893.5151/12–3148: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received December 31—8:19 a.m.]
2675. Past week has seen throughout Nationalist China another explosive rise in prices and black market rate for US dollar. In lower [Page 441] Yangtze Valley black market US dollar rate now above 130 gold yuan. Price most commodities in Shanghai and Nanking has approximately doubled in past week. Discontinuation gold sales to public22 and uncertainty re Sun Fo Cabinet policy apparently reached [removed] temporarily [temporary lid].23
Gold yuan introduced August 19 has now lost about 97% of its value in terms of US dollars, after holding at or near par till early October.
There is no reason to suppose Nationalist Government is capable arresting galloping inflation which, as hitherto, reaction uncontrolled resort to printing press for payment Government expenses. Loss of various armies has resulted in some reduction military budget, but reduced production, loss of confidence in government and general confusion have concurrently reduced tax revenues.
Sent Department 2675, repeated Shanghai 343.
- In airgram No. A–320, December 30, the Ambassador reported Executive Yuan resolutions the previous day to resume sales of gold and silver on January 5, 1949. The resolutions provided for the levying of a flexible equalization fee in addition to the sales price and required deposit. (893.5151/12–3048)↩
- Bracketed insertions in this sentence based on Embassy file copy of telegram.↩