792.94/142: Telegram
The Chargé in Thailand (Chapman) to the Secretary of State
[Received 3 p.m.]
438. It was announced that [sic] in the local press on August 28, that an agreement had been concluded between the National Banking Bureau of the Ministry of Finance and the Yokohama Specie Bank for the purchase by the former of baht 25 million worth of gold from Japan. The agreement became effective on August 26 the date of signature and remains’ operative until December 31, 1941. It is subject to termination, prolongation, or alteration with the consent of the parties concerned. The gold or at least a substantial part of it will be shipped to Bangkok at the discretion and upon the request of the Thai Minister of Finance and it will form part of the currency reserve. (It is learned on the best authority that the shipment of baht 13 million worth of gold is being requested immediately.) The Japanese will receive an equivalent amount of baht currency to pay for Japan’s current commodity purchases such as rice, tin and rubber. A credit has been opened to the Bangkok branch of the Yokohama Specie Bank up to baht 25 million and will be drawn on as required.
The bank loan referred to in Legation’s No. 389, August 2, 4 p.m., was exhausted on August 16. The Japanese, through their financial expert, R. Ono, who has been in Thai[land] since June and is reported to be a former Vice Minister of Finance and now adviser to the Japanese Finance Ministry, supported by the Japanese Minister Futami, immediately demanded a Thai Government loan of baht 25,000,000 secured by earmarked gold in Japan under conditions that made it practically impossible for the baht to be brought to Thai[land]. Luang Pradist, the Finance Minister, rejected this proposition and countered with a proposal to renew loan of baht 10,000,000 in the same terms and offered an additional loan of baht 25,000,000 to be secured by gold to be shipped to Thailand. The Japanese were furious at Finance Minister’s insistence on the shipment of gold, pointing out that the Thai Government trusted the United States and Great Britain with custody of gold and made vigorous representations to the Prime Minister in which they accused Luang Pradist of being an obstructionist. Nevertheless, he remained firm and the Japanese finally agreed to the sale of gold on the terms above indicated.
The outcome of these negotiations represent a victory for the conservative elements in the Thai Government of whom Luang Pradist is outstanding leader.