102.1/11199: Telegram
The Ambassador in China (Gauss) to the Secretary of State
Chungking, June 23,
1944—8 a.m.
[Received 9:50 a.m.]
[Received 9:50 a.m.]
1086. To Secretary of Treasury from Adler. Re your 810, June 12.
- 1.
- Am consulting Ambassador Gauss and General Ferris7 to be able to report their views in full on returning.
- 2.
- See no objection to placing further 25 million dollars to Chinese account when Army approves. Fully agree no response should be made on Reverse Lend-Lease proposal until negotiations for reasonable exchange rate have made more progress.
- 3.
- Feel that any agreement for sale of gold and currency on joint account should be made not as alternative but as ancillary to agreement on reasonable exchange rate which latter is main issue. Not too much should be expected from sale of gold and currency. Volume of such sales would depend on degree of cooperation of Chinese Government and even with active wholehearted cooperation sales would not suffice or cover Army and civilian needs. In view of record on internal gold sales unlikely that such active cooperation would be forthcoming. Recent Kmt8 meeting adopted resolution whereby industrialists would receive official rate of 20 to 1 for advanced purchases from abroad to meet their postwar needs, which constitutes a very substantial subsidy to imports of machinery. This would tend to curtail and depress open market for DS [U. S.?] currency if implemented; understand that Exchange Control Commission now working out regulations for its implementation. [Adler.]
Gauss