893.515/1545d: Telegram

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

151. For Adler from the Secretary of the Treasury.

Mr. Hsi13 called on Treasury on January 20, 1943, to transmit message received by him from Dr. Kung requesting Treasury to allow China to draw from the unearmarked portion of the US $500 million credit US $20 million to meet payments for banknotes ordered from United States and to purchase banknote paper, ink and other relative materials.
Mr. Hsi has been informed that the Treasury is prepared, if so requested by the Ministry of Finance, to make available US $20 million from China’s credit on the books of the Treasury to meet payments referred to above, but that the Treasury does not understand why Dr. Kung is requesting an additional US $20 million when the Government of China still has very substantial idle funds in addition to the unearmarked portion of the US $500 million credit. The Treasury would have to borrow the requested $20 million, paying interest thereon, and, therefore, from a fiscal point of view, the Treasury would prefer to have the Chinese use their idle funds before drawing further on their credit with the Treasury. If, in the future, the [Page 408] Chinese needed more funds, they could call on the Treasury for such, as long as the $500 million credit had not been exhausted.
Mr. Hsi was requested to explain the Treasury’s position to Dr. Kung in sufficient detail so there would be no chance for misunderstanding. [Morgenthau.]
  1. Hsi Te-mou, Chinese representative visiting the United States.