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

893.515/10–1949: Telegram

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

Shanghai, October 19, 1949—10 a. m.
[Received October 19—8:15 a. m.]

4400. Please inform Treasury. Re mytel 4248, October 10.⁵⁵ Representatives private Chinese Commercial Bank acting as fiscal agent Communist Bank China asked manager Bank America ostensibly as casual inquiry re feasibility destruction US bank notes by this Consulate General as means transfer US dollar assets now held Shanghai chiefly by Bank China and Peoples Bank. Manager Bank America disclaimed knowledge any incineration US bank notes by Consulate General for private concerns [and] individuals as he believed procedure contrary US law and Communist regulations.

Believe this approach substantiates our view rumor cited mytel 3686, September 7^55a deliberately circulated by Communists themselves to embarrass US. On other hand, may be endeavor to pressure US into accepting US notes held by Bank China for disposal as means facilitating transferal funds to US at no cost to Communist Bank. Obviously such action most inadvisable.

Companies shipping US notes to USA [charge] 3 percent freight plus 3½ percent war risk which presumably Communists have paid on shipments mentioned mytel 4013, September 24.⁵⁶

As rough guess, Bank China Shanghai may hold upwards 12 to 15 million in US bank notes and gold bullion most of which Communists would like to transfer abroad.

Apparent anxiety Bank China transfer US dollar exchange holdings also illustrated by insistence foreign exchange purchases US dollars 2000 and over be remitted as telegraphic transfers.

McConaughy

55. Not printed.
56. Not printed.
56. Not printed; it reported shipments of United States currency from Taku Bar, one on June 29 of $300,000, and one scheduled for September 26 of $3,000,000. The freight rate on both shipments was 3.3%. (893.515/9–2449)