893.6101/3–449: Telegram

The Ambassador in China (Stuart) to the Secretary of State

516. North Shensi newscast March 2 contains following item:

“Peiping—The Military Control Commission at Peiping has issued a proclamation strictly forbidding the circulation of silver dollars or the making of transactions in terms of silver dollars. It requires all public and private bodies as well as individuals to exchange their silver dollars with the People’s Bank or its designated exchange offices at the officially announced rate.”

Apparently Communist authorities Peiping decided free trading in silver dollars one cause of frequent fluctuations and upward trend commodity financial prices. This new policy of Communists toward holding and [illegal?] transactions silver dollars reminiscent longstanding Nationalist Government policy just now reversed permitting transactions silver. Should Communists at any time establish official premium silver dollars terms PBN, silver dollars would undoubtedly flow from Nationalist to Red areas.

Sent Department 516; repeated Shanghai 238.