893.515/7–749: Telegram
The Minister-Counselor of Embassy in China (Clark) to the Secretary of State
[Received July 8—5:16 a. m.]
Cantel 698. Hsu Po-yuan, newly appointed Deputy Governor Central Bank (Vice Minister Ministry Finance during introduction bereaved [Page 796] gold yuan), expressed to us usual optimism workability silver yuan, but admitted program doomed unless antidote found for Nationalist deficit financing. He offered no comment on specific plans for balancing budget except trying printing press recourse.
According Hsu, initial note issue planned is 200 million dollars fully covered by gold and other tangibles. Further silver purchases contemplated from “Mexico and other sources”, but financing plans vague. Intimation is hoped for access to uncommitted ECA funds.
Gold and some silver is definitely moving from Amoy [and] Taiwan treasure although Hsu was not at liberty divulge extent Generalissimo’s generosity except to say “amount was not small”. He shrugged off press claims of two million ounces.
Government has abandoned plans mint gold coins, preferring use limited minting capacity for silver dollars. Native silver is being paid with gold. Gold reserves instead will be in form standard bars.
Hsu professes no concern overseas Bank of China branches will act on Communist directives. T. M. Hsi27 (Cantel 671, June 30;28 repeated Nanking 449, Shanghai 384) already in New York.
From other bank source understand Central Bank planning transfer here 100,000 ounces of their gold account with Federal Reserve Bank New York.
Sent Department; repeated Nanking 471, Shanghai 404.