893.5151/4–1049: Telegram

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

1133. For Treasury from Parker. Chinese Government has on hand Shanghai 184,000 ounces gold and anticipates additional 100,000 from US prior April 14. This will be used for contractive effect note issue through internal sales during next 2 weeks. On basis information supplied by Central Bank last 2 days (ConGentel 1132, 9th50) must conclude dumping gold and commodities only weapon immediately available avert crisis of serious proportions. Current stocks commodities for dumping very low. Bank tried selling cotton yarn Friday but market uninterested.

Since there is little else US can do at this time assist Chinese Government, reluctantly recommend approval purchase request. Anticipate similar request purchase additional 100,000 ounces in about 10 days. Reurtel 623, April 8. Merchant concurs.

Rates April 9 close. Dollar notes 60,000 gold 2.8 million ounce, rice shot to 360,000 picul carrying other food prices. [Parker.]

  1. Not printed; it reported the gold and silver holdings of the Chinese Government and other elements of the foreign exchange position and estimated net assets at $102,000,000 (893.5151/4–949).