Foreign Relations of the United States, 1949, The Far East: China, Volume IX

893.5151/6–2749: Telegram

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

Washington, July 8, 1949—8 p. m.

1369. Dept not prepared this time invoke foreign funds control powers of Sec Treas relative freezing Chi Govt assets US (urtel 2507 June 27³⁰ rptd Nanking 1365, Canton 812). Reasons for this position set forth memo dated May 17 sent you air pouch under transmittal slip dated June 22, 1949, but in view probable nondelivery this memo contents will be summarized subsequent cable.³¹ Banks generally aware Dept’s position and Bank America has not approached Dept.

Also consider there is no other appropriate basis supervise operations branch offices or correspondents Bank China or other Chinese banks in US or Japan for purposes suggested reftel as well as urtel 2390 June 21³² (rptd Canton 766, Nanking 1277).

Dept however prepared consider request Chi Govt issue certifications under 25 B Fed Res Act in respect official Chi Govt accts US but no such requests received.

For your info Dept has no objection proposed procedure outlined urtel 2389 June 21³³ for Nat’l City Bank. Allowing reorganized Bank China Shanghai acquire dollar balance is consistent with US policy permit normal trade nonmilitary items with Communist controlled areas China.

Acheson

30. Not printed; it suggested Department consideration of immediate “freezing orders to all accounts Chinese Government Banks in USA … in order avoid improper withdrawals by both parties, protect interests of American banks where deposits held and conserve assets belonging Chinese people as a whole.”
31. No. 1452, July 21, 6 p. m., not printed; it indicated Consensus Dept blocking private Chi assets US not called for because bulk such assets well concealed, probably not available Commies; previous reasons refusal block still valid; and blocking might be regarded inconsistent general econ trade policy re Commie China. Blocking might be regarded hostile gesture either ChiGovt or Commies or both and impede other econ objectives all China. Official short-term Chi assets US believed only about $100 million. General conclusion is freezing not feasible this time, and might be administratively difficult.” (893.5151/7–2149)
32. Not printed.
33. Not printed; it reported that substantial amounts of U.S. dollar notes and other negotiable instruments had been delivered to the Bank of China under the June 3 foreign exchange regulations and that the National City Bank might be approached to take over bank notes in exchange for telegraphic transfers (893.5151/6–2149).