893.5017/11–1548: Telegram
The Consul General at Shanghai (Cabot) to the Secretary of State
[Received November 15—7:45 a.m.]
2415. Indications that vital commodities will be shortly in greater supply have caused easing of tension. No rice riots reported in past several days. (Details food situation subject of ConGentel 2414.9) However, with announcement this morning new C. O. L.10 index at 810 percent above August 19 levels, it appears Government has traded one crisis for another. Seriously critical physical cash shortage precludes payment wages in full due today. Management’s primary concern last week in getting rice supplies for distribution to employees is now transferred to problem of raising cash supply to meet greatly increased payrolls. In view cash crisis employers have been given 10 days within which to make payment. Industries who failed meet rice stockpiling problem last week and who are in weak cash supply position are particularly vulnerable. This afternoon 20 percent premium being paid for cash and black market on US currency has come to standstill.
Government conducting terrific psychological offensive, flooding press with reports decisive military successes and claiming adoption new monetary measures have strengthened gold yuan and are directly [Page 433] responsible for price slumps. Foreign and Chinese communities, however, continue regard such Government reports with skepticism.
Sent Department; pouched Nanking 1829.