Office of the Historian

893.5151/9–2845: Telegram

The Secretary of State to the Chargé in China (Robertson)

Washington, October 9, 1945—4 p.m.

1635. For Adler from the Secretary of the Treasury.

Part I

1.
At conference held with Tsuyee Pei on October 2, 1945, the following was agreed upon: (Reurtel 1677, September 28).
a.
The Chinese will institute a rate of CN$500 to US$1 with the understanding that this rate is subject to revision, as and if necessary. Treasury urged that a rate be established immediately which is more in line with open market rates and Pei is to make known these views to Dr. Soong and O. K. Yui.
b.
No limitation is to be placed on the monthly amount which can be remitted from the U. S. to China at the new rate.
c.
American firms in China are to continue to be able to sell blocked dollars.
d.
American nationals are to be afforded the same financial privileges granted to other foreign nationals in China including the British.
2.
We also informed Pei that effective October 5 Treasury amended General Ruling 5A56 to provide that U. S. currency to any amount can be carried on person to China (as well as any other blocked country excluding enemy countries), provided the currency is carried in denominations of $20 or less. In this connection it was pointed out that a sufficiently attractive exchange rate would help discourage the influx of U. S. currency into China.

Part II

The following telegram dated October 3, 1945, was sent by Tsuyee Pei to Dr. Soong and O. K. Yui. With reference to point 2 below, Treasury actually favored elimination of monthly limitation to facilitate resumption of American business in China.

“Referring to Minister Yui’s Chinese telegram of September 25th which reached me on September 30th, have informed U. S. Treasury accordingly. Following views were expressed by Treasury at a conference this morning:

1.
In view of recent rise of U. S. currency rate in Chungking proposed rate of 500 although a great improvement to the original 40 to 1 is still much lower than the market rates.
2.
For this reason it does not seem to serve any purpose for the Minister of Finance to set a monthly limit of U. S. $1,000 for persons who wish to buy more Chinese $ at proposed rate of 500.
3.
It is therefore suggested that the proposed rate of 500 may be announced by the Chinese Government as a special or new official rate [Page 1167] which will hereafter apply to all businesses and that this rate is to be reviewed as and if conditions change. However U. S. Treasury does not object to your announcing a rate more in line with the market rates if the proposed rate of 500 has not aready been announced, and that you consider it feasible at the present moment.

U. S. Treasury is informally notifying the American businessmen of this understanding but it emphasized that the formal announcement has to be made by our Government in China.” [Morgenthau.]

Byrnes
  1. See 10 Federal Register 12600.↩