102.1/4–2847: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received April 28—5:45 a.m.]
914. To Secretary Treasury from Adler. Left Shanghai April 26 returned Nanking April 25 [sic] (reurtel 473, of April 23).
Price situation undoubtedly deteriorating and payments U. S. procurement expenses at official rate is already creating difficulties in Shanghai. At same time it is my opinion and Embassy fully concurs that this moment is not the right time to approach Chinese Government re an agreement for a rate more favorable than official rate for following reasons: [Page 1109]
- 1.
- Most important consideration is following. Chinese Government is in process of making specific demands for financial aid from the U. S. For the U. S. to approach China for relatively small adjustments at this critical juncture when these demands are under consideration would not be politically expedient and would probably be much more expensive in the long run than continuing to pay U. S. procurement expenses at the official rate for a short time.
- 2.
- New President of Executive Yuan53 whose approval for any arrangement would be required, assumed office only a few days ago and is not yet familiar with details of work of his predecessor in the field of finance and exchange.
- 3.
- While burden of paying procurement expenses at official rate is increasing it is not yet intolerable. In addition black market for U. S. drafts and currency in Shanghai is still thin and largely subterranean.
Timing of approach to Chinese authorities for satisfactory arrangement is a matter of judgment to be exercised in conjunction with Embassy in view of larger political and financial considerations involved. Am in daily touch with Army and Navy as well as Embassy on problem and propose, subject to your approval, to defer approach to Chinese authorities until status of Chinese demands for financial aid is clarified unless, of course, burden of official rate becomes intolerable in meantime. Needless to say, strongly favor, and Embassy concurs, China’s being required to carry out certain arrangements including payment of U. S. official expenditures at a realistic rate, should it be decided to give China financial aid though of course such decision would rest on broad economic and political considerations. [Adler.]
- Gen. Chang Chun.↩