893.5151/8–744: Telegram

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

1350. For Ambassador and Friedman from Treasury. The following is for Ambassador’s and your own information only:

Reference despatch No. 2841, August 7, 1944, and telegram 1629, September 30, 1944, concerning the sale of United States dollar exchange to persons in China by the United Clearing Board, Chungking. As indicated in our A–193 of September 2, 1944,21 Treasury has notified both the National City Bank and the United Clearing Board that these facilities are not to be extended to military, naval, or civilian Government personnel. Treasury is willing to consider making an exception for Government personnel about to leave China who must dispose of their personal and household effects and who desire to convert the proceeds of such sales in Chinese currency into United States dollar drafts. But Treasury feels that since these exceptions might be difficult to administer and might weaken the effectiveness of the prohibitions against other sales to Government personnel, your further comments and recommendations would be appreciated in the light of the following:
Can not the departing personnel convert Chinese currency without appreciable loss in (a) the same open market wherein their Chinese currency was originally acquired or (b) exchange the Chinese currency for the U. S. currency now being received by other personnel as pay or being brought to the area by newcomers.
If an exception should be made for Government personnel leaving China to permit them to purchase United States dollar drafts from the United Clearing Board, it would be necessary to establish a procedure for certifying to the United Clearing Board that Governmental personnel desiring to purchase United States dollar exchange are leaving China and are entitled to purchase the exchange. While [Page 945] it might be relatively easy for you to provide such certifications for civilian Government personnel, it might be quite difficult with respect to military and naval personnel in view of the wide areas over which such individuals are stationed and the secrecy which normally surrounds their prospective movements. [Morgenthau.]

  1. Not printed.