103.91702/4163: Telegram
The Ambassador in China (Gauss) to the Secretary of State
[Received 9:16 p.m.]
2095. Continuing my 2085, November 5, 2 p.m., and with reference your 1565, October 31, 1 p.m. Authorization to obtain United States currency for Embassy, Consulates and other civilian agencies presents practical problems which may be difficult to overcome.
APO Chungking does not have sufficient funds to encash our drafts or checks and according best available information here APO Kunming does not have funds to handle more than perhaps 1 to 5,000 United States dollars. Chief of Staff Army forces says military agencies such as APO and Finance officers have only sufficient funds for their own use and while United States currency might be available at Karachi from United States Army there, the problem would be to bring it into China and risk and responsibility attaching, which Army would be disinclined to accept. Recent losses of planes due to enemy action on Assam–China run increases risks involved.
Even if United States currency can be made available it is doubtful whether it could be disposed of in any substantial amounts at Chungking. Principal market is at Kunming and any heavy increase of United States currency there might be difficult to exchange.
Embassy estimates that about 40,000 United States dollars monthly would be required for Embassy and other civilian agencies based at Chungking, for salaries and allowances alone. Total of Embassy and all such agencies for salaries, allowances and operating expenses has recently run to as much as 140,000 United States currency a month.
While your 1565 refers to “operating expenses” as well as salaries and allowances, I question whether, except in those few cases where contracts as for rent have unauthorizedly been made in actual United States currency, it would be possible to use such currency since that would necessitate an officer going officially into black market to sell such currency and no exchange vouchers would be obtainable to support accounts.
Embassy does not understand statement that certificates required by note 5 section 1–19 Foreign Service Regulations should invariably be submitted. No such certificates are prescribed by regulations. I have endeavored to ascertain whether there exists any Chinese law or man [Page 572] date making illegal the sale of United States currency in China but so far have been unable to do so. As reported in my 2085, Kung raised no objection to our using United States currency. There are regulations punishing by martial law those engaging in certain black market activities in commodities. We know that Chinese Government has sought to cease [crack?] down black market exchange shops at Kunming but do not know under what law, if any, this was done.
I will bring Department’s authorization to attention of consular officers and representatives of other agencies, and am making inquiry through Consul at Kunming as to possibility of implementing this authorization through encashment of drafts and check for Chungking, sale of resulting United States currency at Kunming and its remittance to Chungking.
Department may find it necessary to arrange with War Department for supply of United States currency by United States Army to Kunming or Chungking.
I will report further upon receipt of information requested from Consul at Kunming.