Historical Documents - Office of the Historian

893.5151/969a: Telegram

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

Washington, November 20, 1943—3 p.m.

1672. From the Secretary of the Treasury for Adler.57 You are requested to discuss with Dr. Kung the following urgent and secret matter:

1.: You are instructed hereby to obtain a quotation from Dr. Kung on the price at which the Chinese Government would be willing to make CN $400 million per month available to the United States Government to meet United States military and civilian governmental expenditures. Expenditures of the United States Government in China are at present around United States $15 to 20 million per month. It is to be expected that the equivalent amount of Chinese national currency expenditures could be met at considerably less cost in United States dollars at the new price.
2.: In your discussions of this price with Dr. Kung, you should emphasize the fact that the price at which gold is selling in Free China [Page 574] is about CN $8,000 to 10,000 per ounce which at the official rate of exchange is the equivalent of United States $400 to 500 per ounce.
3.: For this 400 million yuan per month the United States Treasury would be willing to pay either with (a) United States dollars, or (b) gold on earmark at the Federal Reserve Bank at New York, or (c) by having one-half of the shipments of gold currently being made to China for sale in China be for the account of the United States Government. [Morgenthau.]

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