893.5151/10–645: Telegram
The Chargé in China (Robertson) to the Secretary of State
[Received October 6—6:20 a.m.]
1736. For Secretary of Treasury from Adler. Saw Minister of Finance October 3d, reference your 1520, September 21 and our 1677 of September 28. After discussion of Shanghai situation, I raised the question of providing a satisfactory exchange arrangement for American businessmen in China. The Minister said that Mr. Pei had proposed a 500 to 1 rate to you in Washington and also intimated that Dr. Soong did not favor an arrangement similar to that of United Clearing Board for American businessmen. I should like to point out as strongly as I can that an arrangement on the lines of Mr. Pei’s proposal would be inequitable. British businessmen have been using so-called channel since last summer which yields them a CN dollar rate for sterling not less than that of United Clearing Board for United States dollars multiplied by 4. The open market rate for United States currency has been rising steadily since September 22 and was today quoted between 1350 and 1450; the United Clearing Board rate is now over 800 and is to be raised to 1000 in the near future. While there, of course, may be temporary downward fluctuations, general trend of United States currency in open market is [Page 1165] definitely upward not only in Chungking but also in Shanghai. In this situation the Chinese proposal for a rate of 500 to 1 for American businessmen would be detrimental and become increasingly burdensome to American commercial interests. There is no case in equity for our agreeing to anything less than an arrangement for American businessmen similar to United Clearing Board arrangement. [Adler.]