Foreign Relations of the United States: Diplomatic Papers, 1945, The Far East, China, Volume VII

893.515/9–1345: Telegram

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

Chungking, September 13, 1945—10 a.m.
[Received 4:35 p.m.]

1576. To Secretary of the Treasury from Adler and Casaday. On September 11 saw Minister of Finance who is still convalescing.

1. Your 1 of 1390 of September 4. Minister of Finance assured us that present arrangements for making yuan available to our military forces will be extended to the newly liberated areas. He intimated that with the acute shortage of fapi it would be desirable if the Army could keep its requirements down to an average of approximately 25 billion fapi a month. In view of this shortage he would appreciate Washington doing whatever possible to expedite shipments of Chinese banknotes from the United States to Shanghai by boat. He informed us that note circulation had increased by approximately CN dollars 90 billion in August and that the increase in September was expected to be considerably more.

2. Your 1391 of September 4.³² Minister of Finance said he had no objection to our making the payments concerned with U. S. dollar checks in view of smallness of amounts involved.

3. With increase and resumption of American business activity, question of making temporary arrangements to enable American businessmen and firms to finance their current activities on a reasonable basis has become urgent. Minister of Finance agreed to extend same privilege to them as extended to United Clearing Board. Later, however, he telephoned to say that this agreement was in principle only and that he would prefer to await Dr. Soong’s return before giving it final approval.

It should be noted that American businessmen as a group suffer most from discrimination under existing exchange arrangements. Overseas Chinese remittances get 500 CN for one U. S. dollar, United Clearing Board has a special arrangement with which you are familiar, and British businessmen obtain their CN dollars by the sale of sterling and rupees through the so-called “chaynem”. There is absolutely no basis in equity for American businessmen to suffer under the enormous burden of the 40 to 1 rate. We should appreciate being-kept informed of any current modifications of the freezing regulations with respect to China and their impact on American businessmen here.

4. Present status of banking law with respect to foreign banks in China is obscure. Minister of Finance however agreed to permit American banks to reopen old branches on a “liquidation” basis without prejudice as to subsequent registration and other legal requirements; this is entirely agreeable to the representative of National City Bank now in Chungking. Minister said that it is the Ministry of Finance’s intention to appoint a Chinese representative to each foreign bank so that a joint investigation of what had happened in period of Japanese operation and control could be made. [Adler and Casaday.]

Hurley

32. Not printed; it inquired regarding payments to beneficiaries in China of the Veterans Administration and the War Shipping Administration (102.1/9–445).