102.1/12–147: Telegram
The Consul at Shanghai (Pilcher) to the Secretary of State
[Received December 1—11:26 a.m.]
2747. For Treasury, State, Commerce from Casaday. Reference Shanghai’s 2711, November 25;80 repeated Nanking 1813 and previous and to A–866–870 inclusive dated December 1, 1947.81
[Page 1228]Today press features account ascribed to “realistic sources” of new drastic steps to curb inflation and black market activity. Report stated measures will be put into effect jointly by Shanghai municipal government, Shanghai–Woosung garrison headquarters and Central Bank with a “new organ” to be established to coordinate activities of these bodies. Central Bank to be chiefly responsible for economic and financial front, municipal government to intensify control over ordinary shops and firms and garrison headquarters concentrate on special centers of speculative transactions.
These steps reportedly taken in response to written orders from Generalissimo. Four specific measures thus far agreed upon according to press account.
- 1.
- Temporary suspension of loans to business and industrial firms.
- 2.
- Temporary suspension of discounts by Central Bank.
- 3.
- Temporary suspension of all remittances between Shanghai and outports.
- 4.
- Dumping by Government of large amount goods especially cotton and yarn on local markets.
Some of these measures have been tried before as previously reported by both Commercial and Treasury Attaches but present indications are that more drastic enforcement efforts may now be expected. Press reports that 10,000 economic police and other investigative personnel will be mobilized in city this week.
Private conversation with officials indicates that other measures than those listed above may be instituted.
Open rates for U. S. dollars December 1 remain at 72,000–74,000. Black market rates for U. S. currency touched high of 150,000 selling on Friday 28, receding Saturday to 140,000–145,000 opening and to 135,000–140,000 low. Today certain usual market sources of information reported “no market” due it was said to widespread fear of measures being instituted but certain other sources reported black market quotations ranging from 132,000–137,000 to 127,000–132;000 during the morning with downward tendency.
Repeated Nanking. [Casaday.]