102.1/3–1547: Telegram
The Ambassador in China (Stuart) to the Secretary of State
Nanking, March 15,
1947—10 a.m.
[Received March 15—5:07 a.m.]
[Received March 15—5:07 a.m.]
566. From Adler to Treasury.
- 1.
- Do not see how possible to obtain Chinese consent retention our opposition [position?] on Hong Kong cross rate while at same time abandoning its use for post February 16 and current transactions. (Reference your telegram 287 of March 7.) Therefore fully agree it will be much easier to secure new agreement present officials when black market for United States currency re-emerges and Hong Kong cross rate diverges in our favor from official rate than recognition of Pei agreement. In securing such new agreement previous use of Hong Kong arrangement under Pei agreement would serve as a strong precedent on our side.
- 2.
- Am continuing to receive daily reports on Hong Kong market. Hong Kong cross rate still well below official rate, hovering above 10,000.
- 3.
- Re temporary expedients, these would have to be improvised in [Page 1091] consultation with you with reference to future circumstances depending on degree of further economic deterioration, degree of efficacy of Chinese Government controls, and spread between different markets and rates. There will be a number of possible alternatives, among others (a) Hong Kong cross rate, (b) sale of United States currency or Treasury checks or drafts to Central Bank at current Shanghai open market rate for United States currency, (c) sale of United States currency in black market in Shanghai and elsewhere, (d) sale of gold, and (e) possibly even Macao cross rate should Hong Kong authorities move against open market for United States currency in Hong Kong. For reasons already stated impossible to make prior decision now on which of these temporary expedients will have to be resorted to. [Adler.]
Stuart