893.5151/900: Telegram

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

834. For Adler from the Secretary of the Treasury.

  • Part I. Your cable, August 18, TF–53,86 regarding special exchange rates for special purposes. Before Treasury considers this question further, please prepare as comprehensive a study as possible of the magnitude of foreign exchange transactions in Free China, particularly in U. S. dollars, with special reference to the various categories of expenditures, i. e. foreign trade, U. S. soldiers, missionaries.
  • Part II. Please send us the latest information which you have on the following matters. It is not desired that you make inquiries on these subjects but merely forward to Treasury latest information available to you.
    The position of the Ministry of Finance on the 1937 stabilization arrangement and specifically, reaction of the Ministry of Finance to the proposal contained in our cable of July 16 to you.87
    What action, if any, has been taken by the Chinese Government regarding investment in U. S. bonds or other Treasury paper of $200 million of the $500 million U. S. financial aid held by the Central Bank of China in two new special accounts at the Federal Reserve Bank of New York? On May 16, the Central Bank cabled the Federal asking them for their views and advice as to the possibility of investing a portion or whole of the $200 million in their special accounts in gilt-edge securities such as Government bonds or Treasury bills in order to earn some interest. The Federal, in cable dated May 19, [Page 538] advised the Central Bank that they believed that U. S. certificates of indebtedness or U. S. Treasury bills were best suited for the investment of funds of the type in the Central Bank’s two new accounts. Nothing further has been heard from the Central Bank regarding this matter. [Morgenthau.]
  1. Supra.
  2. Telegram No. 638, July 16, 8 p.m., p. 532.