893.51/9–845: Telegram
The Ambassador in China (Hurley) to the Secretary of State
Chungking, September 8,
1945—8 a.m.
[Received 11:15 a.m.]
[Received 11:15 a.m.]
1543. To Secretary of Treasury from Adler and Casaday.
- a.
- Your 131 will be taken up earliest opportunity with Minister of Finance who is ill at present.
- b.
- Your 2. Chinese financial plans for Formosa are still in tentative stage and the final form they take will depend partly on a struggle for bureaucratic control going on between Chen Yi, former Governor of Fukien, appointed administrator for Formosa to be directly responsible to Generalissimo, on the one hand, and Ministry of Finance [and?] of Central Bank, on the other (Ministry of Finance has not yet appointed its representative for Formosa though Central Bank has).
We learn from reliable sources that Ministry of Finance’s plans in present stage are as follows:
- 1.
- The Central Bank is to open five offices in Formosa as soon as possible with a personnel of 100, of whom 60 will be despatched from Chungking and the remainder will be from Fukien and Formosan Chinese. It is intended that ports at which U. S. Navy may be stationed will be among first to have Central Bank branches. The Formosan branches of the Central Bank will take over the central banking functions of the Bank of Taiwan as quickly as conditions permit.
- 2.
- Amount of currency in circulation in Formosa is estimated at between one and one and one-half billion “yen” issued by Bank of Taiwan, of which 400–500 million “yen” are in 1 and 5 “yen” and the remainder in 10 and 50 “yen” denominations. The Central Bank is already printing fapi notes stamped “Taiwan” which it intends to introduce in a month or two. Bank of Taiwan 1 and 5 “yen” notes will be redeemed against Taiwan fapi at 1 to 1 but 10 and 50 “yen” notes will be redeemed at a discount not yet determined. As prices in Formosa are very much lower than on mainland, it is intended that Taiwan fapi will be worth much more than mainland fapi, the rate to be fixed after Central Government financial and banking representatives agree on Formosa. Present plans are that a deflationary policy will be pursued in Formosa with the discount at which bank of Taiwan 10 and 50 “yen” notes will be redeemed to be one of the main instruments.
- 3.
- Complete exchange control will be exercised by Central Bank over transactions between Formosa and the mainland and between Formosa and foreign countries.
- 4.
- A struggle is going on among Chen Yi, Bank of China, Bank of Communications, and Farmers Bank as to who is to take over commercial and remaining business of the 17 branches of the Bank of Taiwan. Chen Yi wishes to make Bank of Taiwan into the Provincial Bank of Formosa on the lines of the provincial banks of existing Chinese provinces. Bank of China wishes to take over all commercial functions of Bank of Taiwan and in its fortnightly bulletin of September 1 claims that it has been designated to do so. This claim is apparently premature. Existing banks belonging to Formosans and overseas Chinese will probably not undergo any change with respect to ownership but Japanese participation in banks owned in whole or in part by Japanese will presumably be taken over by Bank of China, Bank of Communications, Farmers Bank, Central Trust, and Postal Savings Bank. [Adler and Casaday.]
Hurley