893.5151/4–1649: Telegram

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

775. In conversation April 16 with me, Minister of Finance S. Y. Liu desperately in need encouragement said he thought Government could hold on for only 2 more weeks unless some new source credit opens up. Minister implored me to find some means either freezing assets Chinese individuals in US for use Chinese Government or revealing identity owners such assets.

I responded, firstly, that to my knowledge and on basis past experience this wise, there exists no means by which US Government could [Page 758] or would wish to effect freeze or identify owners. I then proceeded to stress that this is primarily Chinese problem which must be faced internally commencing with efforts to obtain for disposition by presently constituted government those assets which are now being withheld from [it, a] mission which probably could best be undertaken by Ho Ying-chin, now Prime Minister. I then pointed to the possibility of voluntary declarations of their assets by Chinese individuals generally which could ensue should certain prominent and wealthy Chinese voluntarily declare their holdings abroad and other assets offering them to the Government. Liu mentioned that steps are under way to induce Generalissimo to release to this Government large portion foreign assets under his control for Government use and that proposal is before Executive Yuan this morning which would give Government authority seize assets of Chinese.

Repudiation of the legal tender gold yuan is now very widespread making it increasingly difficult for Government and those whom it supports including the military to command goods or services. On Thursday US dollars Nanking were around GY 95,000 and Friday jumped to about 130,000, there is no reason to think such trend will not accelerate. As repudiation GY advances, silver dollars increasingly widespread demand and are commanding prices paralleling or exceeding US dollars. In face of what he considers situation impossible of solution, S. Y. Liu just 4 weeks after taking office is contemplating resignation, but will probably continue on grounds it is his patriotic duty.

Sent Department, repeated Shanghai 382, Taipei 42 for Merchant.