The Ambassador in China (Gauss) to the Secretary of State

No. 544

Sir: I have the honor to enclose for the Department’s information a translation of an editorial from the Ta Kung Pao of July 10, 1942,80 [Page 533] entitled “How to Make Use of British and American Loans for Solving China’s Present Economic Difficulties”.

The editorial presents a summary of discussion at a round table conference of the Economic Research Department of the Central Bank of China according to which the problems confronting China today are (1) lack of materials and (2) inflation. The conference made the following five recommendations to meet the problem of inflation, four of which hinge upon the use of the British and American Loans and all of which have as their goal the withdrawal of currency from circulation in order to check inflation: (1) increase of the sales of gold bonds and gold savings certificates; (2) sale of gold by the Government; (3) widening of the scope of foreign exchange transactions; (4) issuance of industrial bonds backed by United States currency; and (5) issuance of investment and credit bonds in Chinese currency. It should be noted that at the last report only CNC$70,000,000 of the Savings Certificates and CNC$10,000,000 of the Victory Bonds issued against the backing of the American loan had been sold.

Respectfully yours,

C. E. Gauss
  1. Not printed.