893.24/1597: Telegram

The Chargé in China ( Atcheson ) to the Secretary of State

754. Embassy’s 549, April 1 [16], 2 p.m. and Department’s 637, May 19, 9 p.m.31 (just received).

The Embassy has received a note from the Foreign Office dated May 19 communicating “provisional regulations” of the Ministry of Finance “for extending favorable treatment to the Embassies and Consulates in connection with the conversion of foreign exchange into national currency to meet their expenses” as follows:
  • “(1) For the duration of the war the conversion of foreign exchange into Chinese national currency by the foreign diplomatic and consular offices for their expenditures will be at the official rate and in addition an amount equivalent to 50% of the proceeds CN dollars will be paid;
  • (2) the foreign exchange received from the foreign Embassies [and] consular bodies will be put in a separate account with the Central Bank and will not be credited to the account of the Stabilization Board of China;
  • (3) the national currency needed for the foreign exchange converted by the foreign Embassies and Consulates will be temporarily advanced by the Central Bank and be set off against the said foreign exchange. As soon as the war is over, settlement of the account will be made;
  • (4) conversion of the foreign exchange mentioned above will be carried out by the Central Bank on the basis of certifications contained in official letters from the Embassies concerned;
  • (5) the amounts of the conversions of the foreign exchange to convert the expenses of the various Embassies and Consulates in China will be listed in a table each month by the Central Bank of China and separately reported to the Ministry of Finance and the Stabilization Board for reference. Whenever the various Embassies and Consulates [Page 544] in China require foreign exchange they will apply direct to the Central Bank of China and that bank will make payment in foreign exchange at the same rate at which foreign exchange is received (from the Embassies by the bank) and shall enter it into the account under an appropriate heading for calculation.”
The note states that the regulations are to be implemented “from May of this year” and requests figures as to the amounts of foreign exchange desired monthly by the Embassy.
In the light of Department’s 637, May 19, 9 p.m. (as well as in the light of the ambiguity of the third article of the regulations), we are not taking any action conformable to the Foreign Office note. Prior to the receipt of Department’s 637 I had arranged to see Dr. Kung today for the purpose, inter alia, seeking clarification of regulations. In the absence of affirmative instructions I shall of course refrain from bringing up with him the subject of Department’s 637.
It may be added incidentally that, while the ambiguity [of] the third article is assumably designed to meet Finance Ministry’s objection to a “special rate” and foreign objection to a “subsidy” for diplomatic establishments, it is our impression, received from conversation with several foreign diplomatic representatives that they will hesitate to accept the arrangement until the language of Article III is appreciably modified or supplemented by written assurance that it covers only a matter of mechanics between the Central Bank and the Finance Ministry and does not create any financial obligation on the part of foreign governments.
Please see Adler’s message to Treasury of this date33 with regard inter alia to arrangements made for increased exchange for missionary, philanthropical, educational and relief organizations.
  1. Latter not printed, but see footnote 25, p. 537.
  2. See infra.