892.51/236: Telegram
The Minister in Thailand (Peck) to the Secretary of State
[Received November 30—2:20 p.m.]
540. 1. On November 29 Doll, British Financial Adviser to the Thai Government, handed me for strictly confidential use a copy of a telegram sent by him to Waley and the Bank of England on November 28 through the British Legation which shows that the following arrangements were made between the Minister of Finance and Japanese Minister Futami on November 27:
2. Two credits of 10,000,000 ticals each opened on August 2 and November 2 will be repaid entirely in gold to be shipped from Japan to Bangkok and a third credit of the same amount may be opened [Page 361] if required on the same terms on February 2; these are transactions between Yokohama Specie Bank and Thai Banking Consortium.
3. All of the 25,000,000 ticals worth of gold sold by the Japanese Government to Thai Treasury last August will be shipped to Bangkok and a further sale in the same amount will be consummated, the ticals to be made available partly on the date of shipment and partly on delivery of the gold in Bangkok. The Minister of Finance demanded and Japan consented that Thai Government may freely dispose of all the gold acquired in these five transactions.
4. The telegram states that the Thai Government intends to ask the American Government for a credit of 8 million United States dollars to be equally divided for the use of the Government and market. It would be the intention of the Government, however, to sell at least 44 million ticals worth of the gold to the United States mint, thus repaying the total credit, and by gradually selling the dollar exchange to the Thai Treasury and the market to retire from circulation most of the Thai currency notes which the Currency Department will be obliged to issue in consequence of the gold purchases.
5. Hitherto the Japanese Government has insisted that gold purchased from it should not be resold and in regard to the present changed [arrangement?] whereby the Japanese Government consents to free use Mr. Doll offers the following comments: Because of the freezing orders Japan cannot use its native gold production of some one million fine ounces per annum; it is almost beyond doubt that Japan for military reasons wants to buy as much rice as possible; and Japan is using part of the new credits to acquire large quantities of Thai notes including the smallest denominations.
6. Doll handed me also copy of a memorandum dated November 28 to the Minister of Finance which describes the proposal to be made to the American Government. I was given to understand this memorandum was approved and will be the basis of a communication from the Minister for Foreign Affairs. Finally Doll handed me a letter from himself dated November 29 in which he stated inter alia that the Thai authorities were very happy to have $9,000,000 worth of gold safe in New York and wanted to send the bulk of the newly acquired gold out of the country as soon as possible. He said that if the United States Government were to grant the desired credits the cost of sending the gold cover to the United States would in present circumstances involve prohibitive cost in insurance and freight. They would prefer to deposit the gold in government banks in Singapore, Manila or Australia, especially in Singapore where shipment would entail no marine risk. The letter makes it clear that in this procedure immediate dollar credits are a comparatively minor consideration, the main objective being to enable the Thai Government to place realizable assets in [bank deposits?] for use during and after the present period of peril. For this [Page 362] reason the Thai Government would infinitely prefer to ship more gold out of the country to serve as security for credits rather than use that already in the United States. Doll asked me to ascertain by telegraph for information, whether the American authorities would be willing to purchase gold acquired and deposited as described above.
7. I agreed to telegraph the inquiry but I imagine the Department before returning a reply will prefer to await a formal proposal from the Thai Government. This may be expected in a day or two.