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

893.515/7–1249: Telegram

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

Nanking, July 12, 1949—7 p. m.
[Received July 12—12:30 p. m.]

1495. Received Shanghai’s 1479, July 8, sent Department 2659,³⁴ refusal PBC purchase dollar instruments exceeding US $5,000. In one sense such refusal amounts to unreasonable limitation activities foreign firms, institutions Shanghai. TT³⁵ means increased expenditures.

Embtel 836 [835] of July 12, repeated Department 1494,³⁴ indicates authorities North China not intend actually prosecute or molest those surrendering foreign currencies now despite surrender deadline long passed. Probably acute need for exchange dictates this policy after face-saving interval refusing acceptance. Suggest same may develop due course Shanghai³⁶ in which case Consulate General holdings could possibly be “unfrozen”. Note surrender, deadline never yet proclaimed or enforced Nanking (admittedly not financially important) or to Embassy’s knowledge Hankow.

Consulate General may wish contemplate possibility in due course discreetly inquiring PBC or perhaps American appointed bank reaction proposal Consulate General exchange some US dollar currency on hand for PN. Have you considered possibility exchange US for PN this basis to meet payment ex-Navy personnel (reftel)? Suggest determination this regard might also influence Consulate General final position whether to receive and hold or witness destruction of US currency still in hands Italian Consulate General (Deptel 1351 to Shanghai July 6³⁴ and previous). In Embassy’s opinion American Consulate General’s position that US currency held by it represents official funds, is US Government property, and is therefore inviolate represents sound unassailable stand. This assumes same not permitted circulate or disposed so as influence Chinese economy in way contrary wishes authorities. Surrender at PBC or appointed bank from time to time would seem to meet this condition.

Italian Ambassador³⁷ has meanwhile again expressed hope to Embassy his Consulate General can still be accommodated in satisfactory manner. Note that possible loss US dollars to Communists would be more telling to Italian than US economy.

Sent Shanghai 836, repeated Department 1495.

Stuart

34. Not printed.
35. Telegraphic transfers.
34. Not printed.
36. In telegram No. 3087, August 7, the Consul at Shanghai reported the local Communist Military Control Commission would permit deposit of foreign currencies after August 8 (893.5151/8–749).
34. Not printed.
37. Sergio Fenoaltea.