The Acting Secretary of State to the Secretary of the Treasury ( Morgenthau )

My Dear Mr. Secretary: The Department has given careful attention to the request of the Chinese Foreign Minister, Dr. T. V. Soong, for the delivery during the remainder of 1945 of about $190,-000,000 of gold from the unused balance of the $500,000,000 credit approved by the Congress in January 1942.63

It is the Department’s view, which it understands is shared by the Treasury, that the sale of gold by China has not proved and is not likely to prove a very effective anti-inflationary device. Moreover, it believes that the establishment of a $500,000,000 fund for combating inflation and stabilizing the Chinese currency which you proposed last week to Dr. Soong would, if adopted by the Chinese Government, be of considerable short and long run benefit to China.

The Chinese Government believes, however, that the immediate political and psychological as well as real economic effects of a continued and accelerated gold sale policy will have a vital importance in the critical situation confronting it, and strongly requests the delivery of the gold in question in accordance with the terms of the understanding between the two governments of July 1943.64 Since there appears to be no doubt that the Chinese Government attaches a greater importance to the immediate delivery of the gold than to the longer run benefits which might result from the establishment of the fund which you have proposed and since the continued stability of China and her increasing military effort in the war against the common enemy are of great concern to the United States, the Department recommends that Treasury, if transportation is available, deliver the gold to China in accordance with the time schedules put forward by Dr. Soong.

Sincerely yours,

[Joseph C. Grew]
  1. Approved February 7, 1942; 56 Stat. 82.
  2. See footnote 30, p. 1064.