893.51/7076: Telegram

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

300. Your TF–95, February 19.19 To Adler from the Secretary of the Treasury.

Part I: Please transmit the following message to Dr. Kung:

With reference to the question of the status of the proceeds of the U. S. dollar-backed certificates, etc., Treasury wishes to express its appreciation of Dr. Kung’s cooperative attitude in not wishing to embarrass the Treasury in the enforcement of its Foreign Funds Control measures. The Treasury is consulting with the Stabilization Board regarding some procedure with respect to applications which may be received by the Treasury from holders of certificates, etc. for the release of the blocked proceeds of such certificates, etc. at maturity.

Part II: Please discuss the following matter with the Stabilization Board:

The Treasury suggests the Board may wish to request that the following procedure be followed with regard to applications received [Page 413] by the Treasury for the release of the blocked proceeds of the U. S. dollar-backed certificates, etc. at maturity when paid to the account of a blocked Chinese national:
In cases wherein the application could be acted on under existing general licenses such as General Licenses Nos. 2, 5, 11, 58, 60, 75, or other applicable general licenses, the procedures already provided for in such licenses would be followed.
In cases which are not provided for by existing general licenses and for which specific Treasury licenses will be necessary:
If the individual application involves a substantial sum, the Treasury is prepared to refer such application to the Stabilization Board for the Board’s prior approval.
If the amount involved is nominal, the Treasury, for administrative reasons would prefer to pass on such cases without reference to the Board but would act in accordance with the general attitude of the Board as indicated by the Board’s reaction to cases referred to it. Furthermore, the Treasury, if so desired by the Board, would submit periodic reports to the Board summarizing such transactions.
If the cases involving substantial sums became very numerous and the reference of each individual case to the Stabilization Board became administratively not feasible, the Treasury would then raise with the Stabilization Board the question of working out a procedure suitable to existing conditions.
The Treasury would be pleased to receive the reaction of the Board to this suggested procedure.
For your own information please keep in mind in your discussions with the Board that the reference of cases to the Board will entail considerable delay and administrative routine. While the Treasury is willing to refer such cases to the Board it is felt that such reference of cases should be kept to a minimum. [Morgenthau.]

  1. Telegram No. 260, supra.