IN KUNMING A STREET VENDOR SITS BESIDE HIS SPECIAL WARES: NAME BRANDS OF AMERICAN CIGARETS WHICH SELL AT 2,200 CHINESE DOLLARS (78¢) PER PACK Inflation like death, destruction and disease is international in wartime. In long-blockaded China, at war longer than any other Allied country, inflation reached such tragic proportions that it badly hit morale and, in some places, hurt the war effort.   The Chinese city where inflation is most conspicuous is Kunming. There inflation has brought hunger and, for the coolie, the condition is desperate. To Americans the situation seems fantastic. The coolies deposit money in banks in sackloads, Housewives shop with handbags stuffed with inch-thick wads of money. GIs use small notes to light cigars while others buy up bills to send home for wallpaper. Against orders GIs also cooperate with the black market by reselling their purchases from Army PXs at an enormous profit: the street vendors (right) hike the price and sell U.S. goods to the needy Chinese. The Chinese dollar, worth 37¢ in 1937, now actually brings about .035¢. Black market outlet in Kunming's banking district, called GI Street, sells U.S. hydraulic jacks, airplane parts, K-rations, pens, GI clothing and other contraband. Bag of bundled money is loaded onto a ricksha by a Chinese coolie who has made a withdrawal from his bank and must transport the dollars to a merchant's store. Bank clerks count and bundle the loose bills into neat, tied stacks of 10,000 Chinese dollars ($3.60). Loose money was formerly stored in steel safes but they overflowed. Coolies are paid off by U.S. finance officer. Average coolie now makes about 2,000 Chinese dollars (70¢) a day compared to prewar daily average of 6 Chinese dollars ($1.80). Corporal Larry Andrew3s has stacked in his hands 56,000 Chinese dollars, worth about 20 American dollars. To avoid confusion GIs pay for PX supplies in U.S. coin. Alarm clock in Kunming shop is inspected by a GI who finds it costs 100,000 Chinese dollars ($36). A quart of Canadian Club whisky sells for the same amount. Adapted by Carl W. Weidenburner from the August 20, 1945 issue of LIFE. Portions copyright 1945 Time, Inc. FOR PRIVATE NON-COMMERCIAL HISTORICAL REFERENCE ONLY  TOP OF PAGE      ABOUT THIS PAGE   MORE CBI FROM LIFE MAGAZINE  CLOSE THIS WINDOW VISITORS