In December 1937, the Japanese army occupying northern China established the Provisional Government of China at Peking. In February 1938, the Provisional Government established its financial institution — the Federal Reserve Bank of China.
Although a Japanese invention, the bank’s officers were Chinese. It had the responsibility of stabilizing the currency, control of foreign trade and financing military operations. The bank was given sole note issuing authority in the area under the control of the Provisional Government at Peking.
The notes issued by the bank were printed in China by Chinese printers. The 1 yuan note carries an image of Confucius, the Chinese philosopher. The design has Confucius’ hands making an obscene gesture. The generally held belief is that the design was intentionally done as a subtle insult to the Japanese. The image was so subtle that its mirror image was used again on the second series of notes printed for the bank.
There are differing accounts as to the fate of the designers and engravers of the notes. One version has them being captured and executed. Another has them escaping through the British concession at Shanghai and Hong Kong.
This was not the only example of hidden (or not so hidden in this case) messages inserted into the notes of Japanese puppet banks in China. Messages were also inserted into the notes issued by the Central Reserve Bank of China at Nanking. Those will be saved for another day.
Numismatic Notebook 