893.5151/953: Telegram
The Chargé in China (Atcheson) to the Secretary of State
Chungking, August 2,
1943—9 p.m.
[Received August 2—4:58 p.m.]
[Received August 2—4:58 p.m.]
1354. For Secretary of the Treasury from Adler. TF–145. Re your 993 [933] July 21.
- 1.
- For background information on Japs acquiring, confiscating, tampering with and using fapi, see Embassy’s 1270, July 23, and 1337, July 30,51 copies of which were sent to Treasury. In connection with the former: (a) I specifically asked Dr. Kung, K. K. Kwok52 and local manager of Bank of China about rumor of Japs putting forged CN dollars 10 billion into circulation, and all replied story was utterly inaccurate, (b) Local manager of Bank of China who was in Hong Kong when it fell informs me that Bank of China’s copper plates and new notes with the Chung Hua book coin, Hong Kong, had been destroyed during siege but that he had heard that new notes printed for Bank of Communications had fallen into Jap hands. In connection with the latter, according to the same source the counterfeiting of fapi by the Japs is not systematically organized but carried on by individuals as a private racket.
- 2.
- When I saw Dr. Kung on the 29th I asked him about the reports of Jap counterfeiting and the counter measures his Government was adopting. He replied that the amounts of forged fapi notes found in Free China was comparatively small totalling not more than about CN dollars 10 million. He added that Japs have counterfeited BS dollars, Hong Kong dollars and sterling as well as fapi, all of which they have tried to dispose of in occupied territory. The Government had adopted stringent countermeasures, confiscating all counterfeit notes and meting out severe punishment to large holders. Recently a group including soldiers were found trying to smuggle in CN dollars 1.7 million of forged notes and all were sentenced, the soldiers by military court.
- 3.
- On basis of available evidence, Japs have done much more damage to Chinese economy by buying goods in Free China with bona fide fapi they had acquired—at no cost to themselves in exchange for CEB dollars, FEB dollars, and military yen—or confiscated in occupied territory than they have by circulating bogus fapi. The Japs have used substantial amounts of bona fide fapi in this way and are reported to have CN 2 billion left. The consequences of such use of fapi are obvious, for the inflation is doubly aggravated by drain of goods from and increased supply of money in Free China. There is [Page 441] no sign that Chinese Government is making any serious attempt to grapple with the problem fraught with political as well as economic implications of economic and financial intercourse between Free and occupied China. [Adler.]
Atcheson