Office of the Historian

893.5151/7–1849: Telegram

The Secretary of State to the Consul at Shanghai (McConaughy)

Washington, July 20, 1949—7 p. m.

1443. Relevant info urtel 2812 July 1840 passed three banks. Dept [Page 801] understands ChiGovt and most if not all entities Shanghai formerly its control cancelled authority officials remaining Shanghai operate official foreign accounts. Some corporations did likewise.

Reference para 4 urtel 2812 Dept advised by Parker (Cantel 389 May 1741 not to Shanghai) Central Bank China exchanged new ciphers and test keys all correspondents and during week May 1–6 instructed all correspondents disregard old and use new. New keys not possessed Shanghai. Correspondents have also been advised foreign exchange payments orders dated subsequent May 1 valid only from Canton or Hong Kong. See also Cantel 671 June 3041 repeated Shanghai 384 and last para Cantel 698 July 7 repeated Shanghai 404.

Dept making inquiry Brit Treas42 plans re possible freezing licensing procedures Chinese assets subject their control. Policy outlined Deptel 1369 July 8 in effect until notice change.

Dept regrets possible danger persons managers Amer banks Shanghai and other US nationals but does not believe freezing effective prevent this danger. Problem protection Amer persons and properties Shanghai separate and distinct from treatment Chinese assets US. Dept desires extend every possible protection American interests Shanghai but powers to do so are limited. Possible retaliation against Amer community Shanghai and elsewhere Communist China might follow any extreme measures undertaken by US Govt.

Dept invites ConGens further recommendations this subject urtel 2806 July 1743 being studied.

Acheson
  1. Not printed; it reported instructions of the Communist Bank of China to foreign banks in Shanghai to cancel various outstanding drafts and other negotiable instruments of the National Government dated prior to the Communist takeover of the city (May 25) and place them at its disposal; and indicated that some bank managers believed freezing procedures were the best method of protecting them from physical jeopardy and their home offices from lawsuits.↩
  2. Not printed.↩
  3. Not printed.↩
  4. See infra.↩
  5. Post, p. 951.↩