711.93114A/63: Telegram

The Minister in Switzerland (Harrison) to the Secretary of State

1934. American Interests—Far East. Your 821, March 13,29 822, March 13, 1009, March 25.30 Tait31 and Daymont32 have discussed matter fully with responsible Foreign Office officials. Following is substance Foreign Office views:

Department’s 418, February 11, 1942,29 represented unilateral proposal of means devised to make available to protecting Powers funds required for representation Axis interests in United States. Japanese have never replied.
Situation Far East arises in part from Japanese efforts to enforce so-called “official exchange rate”. Swiss consider this inequitable and not corresponding purchasing power now prevailing. It does not otherwise arise from any unwillingness by Swiss to employ transmission means prescribed by Japanese.
Foreign Office officials expressed view that recent restrictions imposed by Japanese on American remittances are probably in retaliation for restrictions by American Government on Japanese expenditures United States and also represent endeavor to enforce official exchange rate. Legation also informed Department’s steps (see your 759, March 23, 194229) to control expenditures for foreign interests by protecting Powers may have inspired Japanese position Shanghai.
Foreign Office and its representatives Far East have conducted extensive negotiations over considerable period with Japanese to endeavor [Page 1026] establish equitable exchange rate. Thus far no satisfactory response received. In consequence further approach not planned. Swiss not in a position to offer any suggestions how this end achievable. Officials added Fontanel no longer able negotiate at other than rate established by Japanese. This includes even his own office expenses.

In connection this whole question, Swiss have shown constant tendency and desire to leave matters regarding exchange rates relating to representation our interests Axis territories to Swiss representative in the field (they feel that Swiss representative abroad is in much better position to judge and take advantage of circumstances affecting exchange rates).

Foreign Office now estimates that to provide adequate relief for 760 interned civilians in occupied China and 726 non-interned civilians in occupied China and the Philippines at the respective monthly rates per person of 7500 CRB dollars and 22,500 CEB dollars at the official rate of exchange of 18.36 equals 100 CRB dollars would cost approximately 12,060,000 USA dollars annually. Unofficial rate last reported was 90 Swiss centimes for 100 CRB dollars with statement that the cost of living increases in proportion to the decreased value of CRB dollars without any appreciable lag.

In view foregoing, Department’s reclassification of China (your 1011, March 25) to Class VIII with maximum basic monthly payment of $110 will not form a basis for meeting more than a small fraction of requirements if purchases must be made at the official exchange rate.

Regret Legation unable to offer any recommendation supplementary to Swiss views above given other than that Department determine total amount of money that it is willing to expend at Shanghai annually for relief and authorize Legation to notify Swiss Government as to that amount with advice that Department leaves utilization of this money to complete discretion of Swiss representatives in the field and without any of the restrictions or limitations previously imposed.

For Department’s background information, following figures prepared at Swiss Foreign Office based upon monthly salary temporary Swiss Government employee: (a) Shanghai August 1943:20,000 CRB dollars equals unofficial exchange 200 USA dollars; at official rate 880 USA dollars; February 1944:86,600 CRB dollars equals unofficial exchange 200 USA dollars; at official rate 3,696 USA dollars. Actual unofficial rate one USA dollar equals 433 CRB dollars whereas official rate 23.43 CRB dollars.

[Here follow comparable figures for currencies in various European capitals.]

  1. Not printed.
  2. Telegram 1009 not printed; but for summary, see footnote 23, p. 1022.
  3. George Tait, First Secretary of Legation in Switzerland.
  4. Lawrence J. Daymont, clerk at Legation in Switzerland and serving as special disbursing officer.
  5. Not printed.
  6. Not printed.