The Consul General at Shanghai (Cabot) to the Secretary of State
[Received August 20—7:32 a.m.]
1864. To State and Treasury from Casaday and Parker. Further re currency conversion. Reourtel 1852, August 19, repeated Nanking 1465.
Chinese Government announcement provides gold yuan circulation limited 2 billion. Present circulation CNC with allowance northeast totals slightly under CNC 700 trillion. At rate 3 million to 1 gold yuan this equivalent to only 233 million gold yuan. Difference indicates expansion present circulation Central Bank estimates necessary meet monetary needs of country in face anticipated reduction velocity circulation and suggests minimum magnitude continued deficit financing to be expected. However, upper limit not considered a restriction and already discussion issuing up to 4 billion.
No indication positive action on budget balancing although press announcement set goal of revenues covering two-thirds expenditures (not seven-eighths as per reference telegram). S. Y. Liu stated to us merely that he “hopes something can be done” re budget.[Page 390]
While press carried official statement that currency would be exchangeable for foreign exchange “under control”, no present provision for implementation expected for payment licensed imports. Of[No] final decision as to continuation certificate plan, although probability present system will be tapered off.
Plan as whole same as reported Embtel 1426, August 4 with some technical revisions. Rogers explains failure of acceptance plans repeated ConGentel 182953 resulted from refusal Gimo to release gold, plus some hesitancy on part Prime Minister.
Sent Dept., repeated Nanking 1470. [Casaday and Parker.]