893.516/5–1349: Telegram
The Minister-Counselor of Embassy in China (Clark) to the Secretary of State
[Received May 14—8:07 a. m.]
Cantel 372. S. Y. Liu, Governor Central Bank Canton, informally commented to us yesterday that US Government freezing action of US $12,000,000 Central Bank funds in US regarded Chinese Government circles as serious psychological blow and indicative US policy writing off Nationalist Government as lost cause.
Liu stated freezing action considered especially unfortunate at time when Chinese Government requires all available dollar funds especially for silver purchases intended as inflation stop-gap. Liu says Central Bank recently concluded US $7,000,000 silver purchase from Mexico.
[Page 772]We unaware freezing action Central Bank funds and would appreciate comments for background.
Sent Department, repeated Nanking 279, Shanghai 234.