102.1/3–3149: Telegram

The Secretary of State to the Consul General at Shanghai (Cabot)

565. From Treas for Parker. Mar 29 we advised FRB of NY to sell 100,000 ounces gold against dollars to Cenbank of China in accordance their request through usual channels. Request originally received by FRB of NY Mar 1. Surmise here that request made in view limited gold now available to Cenbank.

For your info only delay in our approval resulted from reluctance facilitate possible sale of gold internally against local currency, which considered ineffective use of limited Chinese resources. Chinese have however made request in form customary for asking for gold sales by US and decision made to release gold in accordance with long standing gold policy. Consideration being given to general review of US gold policy with respect to tightening certifications as to use of gold to be made by purchasing central banks in light of possible disappearance of monetary gold into hoards, but no change contemplated in practice pending completion such review.

Decision on gold does not imply US endorsement advisability of use of Chinese dollar reserves for parchase gold for sale to public, but means that for present at least any US views on that question would be expressed as direct concern with use of dollar resources.

New subject. Request just received to permit shipment to Shanghai of 100,000 ounces gold ear-marked FRB of NY for China Cenbank. Treas does not propose raise any objections. Possible connection two transactions not explained.

[Page 753]

State concurs all above. ConGentel 1005 Mar 28 received as Deptel leaving. [Treasury.]