102.1/9414c: Telegram

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

1638. From Secretary of Treasury for Adler.

Mr. T. L. Soong and Mr. Hsi Te-mou have been informed that the Treasury feels that the 1941 Agreement should not be renewed under present circumstances and that you are being asked to resign from the Stabilization Board. They were told that it is the Treasury’s feeling that a stabilization agreement should not be entered into on [Page 473] the basis of the present exchange rate and that China does not at this time need the financial assistance. If it so desires, China could raise the question of a new agreement with the Treasury at some future time.
It was therefore the Treasury’s intention to instruct you to submit your resignation to Dr. Kung as of December 31, this giving you some time to be of assistance to the Board. However, Mr. Hsi Te-mou has requested the Treasury not to ask you to resign at this time but instead to wait a few weeks until he shall have received from Dr. Kung a reply regarding the Treasury’s position. You will therefore not submit your resignation at this time. The feeling here, however, is that the Treasury is unlikely to change its views regarding your resignation. It is anxious that the financial position of the Board, when you leave it, should be such that it will be impossible to suggest that inability of the Board to meet its obligations was the reason the American member resigned. Information regarding this is requested. [Morgenthau.]