. Its staff had returned to T'aiku after having spent the war years at Chint'ang, Szechwan. Early in 1948, before the civil war between the Nationalists and the Chinese Communists reached a critical stage, he and his wife moved to the United States because she was ill. K'ung went to Taiwan for a brief visit in 1962. He later went to Taiwan for a longer stay, but returned to the United States in December 1966 and established residence in Locust Valley, Long Island, New York. He died on 15 August 1967.
H. H. K'ung and his wife had four children. Rosamonde (Ling-i) was born in T'aiku; David (Ling-k'an), Jeannette (Ling-wei), and Louis (Ling-chieh) were born in Shanghai. David L. K. K'ung later served as director of the Central Trust of China, a wartime purchasing agency. In 1948 his cousin Chiang Ching-kuo (q.v.), then deputy economic control supervisor for the Shanghai area, ordered his arrest, but Madame Chiang Kai-shek intervened and sent David to Hong Kong. Louis K'ung served as secretary general of his aunt's official party during her trip to the United States in 1943.
Throughout his public career, H. H. K'ung was a controversial figure. His personal wealth alone was sufficient to make his political position a matter for national and international debate. Such Chinese Communist spokesmen as Ch'en Po-ta (q.v.) were particularly outspoken in condemning K'ung and his relationships with the Soongs and Chiang Kai-shek, and, indeed, there was general agreement that his public eminence was largely the result of these relationships. Economists argued about whether the monetary reform of November 1935 had saved the Chinese economy or had caused the postwar hyperinflation that ruined it. However controversial K'ung's financial and political activities may have been, his educational activities, which received less public attention, were acknowledged to be a reflection of his concern with modern education as an instrument of social progress. K'ung was a staunch Christian, a one-time YMCA secretary, and a friend and supporter of many Protestant missionaries in China. For many years, he helped finance and maintained close contact with the school he had founded at T'aiku. He also had a sustained interest in the affairs of Yenching University, the successor of North China Union College. He was chairman of its board of managers for many years and became its chancellor on 17 June 1937. Because of the burden imposed on K'ung by the Sino-Japanese war, J. Leighton Stuart, the president of Yenching, assumed the duties of the chancellorship. After the university was forced to close, K'ung presided over a meeting of members and former members of the Yenching board on 8 February 1942 at which it was decided to reopen Yenching at Chengtu, Szechwan. Y. P. Alei (Mei Yi-pao, q.v.) served as acting chancellor and acting president at Chengtu. After the university reopened at Peiping in 1946, K'ung continued to head its board of managers until 1949. A laudatory biography by Yu Liang, K'ung Hsiang-hsi, was published in Hong Kong in 1955. An English-language version of this work was published in the United States by the Alumni Club of Oberlin Shansi Memorial College in 1957. Arthur N. Young's China and the Helping Hand 1937-1945, published in 1963, contains more professional information about K'ung as wartime minister of finance.