102.1/2–2247: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received February 23—5:25 a.m.]
347. From Adler to Treasury. Was informed by Pei in Shanghai on 19th that with new regulations and new rate use of Hong Kong open market rates for settling Army and Navy expenditures was automatically terminated (ReEmbtel [Deptel] 203, February 19, noon) and that henceforth Army and Navy could procure CN dollars at 11,900.
Point 5 of “measures for prohibition of circulation of foreign currency notes” promulgated on February 16 and cabled [by] Embassy on February 17 [16]93 prohibits payment of salaries, allowances and stipends in foreign currency. But it is not clear whether Chinese authorities intend to include payment of foreign personnel of foreign government agencies in this regulation. Both Soong and Pei informally raised the question of troop pay with me. I was noncommittal in my comments pointing out that Army and Navy could not even consider making troop pay in CN dollars without a firm repurchase commitment from Central Bank. I have also advised Army and Navy to stall if they were officially approached to make troop pay in CN dollars. In the meantime Army and Navy are continuing to pay troops in U. S. currency, but have asked Central Bank to provide convenient facilities to enable troops to exchange US currency at 11,900 so as to reduce chance of their frequenting black market. [Adler.]
- Unnumbered telegram not printed.↩