893.515/11–1248: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received November 13—4:15 a.m.]
2187. Lower Yangtze valley area relative other parts country continues experience greatest loss confidence in national currency and most precipitous price climbs. Cities further distant immediate hostilities—e. g., Canton, Chungking, Tihwa—seem generally experience less abrupt changes. Peiping, Tientsin, Tsingtao continue on more stable level than elsewhere. Mukden now standing class by itself, reports Communist depreciation national currency to gold yuan $750 to US $1 and favorable confidence in US dollars.
Now most difficult pin down exchange and money rates or prices generally in Nanking or other cities Yangtze valley because anarchic economy characterized by individual transaction prices. US dollar Nanking apparently quoted between 50 and 70 gold yuan to US $1 past few days, although Embassy itself not engaged specific transaction. Isolated reports ranged high as 100 to US $1.
[Page 430]Nanking November 10 reached depth pessimism and disorderliness in streets and market places unprecedented since return Government from Chungking.5 General expectation had been that economic reform measures November 1 would release flow food other goods into Nanking–Shanghai area temporarily at least relieving demand pressures. Such expectations almost completely unfulfilled, however, as shops kept doors closed and rice and cloth unavailable. Rice extremely difficult obtain for almost 2 weeks and so rapid has been deterioration gold yuan that merchants become less and less willing to receive it in exchange their wares. Rioting reached peak November 10 primarily in and around rice shops although some vegetable and fruit markets looted. This has convinced apparently reluctant authorities declare martial law Nanking which took effect 11 p.m., November 10; move expected have a temporary sedative effect upon populace. November 11 generally quiet. Chief police Nanking states rice now moving into city, after purchase by Government from wholesale merchants partly with gold yuan, partly textiles. ECA also plans release large amounts textiles and kerosene on Nanking market as Nanking–Shanghai US gold yuan money rates far above those reported from other regions China except Tihwa where 43 to 1 reported November 8. Rates for Shanghai (as Department will be aware from reports that post) generally parallel Nanking as both cities increasingly anticipate early Communist domination.
In general, appears demand US dollars declining slightly because Chinese as whole consider material possessions including silver dollars more suitable hoarding and use under possible Communist regime. Tightness gold yuan currency additionally discourages advances US dollar gold yuan quotations. While Mukden report indicates Communists willing accept US currency, Chinese populace here may assume Communists will set poor price on it and are attempting its disposal.
[Here follows discussion of foreign exchange rates and other economic matters in various Chinese cities.]
- On May 1, 1946.↩