893.515/814: Telegram
The Consul General at Shanghai (Cunningham) to the Secretary of
State
Shanghai, November 4, 1935—9
a.m.
[Received November 4—8 a.m.]
641. Following is official summary of the Government decree passed
yesterday on currency reform and Chinese financial policy:
- “1. Commencing from November 4th, 1935, the bank notes
issued by the three Government banks, the Central Bank of
China, the Bank of China and the Bank of Communications,
shall be full legal tender; payment of taxes and discharge
of all public and private obligations
[Page 630]
shall be effected by legal
tender notes; no use of silver dollars or bullion for
currency purposes is permitted and any contravention of the
provision is punishable by confiscation of the whole amount
of silver seized; any individual found in illegal possession
of silver shall be punishable in accordance with the law
governing acts of treason against the nation.
- 2. Bank notes of issuing banks other than those of the
three Government banks which have received previous
authorization by the Minister of Finance shall remain in
circulation but the total outstanding bank notes of each
bank shall not exceed the amount in circulation on November
3d, 1935. The outstanding bank notes of these banks shall be
gradually retired and exchanged for Central Bank of China
bank notes within a period to be determined by the Ministry
of Finance. All reserves held against the outstanding bank
notes together with unissued or retired notes of these banks
shall be handed over at once to the Currency Reserve Board;
notes in process of printing shall also be handed over to
the said Board upon taking delivery by the banks.
- 3. A Currency Reserve Board created under special
ordinance shall be formed to control the issue and
retirement of legal tender bank notes and to keep in custody
of reserve against obtaining bank notes.
- 4. Commencing November 4th, 1935, banks, firms and all
private and public institutions and individuals holding
standard dollars, other silver dollars or silver bullion,
shall hand over same to the Currency Reserve Board or its
agent banks in exchange for legal tender notes at face value
in the case of standard silver dollars and in accordance
with the net silver content in the case of other silver
dollars or silver bullion.
- 5. All contracted obligations expressed in terms of silver
shall be discharged by the payment of legal tender notes in
the nominal amount due.
- 6. For the purpose of keeping the exchange value of the
Chinese dollar stable at its present level the three
Government banks shall buy and sell foreign exchange in
unlimited quantities.”
