893.515/1387: Telegram
The Chargé in China (Peck) to the Secretary of State
[Received May 1—7 a.m.]
295. Following received42 for transmission:
[“]In recent weeks there has been considerable drain of foreign exchange at Shanghai due to buying by various foreign banks. In the case of one British bank which has bought far beyond legitimate need official complaint has been made to London with a view to exertion of restraining pressure. The three American banks, namely, National City, American Express Company, and Chase, have also bought at times.
While there is no control it is clearly in the interest of all foreign banks to cooperate in every possible way to maintain the spirit of [Page 397] the gentlemen’s agreement and to help to sustain the Chinese currency because if it should seriously break then the way would be smoothed for introduction of Japanese-controlled currency and practical exclusion of foreign banks and drastic curtailment of non-Japanese trade. The Japanese currency measures in North China have been having a very unsettling effect upon the Chinese currency. Nevertheless, the Japanese-sponsored currency is meeting serious difficulties and it would seem that the best way to discredit it and thus end the climax of success for similar currency adventures in Central China and thus maintain a measure of opportunity for other than Japanese trade with the occupied area is to do everything that can be done to sustain the Chinese currency.
It is hoped that the American authorities may be in position to request the New York offices of the above-mentioned American banks to instruct their Shanghai and other branches especially in North China to cooperate fully in support of the Chinese currency and to try to limit sales of exchange to the amount of cover obtainable other than from the stabilization fund and to discourage prospective buyers of exchange as much as possible.”
Repeated to Peiping and Shanghai.
- See the Chargé’s telegram No. 296, May 1, 10 a.m., infra.↩