Chinese Government United States Dollar Savings Certificates

CHINESE GOVERNMENT UNITED STATES DOLLAR SAVINGS CERTIFICATES On March 24, 1942, the Chinese Government announced in Chungking its plan to sell up to $100 million of U. S. dollar savings certificates, for the redemption of which an equal amount of the 1942 $500 million credit was earmarked. The certificates were of one, two and three year maturity. They were issued only in China for Chinese currency at the rate of 20 Chinese yuan to one U. S. dollar and in denominations ranging from $10 up to as high as $100,000. Six banks - the Central Bank of China, as distributing agent, the Central Trust of China, the Bank of China, the Bank of Communications, the Farmers Bank of China, and the Postal Remittance and Savings Bank - were authorized to sell the certificates. Two kinds of documents were sold, receipts and drafts. Both were redeemable in Chinese yuan but to obtain payment in U. S. dollars, holders of receipts had to exchange them for drafts. The receipts contained the names of the purchaser and of the issuing bank, the serial number, the purchase price (par value) in Chinese yuan and in U. S. dollars and the terms of the loan. The Foreign Funds Control Investigative Report (more fully described be- low) states that they were not negotiable in China. It is not clear, however, whether the receipts could be sold outside of China and thus be converted into the freely negotiable drafts by persons other than the original purchasers. The drafts, as indicated, were obtained in exchange for receipts 1 They included interest in their face amount, being post- dated to mature at the payees' option, in one, two or three years from the date the receipt was issued or the draft was purchased. The drafts were the normal bank draft form, with added instructions to the drawee - the Bank of China, New York - to charge the Savings Certificate account of the drawer's head office in China. Apparently they included also the certifi- cate serial number. The term "certificates" was used at times to mean the total issue, that is receipts plus those drafts issued as the original document, and at other times to mean receipts only or drafts only. To avoid confusion in this discussion, "certificates" will be used only as meaning the total issue. Sales of certificates took place from April 1942 through early August 1943 and apparently the total issue of $100 million was disposed of. A statement of the sales was supplied to the Investigative Staff by Hsi Te Mou, adviser to the Chinese Minister of Finance, head of the Central Bank of China and, at the time of the investigation, also acting manager of the Bank of China, New York. This statement showed total sales of a little over $103 million - which would represent presumably the $100 million plus interest. and could also be purchased as the original document.