893.5151/3–2748: Telegram

The Consul General at Shanghai (Cabot) to the Secretary of State

702. For Treasury, State, Commerce from Casaday.6 Following is simplified text Reuters despatch datelined Nanking March 26, carried prominently March 27 in English and Chinese language Shanghai press. Details unconfirmable in Shanghai today. Will be forwarded when ascertained.

“State Council today acted in 2–way move to halt inflation and stabilize prices by authorizing Central Bank of China to issue unspecified amount short-term treasury notes as means absorbing idle capital and at same time approving measures for issuing stock shares on Government-owned assets7 estimated at US $400,000,000 to back currency. Treasury notes, which will be issued at beginning April, will carry 5 percent rate interest and be redeemable within varying periods of 1, 2 and 3 months.

Notes will bear face values of CN dollars 10 million, CN dollars 20 million, CN dollars 50 million, CN dollars 100 million and CN dollars 1 billion. State-owned assets on which stock shares will be issued are held by China Merchants Steam Navigation Company, China Textile Industries Limited, National Resources Commission, together with items among enemy and puppet properties as well as Japanese reparations estimated at value of US dollars 400 million. Assets to [be] assessed. These assets will be assessed by Ministries of Communications and Economic Affairs, and will be entered in Central Bank of China’s account before shares are issued. Stock shares will be sold exclusively to private individuals and private business corporations. No Government-owned enterprises will be allowed any of these shares. Each unit, after it has sold more than 50 percent of shares, may proceed call meeting stockholders and elect board trustees organize a corporation with the country’s company laws.”

Repeated Nanking 491. [Casaday.]

  1. Lauren W. Casaday, Assistant Treasury Representative in China.
  2. For previous correspondence on this subject, see Foreign Relations, 1947, vol. vii, pp. 13691383, passim.