893.50/355½
The Ambassador in China (Gauss) to the Secretary of State
[Received November 16.]
Sir: I have the honor to enclose an excerpt from despatch no. 72, October 6, 1943, from the Consul at Kweilin,69 on the subject of political and economic conditions in Wuchow, Kwangsi Province. A summary is included in the excerpt from the despatch.
Reports of smuggling between free and occupied China have been frequent and apparently well-founded. This illicit trade generally involves the export of strategic materials and foodstuffs from free China and the import of cotton textiles and luxuries from occupied China. The Japanese have been reported in the past to have made substantial purchases in the southeastern part of free China with fapi (Chinese national paper currency) with the triple purpose of obtaining needed goods, reducing the supply of goods in free China and adding to the currency inflation in that area. The Japanese and followers of the puppet Nanking regime have recently shown increasing interest in gold, and the flow of gold, which was formerly reported to have been from Canton and Hongkong to free China, is said to have been reversed. A Chungking banker recently stated to an officer of the Embassy that there is also an increasing interest in fapi in occupied China and that substantial quantities of goods, chiefly cotton goods and luxuries, are coming into free China in exchange for that currency.
Respectfully yours,
- Not printed.↩