102.1/9616: Telegram
The Ambassador in China (Gauss) to the Secretary of State
[Received 11:59 p.m.]
2335. For account of course of prices September, October, see section 1, paragraph 1 of my 2297, of December l.72 Ambassador Wei’s statement like report of Mark Twain’s death. True that prices of a few individual commodities fell in this period due to a number of factors, but this fall was insufficient to reverse upward trend. While preliminary retail price data for Chungking [in] November also reveal maintenance of comparatively gradual upward trend, price of only one commodity, tea, actually declined. Most competent observers believe that upward trend of prices will become more marked before Chinese New Year.
From Adler for Secretary of Treasury. Clear that largely psychological beneficial effects of Chinese Government purchase of gold have already worked themselves out and that only further sales to public on a significant scale would yield additional results. (Re your 1731, December 2.) In this connection Kung, in a recent conversation, repeated that Chinese Government would probably call a halt to large scale importation of gold owing to high cost of insurance and transportation and sell gold certificates instead. (Cf. end of paragraph 3, of my 2228, November 24.72) Safe to predict that sale of claims on gold would neither find as ready a market nor yield as high a return per unit as would sale of gold itself.