393.1115/8–1849: Telegram
The Consul at Shanghai (McConaughy) to the Secretary of State
[Received August 19—12:14 a. m.]
3321. Re American Association statement, Contel 3002, August 3, ConGen suggests as cash remittances unusable for purchase foreign imports for duration blockade resulting in highly unrealistic foreign exchange rate and as Shanghai present need for food greater than for cash remittances, Department explore with British possibility obtaining quarterly rice allotment, say maximum amount 30,000 tons, from IEFC26 for purchase by Americana[s,] foreigners, other (including Chinese) organizations Shanghai to pay off staff, liquidate firms and meet growing needs for food, to be made available in monthly installments 10,000 tons each October, November, December for delivery by American, foreign “evacuation” ships.
Delivery rice would demonstrate fallacy Communist line US, British backing Kmt blockade, would provide token food imports for loyal employees American, foreign firms reducing staff for closing down due intolerable Communist labor policies, attitudes and lack business due blockade, could be handled as “imports with self-provided exchange”, would cheapen costs labor payoff by 50 percent, and would deprive Communist and Chinese control over foreign exchange, eliminating possibility exchange would be used for military or other purposes undesirable from standpoint US economic policy.
[Page 1302]ConGen notes suggested monthly allotment 10,000 tons only one-seventh normal monthly rice consumption Shanghai or one-quarter former ECA monthly rice ration. Wheat, other grains no substitute for rice Shanghai as wages here pegged rice directly or as major component parity deposit unit. First quality rice Shanghai selling retail for about US $500 per ton; is about 200 for equivalent grades supplied by ECA.
If proposals deemed feasible, desirable, please advise so ConGen can definitely ascertain local feasibility, work out technical problems re import procedure, storage, purchase problems, use rice payrolls, etc. While rice previously duty-free, possibility local authorities might impose arbitrary import duties on shipments consigned foreign organizations. However, Church World Service supplies reports Chinese Customs after long negotiations released 5,000 bushels wheat flood relief purposes duty-free August 6, although wheat subject import duty for commercial imports.
In view several reliable, sober-minded American businessmen, not even rice shipments in amounts indicated might be sufficient “bait” to obtain Communist permission departure foreign employers Gordon or other evacuation.
Proposal might offer practicable solution Gould-Miner case.27 Please pass C. V. Starr in Department’s discretion for consideration should present negotiations collapse.
Sent Department; repeated Nanking 1792.
- International Emergency Food Council.↩
- For correspondence on this subject, see vol. viii, “Problems of United States Consulates in areas occupied by the Chinese Communists”, chapter IV.↩