893.51/7669: Telegram

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

156. TF–86 to Secretary of Treasury from Adler. Re your 112 of January 22.

[Page 406]
In recent conversations Dr. Kung has repeated his opinion that a reduction in official exchange rate and institution of special exchange rates for USAF are both undesirable, though my impression is that his attitude to a reduction in exchange rate is less adamant than formerly. He told me a day or two ago that he was sympathetically considering a plan for reverse Lend-Lease10 for USAF which would take care of its expenses in China. (Another feature of the scheme he is considering, I believe, is the granting in a disguised form of special rates to American soldiers for their personal expenses.) The Generalissimo has already approved the plan provided it does not involve expenditures of over CN $10,000,000 per month. But before submitting the plan to the Treasury formally Dr. Kung wished to learn your attitude to reverse Lend-Lease by China.
With respect to black market, he informed me at the same time that he was preparing to submit a proposal to Executive Yuan whereby trading in the black market would be made illegal and all dealings in foreign currencies would be restricted to Central Bank or its designated agents (i. e., the Bank of China). In this connection he asked me for copies of our regulations concerning the import and export of currency.
I see no objection to Treasury’s not doing anything about black market until Chinese Government chooses to raise the matter with the United States Government. [Adler.]
  1. For further correspondence on reverse Lend-Lease, see pp. 515 ff.