893.5151/990: Airgram
The Consul at Kunming (Ringwalt) to the Secretary of State
[Received March 27.]
A–10. A distinguished group of representatives of the Central Government has recently arrived in Kunming and is actively engaged in negotiations with the provincial authorities. The group includes Mme. Chiang Kai-shek, Finance Minister H. H. Kung and his wife, and Foreign Minister T. V. Soong and his two brothers, T. L. Soong and T. A. Soong. Notably absent are the Generalissimo and Mme. Sun Yat-sen. At the request of the Minister of Finance, Dr. Theodore Atcheson [Edward Acheson], Financial Adviser to Headquarters USAFCBI,95 Dr. Arthur Young, Adviser to the Ministry of Finance, and Mr. Solomon Adler, Representative of the Treasury Department, accompanied him to Kunming.
Although the professed purpose of the visit of this group to Kunming is to investigate certain financial problems growing out of the presence of units of the United States Armed Forces, it has become apparent that this is secondary to other considerations, including [Page 375] the … increasingly strained relations between the Central and Provincial Governments.
Among the problems which are now being discussed with the provincial authorities are possible steps to be taken for the regulation of commodity prices and the control of open market operations in foreign currency. However, the clique in control of the Provincial Government is understood to be deeply involved in both the hoarding of commodities and the black market in foreign currency. In this connection it is reliably reported that there remains a substantial share of a provincial note issue of New Yunnan $500,000,000 (CN$1.00 equals New Yunnan $2.00) which continues to be the current medium of exchange in certain outlying areas of Yunnan. These notes are being utilized gradually for the acquisition of Chinese national currency with which to obtain foreign exchange and gold, much of which is smuggled in from India. Although local foreign exchange operators are mostly Shanghai men, it is generally understood that they are financed and controlled by members of the provincial government clique. Similarly, gold smuggled in from India by plane is believed to find its way into the hands of members of the clique through Shanghai middlemen. Pilots who smuggle the gold in from India are reported to receive a reward of fifteen rupees per tola (1 tola equals about three-eighths of an ounce).
In view of the above considerations, it would appear that the provincial authorities can be counted upon to oppose any legislation which would embarrass their hoarding and black market operations and that there is little possibility of the adoption of any constructive measures leading to the solution of either of these problems.
- U. S. Army Forces, China–Burma–India.↩