893.5151/12–2349
Memorandum of Telephone Conversation, by Mr. Robert W. Barnett of the Office of Chinese Affairs
Mr. Christelow59 telephoned Mr. Barnett on Friday December 23, stating that word had been received from London that the British Government intended to take action on Chinese sterling in the near future. The economic justification for this action is that Chinese sterling is one of the main sources of discount sterling. The intention is to block the some three million pounds of sterling on deposit permitting withdrawals for only bona fide commercial purposes. Also under consideration is the blocking of Hong Kong sterling. While this action when taken will be justified on economic grounds, the British Government was aware of its political implications. By taking this action they will prevent the Nationalist Government from dissipating its sterling assets. These assets may in due course be considered to be the property of the Chinese Communist Government and a claim against them is anticipated. It is the view of the British Government that control over these assets will provide them with a useful bargaining weapon in their discussion with the Chinese Communists regarding conditions for recognition.
Mr. Christelow stated that no time had yet been set for taking the action contemplated. However, he could say that the action would not be taken over Christmas week end.
Mr. Christelow informed Mr. Barnett that he had made known the above facts to the Treasury Department which had indicated to him no special concern in the matter. However, because it had political aspects he wished to have the proper authorities in the State Department informed and would be willing to discuss it with them on Tuesday of next week if they so desired. Prior to Tuesday he could be reached on Ordway 3293.
- Fred Christelow of the British Treasury and Supply Delegation in Washington.↩