893.515/1364: Telegram
The Counselor of Embassy in China (Lockhart) to the Secretary of State
[Received 8:12 p.m.]
130. Peiping’s 126, March 11, 2 p.m.
1. Local Chinese press has announced measures of “Provisional Government” to prevent the use of old legal tender banknotes. In substance, those who possess or transport currencies other than Federal Reserve Bank currency (with certain minor exceptions such as subsidiary notes of Meng Cheng Bank et cetera) or circulate or intend to circulate such currencies shall be subject to imprisonment (from 1 month to 10 years) or shall be fined (from $500 to $10,000) or both. Confiscation of old legal tender banknotes is also mentioned, as is confiscation of the agencies used in and for the possession, transportation and circulation of the old legal tender banknotes. These measures are promulgated for the period of 1 year from March 11.
2. Regulations to implement the above measures have been published. In substance, Chinese (including legal persons) in the “Federal Reserve Bank currency area” are to be subjected to the control of Chinese police organs acting in cooperation with Japanese gendarmes and this control extends to the search of Chinese banks, money shops, et cetera.
Provision is also made for the search for “important” criminals and for ascertaining the identity of and watching those Chinese who deal with third power nationals in this matter of using old legal tender banknotes to prevent third power nationals from collecting and monopolizing by every possible means old notes. While these regulations mention March 11 to 15 as the period for search, they are not restrictive as to searches beyond the latter date.
3. A member of the Embassy staff was informed by a French banker that the silver holdings of the foreign banks in Peiping amounted to 10,000,000 and those in Tientsin amounted to 40,000,000 Chinese dollars. An American banker states that his bank in Peiping holds no silver and that, although he is not informed as to the silver holdings of other foreign banks in Peiping, those in Tientsin are holding approximately 50,000,000 Chinese dollars.
Repeated to Chungking, Shanghai. Code text to Tientsin and Tokyo.