893.515/8–1240: Telegram
The Chargé in China (Clark) to the Secretary of State
[Received August 14—1:10 p. m.]
Cantel 933. Conversations with Finance Minister and Deputy yesterday indicate Government financing considerably worse than previously known, with first 6 months’ revenue 1948 given as only 1 percent of expenditures, but increased to 10 percent July with introduction currency reform. We were told July revenue 3 million silver dollars, expenditures 30 million.
Chief source revenue customs at lowest ebb and taxes, especially land taxes, difficult collect and control during present fluid conditions. Imports [Page 805] practically nil, with export commodities remaining source or moving costs mainland for safety rather than abroad as prices uncompetitive world market levels. Economic and financial picture dismal with no apparent solution visible.
Deputy Minister gave total silver yuan note circulation as only 11 million yuan. All notes continue fully redeemable but admission made no perceptible growing public confidence in note circulation and redemptions continue unabated.