Memorandum of Conversation, by the Chief of the Division of Chinese Affairs (Vincent)

Dr. Arthur Young, Adviser to the Chinese Government on economic and financial matters, called on me Saturday (March 10). In the course of the discussion he mentioned the matter of gold shipments to China. He said that through its sales of gold the Chinese Government had been able to call in 34 billion Yuan. Actual sales, as I recall it, accounted for something over 20 billion Yuan and forward sales to something less than 15 billion. He felt that this was a very commendable record in connection with China’s attempt to retard inflation.

Dr. Young said that the Chinese (he specifically mentioned Dr. Kung) were very anxious to increase gold shipments; that forward sales had made the matter particularly urgent; that if gold in increased amounts were not received the black market price of gold might get out of hand; but that the chances of obtaining increased shipments did not seem to be encouraging.

He mentioned an exchange of correspondence (or perhaps it was a conversation) between Secretary Morgenthau and Dr. Kung.30 The [Page 1065] Chinese apparently were not encouraged by the Secretary’s statement that he would do what he could to obtain War Department allocation of increased space for gold shipments to China.

Dr. Young said that he was loath to interject himself into the matter by calling on Harry White31 (I had suggested that he do so). I told him that there was nothing that I could usefully do; that we had previously indicated that there was no political objection to the Treasury Department’s agreement to ship gold to China; and that there the matter stood. The problem of space allocation seemed to me to be one which the Treasury would have to work out with the War Department.

Comment: My conversations with Adler (before he left for China), with Irving Friedman32 and with Harry White of the Treasury have indicated to me that the manner in which the Chinese Government is disposing of gold does not warrant efforts to increase the rate of gold shipments. Some time ago Harry White called me to say that while the Treasury would continue to show itself cooperative with the Chinese in the matter of gold shipments, it did not feel that the situation warranted special efforts to increase shipments. He asked me whether I perceived any objection to his stand in the matter. I told him I did not.

J[ohn] C[arter] V[incent]
  1. See letter of July 24, 1943, from the Chinese Ambassador to the Secretary of the Treasury, quoting Dr. Kung’s message to the Secretary dated July 23, Foreign Relations, 1943, China, p. 437; see also Department’s telegram No. 1005, July 31, 1943, midnight, to the Chargé in China, summarizing Mr. Morgenthau’s reply to Dr. Kung, ibid., p. 439.
  2. Harry Dexter White, Assistant Secretary of the Treasury.
  3. Irving S. Friedman of the Division of Monetary Research, Treasury Department.