893.5151/907: Telegram
The Ambassador in China (Gauss) to the Secretary of State
[Received December 13—11:21 a.m.]
1485. For Secretary of Treasury from Adler.
TF–78. Reference my TF–77.7 Conversations with Dr. Kung and Ministry of Finance officials reveal that on the whole they feel that black market for United States dollar notes could and should be dried up by cessation of their import by the United States Air Force in China. They themselves do not want to take initiative, as they realize that existence of the black market acts as safety valve for the United States Air Force’s vocal discontent with official exchange rate. But my impression is that they would nevertheless welcome remedial action by United States authorities.
My own view is that such action should be taken especially as American soldiers’ recourse to black market is leading to ugly rumors and to bad feeling on part of British soldiers who receive their allowances only in fapi converted at official rate. Main drawback to prohibition of United States Air Force import of United States dollar notes is that it would remove safety valve for Army’s dissatisfaction with official rate. But on the other hand:
- (a)
- Chinese Government is known to be considering adoption of reverse Lend-Lease for United States Air Force, and prohibition might accelerate a decision on its part.
- (b)
- If Chinese Government does not adopt reverse Lend-Lease, it might find it more difficult to maintain its present position with respect to changing official rate of exchange.
- [Adler]
- Gauss
- Telegram No. 1484, December 11, 4 p.m., supra.↩