893.51/7658
The Ambassador in China (Gauss) to the Secretary of State
[Received December 14.]
Sir: I have the honor to enclose for the Department’s information the following material96 concerning the recently concluded publicity campaign to promote the sale of the Allied Victory Bonds and the United States Dollar Saving Certificates issued by the Chinese Government against the backing of the American loan:
- 1.
- China Information Committee Bulletin of October 17, 1942, entitled “Publicity Week for New Bonds”.
- 2.
- Translation of speech by the Secretary-General of the Bond Solicitation Committee announcing “The Enforcement Measures Governing the Solicitation of 1942 Allied Victory Bonds”.
The Chinese Government on October 15 opened a week’s campaign to encourage and increase the sale of the above-mentioned bonds and savings certificates. The local press devoted editorials to the subject, and an appeal for the increased sale of the bonds was made to the people by the Bond Solicitation Committee of the Ministry of Finance. That appeal stated that it was the duty of each citizen to the nation at war to buy bonds, that it was to the advantage of the buyer as a means of saving and that it presented a means of hastening the victory. Slogans adopted by the Committee appealed for the purchase of the bonds on the grounds of patriotism, stabilization of prices and currency and the buyer’s own advantage, and emphasized the United States dollar backing for the bonds and the terms of repayment in United States currency.
Dr. H. H. Kung, Minister of Finance, in his report to the Third People’s Political Council enumerated as one of the five points toward the accomplishment of which the Ministry of Finance will exert its full efforts the enforcement of compulsory subscription to public bonds in order to effect an equitable distribution of the economic burden and also to absorb floating capital. Editorials in the Chinese press made vague references to the enforcement of compulsory subscription to the bonds, and there has reportedly been much discussion concerning the establishment of some compulsory purchase program. [Page 548] At the end of the campaign the Bond Solicitation Committee announced its Measures Governing the Solicitation of 1942 Allied Victory Bonds, according to which compulsory purchase of domestic bonds was to be effected by an allotment plan while the sale of the United States dollar bonds and savings certificates was to be continued by solicitation. The allotment plan is to be made applicable only to Chungking, and in view of its complicated provisions is not likely to be effective.
The campaign has apparently done little to increase the sale of the bonds and savings certificates, for the total sales of the Savings Certificates up to October 29 were US$5,498,000 or CN$109,960,000. It is impossible to obtain any figures for the sale of the Allied Victory Bonds, but it is understood that the total sales of that issue are approximately CN$10,000,000. The Ministry of Finance is apparently reluctant to release any statistics because of the small sales of these bonds.
The sale of the issues secured by the American loan has contributed little as an anti-inflationary measure. It is generally felt that investors who are able to secure considerable profits from commercial transactions under present inflationary conditions are not attracted by the small return to be derived from the interest on these bond issues. The negligible sales of the Allied Victory Bonds is ascribed to the long term thereof, and even the backing provided by the American loan has not served to make these issues sufficiently attractive to Chinese investors to make them invest therein in appreciable quantities. The continued small sale of the bonds and savings certificates may therefore be ascribed primarily to the present opportunity offered investors of obtaining large profits from speculation and commercial transactions and secondarily to the lack of confidence in the Chinese Government’s fiscal policy and the long term of the Allied Victory Bonds.
Respectfully yours,
- Not printed.↩