124.05/9–2048: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received September 21—2:09 a.m.]
1735. For State and Treasury. Reference Department’s circular airgram August 2479 concerning most favorable exchange rates for payment operating expenses and salaries. As previously reported by Embassy and ConGen Shanghai, strong inflationary pressures generated following inauguration new economic measures particularly by continued deficit financing civil and military budgets, increase to effective purchasing power through Government buying foreign exchange holdings in China, decrease available goods and services from both domestic production and imports, and hindrance to internal commerce from price differential. Pressure presently being partially contained [Page 408] only by strict economic policing, but such action cannot be effective indefinitely. Break in rate may well be sudden and severe.
In order to protect interests against possible contingencies, Embassy requests authority at its discretion to negotiate a special rate with the Chinese Government similar to December 8 agreement.80 Should such action become necessary a rate equivalent to the full Hong Kong cross rate will be sought as a minimum. Embassy may be forced to resort black market but greatly prefers request special rate from Chinese Government. Embassy desires negotiation directly with top executive officers Chinese Government with assistance and advice Treasury Attaché.
Further reply to reference airgram will go forward shortly as airgram.81 However, believe immediate authorization as requested above imperative.
Sent Department 1735, repeated Shanghai 829.
- Not printed.↩
- See telegram No. 2356, December 9, 1947, 1 p.m., from the Ambassador in China, Foreign Relations, 1947, vol. vii, p. 1229.↩
- Airgram No. A–246, September 30, not printed.↩