893.5151/730: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received May 8—3:30 a.m.]
209. My 200, May 3, 4 p.m.62 Financial Adviser Arthur Young called yesterday and, commenting on the recent fall in the exchange value of Chinese currency, stated that the stabilization fund on the evening of May 1 temporarily withdrew support from the currency because the speculative position and the drain of exchange proved that the fund was insufficient for the aggressive operations necessary to buy back substantial amounts of such currency. However, the Bank of China, the Central Bank and the Hong Kong Tokyo [and Shanghai?] Bank managed to accumulate some fresh resources for the fund in order to continue operations to reduce fluctuations and support the market. Young was of the opinion that the immediate emergency could thus be met but that the strain would disorganize China’s economy and progressively diminish the effectiveness of the war effort unless the Government took firm internal action and unless external help were promptly received in a substantial amount. In reply to a question he said that the help he had in mind was a contribution to the stabilization fund.
- Not printed.↩