Evening star., 1949-05-02
Last Rail Link
Cut in Shanghai,
Money Topples
Red Penetration Muy
Be Further TO South
Thun First Believed
BY Fred thompson
Assoeio'ed Press foreign Correspondent


Traffic was reported suspended
today on the last railway escape
from Communist -menaced Shang-
hal to South China.
Inside the city the chaotic
money market crashed at mid
da-. after garrison headquarters
outlawed free trading in prewar
silver dollars on threat of death
obviously a measure of great
desperation.
The Red radio last night said
eight Chinese government armies
were wiped out" and parts of
four other armies routed" in the
Nanking Shanghai Hangchow
area. "a Chinese army is usually
10000 men, The Red broadcast's
claim of great victory" was not
confirmed by government sources.
RAN Service Suspended.
The semi-official Chinese Gen.
trail News Agency said rail service
had been suspended between
Hangchow Ind Nanchang. Hang
chow is seaport. resort city and
communications center 100 air
miles southwest of Shanghai
Nanchang, capital of Kiangsi
Province, is about $50 miles far
ther southwest-almoSt midway
between Shanghai and Canton,
provisional Nationalist capital on
the south coast.
(This was the first indication
that the Communist offensive
might have penetrated so deep
ly into South China. Previous
dispatches have indicated the
main Red thrust was aimed at
Hangchow.
Central News, however. did
not say what caused suspen-
sion Of rail traffic between
Hangchow and Nanchang or
where Red troops-if any
were operating along the line.)
A Shanghai garrison COM
munique said Nationalist forces
still were holding Kunshan. 80
miles west of Shanghai, despite
heavy Red artillery bombardment
at the outskirts of the town.
The communique claimed Ma
tionalist successes in fighting in
the Kunshan area.
10000 Reported Marooned.
There was no news here of the
fighting south of Lake Tai SO
miles or SO southwest of Shanghai
where the Reds seemed to be
throwing more important strength
toward Hangchow.
The Central News Agency, re-
porting the suspension of rail
traffic between Hanchow and Nam
chang, said:
Over 10000 southbound pas
sengers were being pitifully ma
rooned at Hangchow station. De-
spite desperate efforts to get out
of the almost deserted lake city,
the fate Of the evacuees was evi-
IDENTIFY foredoomed as the Hang
how-Nanchang rail- line was the
only communication artery to the
south"
In Shanghai there was no undue
amount of military activity and
no sign of any impending Red at
tack. Within the city troop move
ments were not especially evident.
Hundreds of Chinese soldiers,
however. boarded Chinese naval
vessels which steamed down the
Whangpoo River toward the sea.
The Shanghai garrison's new
money market decree prohibited
trading in silver dollars except
at the official rate of 1000, 900
yuan to one silver dollar. The
previous open rate had scared
as high as 5000, 900.
AS word of the order spread
through the city. the value of
silver coins crashed. With it the
value of foreign currencies crashed
even harded.
During the welter of activity
it became known that the official
government Central Bank had
moved its headquarters to Canton.
Unless the garrison by terror
means can stabilize the scarce
and skyrocketing silver dollar
to which prices now have attached
themselves-it appears there are
only two things left to do. Busi-
nesses win have to operate on
foreign currencies if they can get
them. or they will have to try
operating by barter-paying wages
and collecting revenues in food
stuffs. for example.