893.5151/8–1548: Telegram

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

1805. For State and Treasury from Casaday and Parker.43 Re-Embtel believed sent August 14.44 Rogers says Central Bank officials Shanghai standing by since Friday night awaiting last minute details from Nanking for currency conversion scheduled [go in] to effect Monday August 16. However, up to late hour Saturday, go-ahead signal not yet received Shanghai which leads officials here to think there may be postponement of few days.

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Although Rogers opposed conversion under present circumstances, he has urged through O. K. Yui that if it is going to be done, it be done immediately; that is, early this week as (a) market conditions relatively under control just now and (b) secret surely cannot be kept more than few additional days and leakage now might prove disastrous.

Exact details conversion allegedly not known here but Rogers says apparently public announcement will be made of fixed ratio reserves to note circulation although no specific proposals advanced for budget balancing, tax reform, et cetera. Government apparently relying on optimistic calculation of reserve as per Embtel 1426,45 repeated Shanghai 690. Exchange rate with dollar one of details being awaited from Nanking but thought rate to be either 3 or 4 to 1 US dollar. “Sun” paper notes to be used with subsidiary silver coins. Although full requirements coins not now available here, Prime Minister reported to have said conversion not to be delayed this account.

Sent Department 1805, repeated Nanking 1438. [Casaday and Parker.]

  1. Paul C. Parker, Treasury Department employee and member of the ECA Reconstruction Survey Mission which was sent to China in June to recommend allocation of funds for reconstruction projects under the China Aid Act of 1948.
  2. Telegram No. 1514, supra.
  3. August 3, p. 378.