Office of the Historian

893.51/9–1645: Telegram

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

Chungking, September 16, 1945—9 a.m.
[Received 1:10 p.m.]

1599. To Secretary of Treasury from Adler.

1.
Main feature of financial situation continues to be extreme tightness of money market. Many Chungking native banks and business [firms] in shaky position and industrial production is declining with increasing unemployment; same picture also true for Kunming. Local financial, industrial and commercial circles petitioning Government for financial aid; Ministry of Finance has promised CN dollars 5 billion for this purpose. Intense and widespread criticism of Government gold policy still continues. Minister of Finance admitted to me confidentially that 40% gold levy was a mistake and he had decided to support gold market at around $50,000 per ounce.
2.
Price situation spotty and uneven. Rice and daily necessities still have an upward trend, but cotton textiles, wool, wood oil, etc., continue to decline. Available general price indices show a slight decline for August on July.
3.
Course of United States currency is still downward. United States dollar dropped to CN $1,200 at end of last week and weakened further this week to $800. On September 14 it closed at $750 and today it is being quoted at $700; this most recent drop is partly due to Chinese newspaper misinterpretation of Treasury press service No. V-13 which Chinese press on September 14 picked up and garbled from OWI (Office of War Information) release from its San Francisco news service. Chinese market reacted unfavorably under impression that new restriction was being placed on United States currency of large denominations. I understand that OWI (Office of War Information) will publish correct story over weekend.
Gold which has been quoted as low as $40,000 per ounce during week was quoted on September 14 at $55,000. United Clearing Board which has sold virtually none of its August allotment of United States $1,200,000 is now selling at CN$600 per United States dollar.
4.
Kung has resigned chairmanship of Farmer’s Bank and has been succeeded by Chen Kuo-fu, elder of Chen brothers. [Adler.]
Hurley