Foreign Relations of the United States, 1947, The Far East: China, Volume VII

893.5151/2–1747: Telegram

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

Nanking, February 17, 1947.
[Received February 18—1:50 a.m.]

299. The following economic emergency measures were announced February 16: (ReEmbtel 298, Feb. 17⁸⁸ and previous⁸⁹).

• “1. Measures concerning the balancing of the national budget.

  (a) Those budget appropriations of this fiscal year, made for various Government organizations and not considered of pressing necessity, shall be deferred. The Executive Yuan, together with the Comptroller General’s office, shall draft regulations to effect this provision.

  (b) The collections of taxes shall be rigidly enforced. Particular attention shall be paid to the collection of direct taxes and the increase of sources of tax revenue. The Ministry of Finance shall immediately draft measures for the implementation of these provisions.

  (c) The sale of enemy and puppet properties and surplus commodities, under the control of Government, shall be expedited by different Government organizations concerned, and reports of the results shall be made every 10 days.

  (d) Government operated enterprises, with the exception of heavy industries and those enterprises necessarily requiring Government operations, shall be sold publicly by issuance of stock shares or directly to private individuals and corporations.

• 2. Measures for the control of speculation in order to stabilize the currency.

  (a) Immediate prohibition of the purchase and sale of gold.

  (b) Immediate prohibition of the circulation of foreign currencies in the country.

  (c) Strengthening of the regulation for currency transactions in order to control credit, thus harmonizing the Government’s economic policy and stabilizing the currency market.

• 3. Measures concerning the expansion of trade:

  (a) In order to maintain equilibrium of international payments and remedy the national depression, the foreign exchange rate shall be readjusted. This rate shall be fixed by the Central Bank of China from this day forth at CN $12,000 to one U. S. dollar. The export bonus and import surcharge measures, promulgated on February 6, 1947, shall be abrogated.

  (b) In addition to the readjustment of the foreign exchange rate, concrete measures for the improvement of production techniques, standardization of products, reduction of production costs and the exploitation of new markets shall be drafted and implemented by the export promotion commitee.

  (c) According to the revised import and export regulations, raw materials and machinery, which are to be imported this year to meet the urgent needs of Chinese industry, have an estimated cost of $472,-590,000 U. S. dollars, or its exchange equivalent. The quotas for the majority of the commodities under this allotment have already been fixed by the temporary Import Control Committee. This committee shall announce the established quotas from January to June. The Central Bank shall be prepared to pay the necessary foreign exchange for these imports, amounting to 200,000,000 U. S. dollars.

  (d) In the temporary provision for the control of foreign exchange by the Central Bank, as now enforced, the part concerning the purchase and sale of gold and foreign exchange shall be revised.

• 4. Measures concerning adjustment of commodity prices and wages:

  (a) The Executive Yuan shall designate certain localities for strict control of commodity prices. And the local governments and other organizations concerned of said localities shall mobilize the full strength of their areas to effect this control.

  (b) The prices of daily necessities in those designated localities shall be fixed by consultations in accordance with the present regulations provided for that purpose.

  (c) Salaries and wages in those designated localities, fixed according to the cost-of-living index, shall not be raised higher than the index of January 1947, nor shall basic salaries be increased in any way. But the factories shall ration food, clothing and fuel to their employees, who shall pay for these necessities at January 1947 prices. The factories shall purchase the food, clothing and fuel needed through the Government and shall be absolutely forbidden from buying freely in the market, and thus breed suspicion of hoarding.

  (d) The regulations regarding the control of agriculture, mining, industry and commerce during the emergency period, promulgated by the National Government in 1938, shall be vigorously enforced. The enterprises and commodities covered by those regulations shall be placed under effective control. The following are the principles of control:

  (1) The treatment of labor and the profit from sales should be determined.

  (2) During the period of enforcement of the present emergency measures, lockouts, strikes and sabotage are prohibited.

  (3) Speculation, hoarding and other illegitimate activities are prohibited.

  (4) Violators of the aforesaid regulations will be severely punished.

  (e) Regulations prohibiting hoarding of daily necessities during emergency period shall be vigorously enforced. Violators will be severely punished according to these regulations and the regulations mentioned in the previous article, besides confiscation of the hoarded commodities.

  (f) During the period of the enforcement of the present regulations, the local governments concerned are authorized to close certain financial markets in order to prevent speculation.

  (g) The above measures will be enforced from the date of their promulgation.

• 5. Measures concerning provisions of daily necessities:

  (a) The Government shall provide for the following daily necessities: rice, flour, cotton yarn, fuel, salt, sugar and food oils.

  (b) Each month the Government shall provide the above-mentioned commodities to officials and teachers at fixed prices according to their legitimate needs. This measure shall first apply to the Shanghai and Nanking areas. The same commodities shall also be sold on the open market in order to stabilize prices.

  (c) The Government can add to or reduce the kinds of commodities comprising article a, according to market and local conditions.

  (d) The Government, besides handling directly the production, transportation and distribution of daily necessities, shall aid and encourage the citizens to engage in the same activities. A sufficient amount of rice and flour shall be imported from abroad by the Government.

  (e) The Government shall gradually extend the provision of daily necessities to other important areas in addition to Shanghai and Nanking.

  (f) The Supreme Economic Council shall be the supervisory body for directing provision of daily necessities; it will be responsible for deciding policy and auditing the operations.

  (g) The Ministries of Economic Affairs, Finance and Food, and the National Resources Commission, under the direction of the Chairman of the Supreme Economic Council, shall be responsible for the provision of daily necessities according to their respective jurisdictions.

  (h) Provincial and municipal governments shall supervise the merchants dealing in various daily necessities to ensure their compliance with the Government policy.

  (i) The prices for daily necessities shall be decided and promulgated by the Government organizations concerned.

  (j) Dealers in daily necessities shall not: (1) sell daily necessities at higher than fixed prices; (2) delay the sale of and hoard daily necessities. Violators of the above prohibitions will be severely punished as disturbers of the market.

  (k) Detailed regulations shall be drawn up and enforced by various Government organizations under the guidance of the Supreme Economic Council.

  (l) The present measures will be enforced from the date of promulgation.”

Copies for Treasury, Commerce, and Agriculture.

Stuart

88. Not printed; it quoted a statement issued by the Chinese Ministry of Information on February 16 regarding regulations for the tightening of control over financial institutions (893.51/2–1747).
89. An unnumbered telegram of February 16 quoted a statement issued by the Ministry of Information regarding measures to check speculation in and buying and selling of gold, prohibit the circulation of foreign currency notes, and govern foreign exchange deposits held abroad by Chinese nationals (893.515/2–1647).