893.516/5–1749: Telegram
The Minister-Counselor of Embassy in China (Clark) to the Secretary of State
Canton, May 17, 1949—6
p. m.
[Received May 18—12:18 a. m.]
[Received May 18—12:18 a. m.]
Cantel 399. For State and Treasury from Parker.
- 1.
- Early morning meeting with Finance Minister confirmed substance Cantel 389, May 17.87 Bank has already requested confirmation prior payment on pledge May 1 Shanghai drafts as indicated paragraph 2. This procedure also followed by Government banks. Liu indicated great desire cooperate US Treasury and US correspondent banks for mutual protection. If present proposal not satisfactory will be guided by further suggestions from Washington. Further agreed request certification through Pei as alternative to any type freezing action, but would prefer continued direction accounts so long as feasible.
- 2.
- Central Bank will request Pei to make application to FRB of New York for dollar loan of 7 million to be backed by pledge of gold held their account in FRB. Loan to be used to make payment Mexican Government for silver and silver coins obtained through Swann Cul-bertson. Loan would be short-term with repayment from Pol account due from ECA. Freezing action by New York prevents payment former silver which Chinese Government considers “desperate necessity”.
- 3.
- Rather than having US go through motions of making loan to disintegrating Chinese Government at this time with attendant political implications, it would be preferable expedite release Pol funds or, if status liabilities would permit, free funds now restricted by New York. However, if this not feasible within next few days, recommend action be taken expedite approval loan. [Parker.]
Clark
- Not printed.↩