893.515/11–2847: Telegram
The Acting Secretary of State to the Ambassador in China (Stuart)
Washington, November 28,
1947—8 p.m.
1441. For Emb and Adler from State and Treas.
- 1.
- State does not now consider desirable to use CN dols available under surplus property agreement if available only at official open market rates.
- 2.
- Dept believes possibilities negotiating special rate as alternative to
use of unofficial market not exhausted. This should immediately be done
by Amb Stuart with Adler’s assistance at highest
[Page 1227]
possible level Chinese Govt. Desirable
that special rate be applicable to CN currency drawn under clause 6B (1)
of Agreement August 30, 1946 for Fulbright program79 as well as purchase
CN from Central Bank to cover operating expenses. Following points
should be: stressed:
- a.
- Absolute need US Govt special rate approx 85% unofficial market T. T. rate as essential condition continued operation US Govt agencies China. Expenditure[s] of US Govt agencies operating in China limited by Congressional appropriations expressed in US dols. Unfavorable exchange rate causing too rapid exhaustion of appropriations. Supplemental appropriations not considered proper solution since Congress expects agencies to get fair value for dols they spend. Moreover requests for supplemental appropriations would focus attention Congress on failure Chinese to give US favorable rate and thus might well prejudice Congress against program aid to China.
- b.
- US Govt wishes give appropriate assistance to China in present crisis but is being hampered by failure Chinese Govt facilitate US Govt in this aim by giving US Govt agencies fair value for dols spent in China. Unless US Govt can secure its local currency requirements at reasonable rates, US Govt may be forced contract rather than expand scope its activities in China.
- c.
- The policy of the US Govt is to respect and comply with official exchange rates and regulations. US Govt desires dols it spends go to official accounts rather than black market. Hence US Govt has no alternative but urge Chinese Govt make available CN dols at some special or diplomatic rate applicable all US Govt agencies in China.
- 3.
- If course outlined above fails to produce satisfactory results one week from receipt of this tel Emb and other US Govt agencies authorized use unofficial market as outlined Embtel 2144 Oct 27. Emb will then notify Chinese Govt that US Govt regrets necessity this action but unavoidable and that US Govt agencies will immediately resume approved procedure whenever Chinese Govt makes satisfactory rate available. [State and Treasury.]
Lovett