893.4061 Motion Pictures/6–2644

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

No. 2717

Sir: With reference to my despatch no. 2389 of April 1, regarding remittance to the United States of net earnings of American motion picture distributors in China, I have now the honor to enclose:8

Copy of a letter dated June 15th, 1944, from the Minister of Finance.
Copy of a letter dated June 20, 1944, from the Film Board of Trade (China).
Copy of my letter of this date to the Political Vice Minister of Finance (in the absence of the Minister).

It will be noted from this correspondence that the Minister of Finance has agreed to restore, for the year ending December 1944, the facilities for remittance of 50% of the net earnings of the film distributors. As for facilities for remittances beyond this 50% limitation, he asks for the presentation of certain detailed information “for examination and decision”. As to facilities for remittance of the present backlog of blocked funds of the distributors, Dr. Kung dismisses this request in Oriental fashion with the statement that “effective measures will, of course, be taken when conditions warrant.”

I do not feel that any real or substantial advance has been made in connection with the desire of the film distributors to remit their net earnings in full.

While the whole matter of remittances has been under study by the Ministry of Finance, all remittances for 1944 have been held in suspense. That is, applications for remittance facilities have been filed by the distributors with the Foreign Exchange Commission, but that Commission has withheld action thereon. I have now asked that favorable action be taken on the applications under the sanction given by Dr. Kung, and it is to be expected that the backlog of 1944 remittances may soon be expected to flow to the United States.

It will be noted that the Film Board of Trade has “provisionally accepted” the proposals made in Dr. Kung’s letter and has referred them to the parent companies. It is my understanding that the China distributors would not be in a position to furnish all of the detailed information required by the Ministry of Finance “for examination and decision” in connection with applications to make remittances beyond the 50% limit now sanctioned.

In connection with this whole matter, it is pertinent to recall that the film distributors have been receiving 50% remittance facilities at the official exchange rate of CN$20 to U.S.$1.00, while, as the Department is aware, the “open market” value of U.S. currency in China at this time is between CN$100–CN$200 to U.S.$1.00, the rate fluctuating heavily even from day to day. All in all, the film distributors are not in an unfavorable position in regard to remittances in view of the provision of exchange at the official rate of 20 to 1.

Respectfully yours,

C. E. Gauss
  1. Enclosures not printed.