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Volume 436 A - Fox Reports, July 15 – August 29, 1941
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Volume 436 A - Fox Reports, July 15 – August 29, 1941
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 436-A
China
Fox Reports
July 15 - August 29, 1941
- C -
Book Page
China
See War Conditions
- 7 -
Fox, A. Manuel
See War Conditions: China
- W -
War Conditions
China:
Fox (A. Manuel) reports, July 15--August 29, 1941.... 436-A 1-43
Mr. Cochrave
-ince this says "lirgent
11-5 ere seuding this
much of it on to you,
the lest 5 the message
in arr ived
as yet Themessage is from fox
E. S. freedware
=
the
Regraded Unclassified
but me comply 1 of et
in white
Peninsula Hotel
Kowloon
Hong Kong
July 15, 1941
My dear Mr. Secretary,
I had of course intended to rewrite the
attached letter before mailing but find that
it must leave at once to make the Clipper. I
trust that your confidential secretary will
have it typed before submitting it to you and
that she will have no difficulty in deciphering
it.
Very respectfully,
A. M. Fox
The Secretary of Treasury,
Washington, D. C.
Copy
7/29/41 as
Regraded Unclassified
UNITED STATES TREASURY DEPARTMENT
American Consulate General
Hong Kong
Office
De Treasury Representative
July 15, 1941 5 A.M.
My dear Mr. Secretary,
I have been moving 80 fast and keeping each unusual hours
that I haven't had an opportunity to write you a personal letter.
I have tried to keep the department fully advised both thru the
State Department and thru the offices of the Treasury Representatives.
I find two distinct attitudes in these two departments, that, in
the Treasury office being the more progressive and more represent-
ative of the true situ tion usually prevailing especially in the
economic and financial field. Immediately upon arrival I found -
letter from Ambassador Gauda copy of which I enclose and had I
followed it I would have seriously marred, If not permanently
destroyed, my usefulness here.
There are a number of matters which I would like to call
to your personal attention:
(1) I am quite disturbed over the situation I find here
regarding the American banking institutions. I have reported,
in 6. general way, in a recent cable regarding them. My particular
concern is relative to the National City Bank. A somewhat different
attitude seems to prevail then in the Chase Banke where B. more
aympathetic attitude 18 to be noticed. The Hong Kong branch of
National City is in charge of B. Mr. Bitting, a bachelor playboy,
If you know what that meane in the Far East. The supervisor of
the Shanghai area 18 a Mr. Mackey and the manager of the Shangha!
area 1s a Mr. Reed. Mackay 788 most anxious to cooperate with us
in Shanghai but needed mostuneacy, Reed, next to Huxter of the
forcantile Ban/, 18 recuted to be the alickest exchange operator
In Shanghai. I suspect that Huxter and Reed did the greateat damage
to Fund A. Neither have any scruples about handling accounts for
the Japanese and apeculators, My impression too 18 that the
tional City 18 less exacting in handling accounts for speculatore
DA exchange operatore than 00 unercial firms, I have received
emplaints from many sources that American firms have considerable
lifficulty in obtaining accommodations with the American banks -
about this I have reported by cable from Shanghai, American banks
are said to be "fair weather friends". The branches in China are
Greated like 53th Branch with little or no discretion left with
DW apect to commerical addounts to local menagers in China,
Regraded Unclassified
(2) I find a dirminet and disturbing disposition on the sir:
of the British businessmen in Shanshai is maromise 8157 the
Japanese, A. number asserted that they were sare that they Rouly
fare as well with the Japanese &3 they have with the Chinese, They
give se the impression of being *illing to trim and sell
quickly and are ready to do anything to protect trair profits and
investmente. This makes It all the more important American bankers
and others have a clear-cut policy and sesure leadership in the
Shanghai Municipal Council and eleewhere.
(3) There neema B disposition on the part of the British to
force Rogers on the Board. He may know exchange but otherwise he
hasn't passed much beyond the diaper stage. At first apparently
cocky, now whining and complaining that he has been mistrested by
Washington, the Chinese, and even nie own government 1a letting
his down. I am amazed that the British should want a boy t.
represent them at this critical juncture. I have had a number of
talks with Hall-Patch, Far East financial advisor to the U.K.
Treasury, copies of which I enclose. He changes r.18 plane frequent-
ly and keeps close to me. From him and other enurces I find a dis-
position on the part of the British to wait and wear down the Chinese
in the hope finally of winning out. I have had two talks with the
Generalissimo, one of 1t hours, at which all the Board members,
including my American associates were present and another, upon
his invitation, of 3 hours at which we were alone. He seeme
absolutely determined in the Rogers matter. The Generalissimo seemed
sincerely and keenly interested in a discussion of financial and
economic problems confronting China.
At first there was A disposition on the part of the Chinese
sembers of the Board to postpone formal organization to await the
appointment of the British member, Now they are disposed to pro-
osed immediately upon our return to Chungking with the formalities
of organizing officially. Hall-Patch and Rogers insist that by
the terms of the Britiah-American agreements and understendings,
the Board could not officially organize without & British member.
Roma time ago I cabled to the Department for a legal opinion on
this point. I as inclined to proceed at once with a four man
beard unless there are legal obstacles to it.
(4) I find in Shanghai genuine interest, among Americans
and Chinese, 1h a Chungking victory. Under the gangster and
Sangarous conditions prevailing in Shanghai such sentiments cannot
be revealed or action taken that will make them too evident.
There appeare to be much loose money in Shanghai and If some
of Chinese investment with American backing -- perhaps that
the Stabilization Board may be sufficient -- can be devised I am
Regraded Unclassified
strongly of the opinion that 8 ,000 deal st idle capital in
Shanghai and elsewmere could be drawn into the interior. Early
and earnest attention will need to be directed to this matter
by the Stabilization Board. Any surgestions from Washington
will be most welcome.
(5) Much material was gathered in Shanghai on the freeting
of Chinese funds. The term is generally misunderatood even among
those who should be expected to know better. We are preparing &
report which should be cabled to Washington by the end of this
veek. I am convinced that much of Fund A was needlessly dissipated
and that a similar fate vill befall the new Stabilization Fund
unless some control measures are instituted. Shanghai has been
patiently awaiting the arrival of the new Fund on the market and
then the fun will start. The statement of the Japanese commercial
attache in Shanghai which I enclose 16 interesting in this respect.
There 1a much good the Fund can do and why it should be thrown
to the speculative wolves I don't know. I do not know either what
position my Chinese associates will take in the matter but mine
10 becoming increasingly clear 88 my cable will show.
(6) There seems much fuss about a private secretary. For
the first time in 18 years I havebeen without one and at a most
difficult period. We have had no easy time even getting temporary
assistance in Hong Kong and Chungking and we have healtated to
entrust the copying of some of our notes to such help as we could
get. Visa Jacobsen of the Nicholson's office in Shanghai suggested
& woman in Shanghai with good enough experience. She seems restless
and adventurous, with a commercial flare. She seema to have
specially good connections in the State Department - at pull there
somewhere, as 18 evidenced by the fact she was able recently to
get a viea to come to the Far East. Consul General Lookhart of
Shanghai, who knows her and apeake well of her ability, was not very
anthusiastic about her appointment.
I'll manage somehow - I have thus far -- and If the Depart-
nt doesn't think that the cables I have sent and the detailed
terial on which they must be based are sufficiently important
d confidential then I am positive that I stand well enough by
is time in Chungking to be able to borrow a sufficiently capable
D. trustworthy Chinese secretary. K. P. Chen told DE upon my
rival that they could furnish me with ample stenographic assistance
ordinary purposes but not with a confidential secretary. This
tter would have been settled in Washington except that Dr. T. V. Boong
Ptainly acquired a severe attack of parelmony and I didn't want
argue with him. Incidentally a number of people in Shanghai
irbg our interviews spoke rather disparagingly of the Doctor.
They don't seem to have much confidence in him, in certain respects.
Regraded Unclassified
- 4
I knew I was accepting a difficult task when I came to
- it is running true to form. It is interesting and
llenging and I continue to have confidence that there are
tinet possibilities for good in operating the Stabilization
Ambassador Gause assured me, at our first anionly meeting,
the Chinese are not grateful. They have been most kind and
srative; I find no difficulty in treating them as my equals.
ly hope that I shall prove worthy of the friendship of some
ha ve met, They need help -- and need it badly -- I shall do
⑉
11 bit to render such assistance as I can.
Very respectfully yours,
A. M. Fox
Secretary of The Treasury,
Washington, D. C.
/42
Regraded Unclassified
Peninsula Hotel
Kowloon
Hong Kong
- -
July 5,941
11mg in En Secretary
X rewrite The attached letter
Shad scourse intended
sefre mailing out pud hatit
much leave at once 7 make
he clibber. Itrust had your
conts dentist secretary will
have it used before submittey
it + you dua that she will,
it ha and difficulty in deciphering
Very respection
5.M.Com
Tre Secretary I reasury,
"achington, DC
Regraded Unclassified
Personal and Confidential
UNITED STATES TREASURY DEPARTMENT
AMERICAN CONSULATE GENERAL
HONG KONG July 15,1941 5AM
Mr. Secretary,
such unusual hours that Shaven't
I have been moving so fast and
I have tried to keep the department fully
apportunity to write you a personal
both thru the State Department and
fabe fires distinct of the attitudes Treasury Representation in these two
that in the Treasury office being
re progressive and usually more representa L
the the situation prevailing
dially in the economic and financials stound
tter from ambassador Gauss copy
Immediately upon arreval
hich I enclose and had I followed
would Lave seriously marred of not
namently destroyed, my usefulness
There are a mumber of matters which
ention: old like to call to your personal
tration find here regarding the
(1) Iam quite disturbed over the
American banking institutions I have
Hg reported. in a generalivay, in a
Regraded Unclassified
2
s
recent cable regarding them. My par
is relative to the National to
Banka andifferent attitude prevails
in the Chase Banksnd is to be 0.4
sympathetic attitude prevail
layboy, If you what that means
charge of a know Mr. Betting a bachelos
The Hong Kong branch
the Far East The supervisor of the
Shanghai area is a Mr. Mackay and the
manager of the Shanghai area is a
Mackayowad most anxious to
cooperate but seemed most uneasy.
Reed, mext to Huxter of the Mercantile
Bank, is reputed to be the slicked exchange
operator prestest suppect that Huxter and Read
have any scruples handling
id the greater damage tout to Fund A. Neither
account for the Japanese and speculators
agempression too is that the National City
resultiacting in less handling accounts the for
mmercial firms many Sources that hand received If
exchange operators
implaints from florerican firms.
the the Hongt accommodation
hope compederate
with the Shan about this america Shave
reported by cablectrow ghain
disposition on the part of the British
(2) Ifiend a district and disturbing
Regraded Unclassified
are treated like 58th Bra ch with
friends. Them branches China
banks are sand tabe "fair weath
little or no discretion left - with
tocommercial accounts to local
managers in China
Regraded Unclassified
compromise
businessment to to with
that they were sure they
the Japanese a number that asserted would
fare ase well with the Japanese as
they me the have impression with sail the Chinese of being willing They give to
trim and change guickly ond and
their profects and Fant investment This materit and then
are ready to do anything
all (3) There impo, seems a disposition on dura on 1
Board He know exchange but
bart of the Britch to force Rogers on the
the diab stage at first apparently
otherwise bassed much beyond
he has been mestlented -tam ameted
cocky mow whine and complaining thet that
represent had them at this critical juncture
that the British should want a boy to
I have a mumber of talks with Hall-
Patch, Far East fidencial advisor to the
from him and other sources I find a
LNKA Treasury copy of which Senclosett
distriction on the bart of the me. Butsh
want - wear down the Therese and
finally out I have had two talks
with the Generalisgimo, one of 14 hours.
at which all the Brard members
present and another of of 3 alone
including my american your has hours aggociates were He
seems absolutely determined in the
Rogers matter. The Generalissims secmed
Regraded Unclassified
Chave a clear cut police and assume
leadership in the ^ Tabicipal Counce
and elsewhere.
ilven down. his own government is letting his
changes his plans frequently and keeps de
Regraded Unclassified
=
sincerely and keenly interested and a
discussion of financial and economic
problems confronting there China.
on the part of the Chenese members of the
first was a disposition
Board to postpone formal organization
to awart the appointment of the British
with immediately formalities upon our return to Chunghin
member Now they are disposed to proceed
Hall-Pater they And Refgers insept of interest officially
Chronghing sectory There appears.
among ameri the gangster Chinpse condations izalo
with american
and if sometome
backing - perhaps thatdthe Stabilization
I am strongly of the opinion that a
may be sufficient camble devised
be drawn into
in Shanghai
the interior Early and earnest attention
will need to be directed to this matter
suggestions from Washington will bet
most welcome
(6) There seems much fuss about a
bruate secretary For the first time at in 18
most difficulty periods the have
years. have been without one and had a
defferent tyme go thing soen, /8 porary assisted Leve
hesitable coping of
in and we some
Lowe notes to such help as your souldget
pena
Regraded Unclassified
British american
officially organize without a British
understandings.
^ Eabled to the Depart
for a legal to obenion ony this point.Jan
board ainless there are legal
proceed A with a four me
obstacles to it.
he revealed or action taken that will
in Shanghai such sentiments cannot
make them too evident
Regraded Unclassified
12
the
not very spea Home ASll man
that the cables Department Shave,se
Ling the
material on which
are sufficient bobitive I stane tibe
am by this the
to forrow Chen Fold me and
K, P. could furnish assistance for order
purposes This assignath a matter excep note lade
secretary tbachington the
settled TV Soong certainly Sequired
attack Shanghai
of argue people inke rather de
the Brews Doctor They don't,seem
funds
Regraded Unclassified
Regraded Unclassified
which should
dissipated
that much of and
by the end of this
Jafa been patient
befall the new St.
of the new/fund
Fun will start The
commercial attac
interesting in
associates will take in
don't known
minis becoming aner
my cable will slfow.
I knew I was
st when I came to China
nd Icontinue propertities torsorp to have ANN confidence and Casad 44
we to form. It is interesting
sured eye have me been most in kind treating and cooperative.I
method are not
eed the help and need it badly assistance
quals Smendship of some I have I shall
no difficulty I ohly hope that shall prive met. the The
my small - bit to render such
year.
Very respectfully A.M.For you
The Secretary of The Treasury
Washington D.C.
Regraded Unclassified
COPY
SEAL
EMBA88Y OF the
UNITED STATES OF AMERICA
Changking, June 3, 1941
(Personal and Confidential)
The Honorable A. Manuel Fox,
0/0 American Consul General,
Hong Kong.
My dear Mr. Fox:
The Department of State having informed the
Embassy of your expected arrival in Hong Kong, I write to ex-
tend a word of cordial welcome and to assure you that the Dire
bassy, and the American consular officers at the several ports
in China and at Hong Kong, will be glad at all times to be of
any possible assistance to you and your associates in your
work in China.
A8 you will have been but a few days from the United
States when you reach Hong Kong, I assume that you are fully
informed of the latest developments in regard to the
stabilization committee set-up. Perhaps you have already
learned that the nomination of Rogers as the Pritish represen=
tative has been rejected by the Chinese Government. This
information has been obtained confidentially (and confirmed);
and I might add that it is our understanding that the rejection
of Rogers flows from the opposition of Dr. H. H. Kung, who
from time to timebas been the object of frank criticism by
Rogers in the past in connection with various financial and
currency matters. This rejection of Rogers has not, I non
informed, been well received on the British side. An yot,
the British have not aubmitted a substitute candidate.
I am informed that the Chinese members of the ntubiliza-
tion committee have very recently been called to moot at
chungking, 80 that none of them will be there to moot you nt
Hong Kong.
It is known here, according to my information, that you
propose
Regraded Unclassified
2
propose to visit Shanghai before coming up to Chungling.
Personally I think this 0 very wise move as the question of
including the Shanghai market in the stabilization operations
will undoubtedly be a much discussed point. If my infor-
mation is correct, Dr. Kung and his group are rather
opposed to supporting the Shanghai market.
In connection with your visit to Shanghai, however,
one suggestion occurs to un here (as a result of some
comment that has reached us). This suggestion 1a made
merely for your consideration and in the utmost desire to be
helpful to you in any way at all times, It 1a based upon the
situation which finds you proceeding to Shanghai without first
coming to chungking and meeting the members of the Govern=
ment and your colleagues on the stabilization committee.
I suggest that before leaving Hong Hong you may wish to
send a message of friendly greeting to Dr. H. H. Kung, Inform-
ing him of your arrival at Hong Kong and saying, perhape,
that before proceeding to Chungking to remain indefinitely
you are taking tho opportunity to make a short trip to
Shanghei in order to obtain a first hand impression of the
situation there 80 that you may be better equipped to give
consideration to that feature of the problems which must be
discussed when the full committee finally assembles in Chung-
king: that this aide trip will of course be very brief and
that you look forward to meeting Dr. Kung and your colleagues
in Chungking at an early date.
You will find a great deal of "politics" in this Chung=
king situation; and you are likely to encounter strongly
opposed opinions. Having In mind your own effectiveness in
the situation you will necessarily have to approach some of
the problems with considerable reserve and with finesse.
You may, or may not, find yourself opposed, a.8 are many here,
to the views of the Minister of Finance as put forward directly
by him or by those who are more or less his representatives.
But you will probably feel that whatever position you may have
to talio, there nhall be maintained at all times a surface
respect for the opinions and susceptibilities of all concerned.
It ta this that Lando me to my suggestion regarding the
message to Dr. King before you go to Snanghai; a message to
respect the Oriental amonities of the situation and perhaps
overcome May tundency at resentment that you should be making
the trip to before coming on to Chungking to become
ac mainted with your Chinese colleagues, the officers of the
Chinese government, and 60 on.
I
Regraded Unclassified
- 3 -
I look forward with pleasure to meeting you and
your associates at Chungking.
with cordial good wishes,
Yours sincerely,
(Signed) C. E. Gause
O.E.Gauss
Regraded Unclassified
Interview with
MR. A. S, HENGHMAN
(Main-or of the Hongkong and Shanghai Banking Corporation,
Shanghai, China.)
Mr. Henchman is referred to by many groups as "the
King of Shanghai". The British Embassy, which had been
most helpful in arranging interviews with members of the
British community, informed us that If we wished to see
Mr. Henohman we would have to call at his Bank for he
00:14 not he expected to como to 118. under such streum-
stances we went to Er. Henohman for our primary concern
was to get his views on the Shanghei situation.
When it was auggested at the opening of the conver-
sation that much foreign exchange In Shanghai was being
used for non-essential purposes and that some form of ex-
change control seemed to be necessary Mr. Henohman broke
out with a clear and decisive "Impossible". The Board,
operating Fund A, had been very much interested in doing
something along these lines. Mr. 0yr11 Rogers, after
months of painstaking study, had advised against it. On
another occasion Mr. Henchman had informed Sir Vandaleur
Grayburn that the situation would not allow of any don-
trol measures being established.
Legitimate needs for exchange could not be effectively
distinguished from the illegitimate. To turn away people
asking for exchange might result in ourtailment of pro-
duotion, loss of employment, and therefore mounting
social unrest and discontent which were to be avoided at
all nosts at the present time in Shanghai. Some time ago
Dr. H. H. Kung, the Minister of Pinance, toyed with the
idea of exchange control over Shanghai. This view was
thoroughly "unrealistic" and he was finally perminded not
to press the issue further.
then Mr. Fox mentioned that many business men that he
had talked to -- American, British, and Chinese -- had
expressed surprise that controls had not been imposed .
year and more ago, Mr. Henchman replied, "Yes, it is
extremely easy for merchants to say such things. The fact
that they are not bankers prevents then from viewing pro-
Regraded Unclassified
(Interview with Mr. &- 8. Henohman.)
perly the difficulties and intrioacies of the situation."
In reply to 6 query about the drain on Fund A, Mr.
Henchman replied that to his certain knowledge the funds
did not go to the Japanese. "Lord knows I don't 11ke the
Jape any more than you, but to my knowledge on only one
occasion did they raid the Pund." On this occasion Mr.
Henorman protested vigorously to the Japanese authorities
and the exchange people responsible were severely repri-
manded. The biggest raiders were Chinese speculators and
leading publio officials. Surely the United States
Treasury must have full knowledge of these operations for
the exchange acquired by the Chinese has been transferred
in very large part to America, It is absolutely essen-
tial that these individuals be controlled.
In reference to the Shanghai gold bar market Mr. Hench-
man said that at one time its transactions were strictly
legitimate. chungking had some time back ordered the
olosure of the market. It was thereupon reopened by the
Manking Chinese and has become B. form of pure gambling,
Nanking insiders rig the market to mult their convenience,
and once engineered the arrest of over 100 Bank of China
employees to cause desired fluctuations. Fancy profits
wore obtained when the market went wild through fear and
panio.
"our bank 1a a true friend of China. Whatever makes
China strong ulds us, for our business is entirely
Chinese." It was pointed out that the bank branches in
far-away Malaya were largely dependent on Chinese irmi-
grants -- their business esteblishments and remittances,
"It la our policy to keep Shanghai strong, for a strong
Shanghai can ald Pree China materially,"
The Japanese have not dared move further against the
Settlement than they have alroady done because or a very
healthy respect for the United Kingdom in conjunction
with the United States.
Shanghai,
July 4, 1941.
Regraded Unclassified
Interview with
SHIZUO SHIMADA
(Commercial Secretary to the Japanese Embassy, Shanghai)
Mr. Shimada was Introduced by Judge Allman, American
member of the Shanghai Municipal Council, to Mr. POX at
one of the American Consul General's festivities on the 4th
of July. He was very destrous of having an interview and
such was arranged.
Shimada opened the conversation with the statement that
he knew it would not be politic to ask what measures were
contemplated, but that he would like to convey some ideas
from the Japanese side.
He stressed again and again that Japan was no longer
interested in attacking fa-pi, and would in faot be glad to
see the rate stabilized at about the present level. It
cannot be publicly announced but Japan 18 interested in
stabilization for among other things it helps Japanese
businessmen -- both in their dealings with Chinese and in
obtaining foreign exchange to pay for necessary imports.
when questioned as to why Hanking was pushing Central
Reserve Bank notes and thus attacking fa-pi, Shimada replied
pointedly that Japan could not interfere with the independent
Manking government. lie asked whether Fox held Nanking to be
& "puppet" government, and when It was pointed out that he
himself had used the term no morely shrugged his shoulders
and laughed. no did acknowledge that without Japanese support
Manking would not 10mg survive.
He called attention to the frot that ho had heard a
rumor that Shanghai ni ht no isolated 9,8 regards foreign
exchange. 110 hoped there YMS no foundation to this report,
affirmine that -11 Drive volet notion must not be too feat
or too hasty.
Japan to not strong oncugh financially to effectively
attack ra-01. And it certainly in not strong enough to
engage in Any [Inancial 11 che with the 11.15. and the 1.3.A.,
which 10 Implicit in their support of fa-pl. Shi ada thought
that nove tiations that processed along financial lines might
lead to onnco. James italize the present war atoped 00 soon
Regraded Unclassified
- 2 -
(Interview with Shisuo Shimada)
M possible.
If Japan, China, and the U.S. cannot negotiato now the
"ditah will get deeper" and difficulties will multiply.
When asked whether Japan was exercising discrimina-
tion against American interests he denied such practices.
when informed that the U.S. had on hand records of dis-
crimination in North China where American concerns had boon
frosen out he again denied that this was discrimination.
This vas followed immediately by the plea, "America must be
more generous in her treatment of Japan".
Shanghai
July 8, 1941.
Regraded Unclassified
Interview with
L.
(Par jastom deviser to the !nited Kingdom Treasury)
IT, took the initiative to ountact x. "all-ratch
and the latter of introduction from ''''. Raymond n.
Stevens, Chalrman of the United States Tariff Commission.
A rather frank and entisfactory talk ensued, during which
considerable attention was given to the case of Mr. Cyril
Rogers. vr. Vall-Patch state! that Morers WRD quite
brilliant, lad onjoyed wido experience in foreign exchange
transactions, and vias quito prolific with 1deas when
difficult situations arose. It was pointed out that he had
boon ----- production, yours au Liab Date of
England, and that Sir Monta the Norman very reluctantly and
only after considerable prossure had been exerted agreed to
nis continuing his work in China. Rogers was a hard worker,
and knew both China and Its monetary problems intimately.
Mr. Vall-putch acknowledged that the Pritish had had
considerable difficulty with Rogers. le didn't seem to
know how to got along with people, antagonizing them
rather eastly. At first he riled the foreigners here, and
finally many proups of Chinese. Mr. Hall-Patch was Informed
that it was larown that Rogers had been busy in Washington
plugging for his own ohoice for the American member, 10.
Arthur Young.
In speaking of stabilization operations Mr. Hall-Patch
agreed that a very Important part of our work here was not
merely monetary but concerned the influence we could axert
over inflationary price trends, the rapid expansion of note
issue, and other vital sconomic problems. our effectiveness
in respect to these problems depended in part on our
ability to got along well with the people in authority.
Mr. Hall-Pateb spoke at length regarding the Shanghai
market. Ho stated that Mr. Lookhart, the American Consul
General at stanishat, had requested him to ur/te me to visit
Shanghai before maining up my mind about what should be dons
about that market. Mr. Hall-ratch stated that he realized
that if Shanghai were lost to the Japanese, as it might well
be, no would have to do something 1 mediately regarding the
Shanghai situation. Undor such circumstances it would be
Regraded Unclassified
#2#
(Interview withMR.E.L. Hall-Patch)
woll to be prepared. If the United Kingdom and the
United States were to cooperate fully on a program of
external exchange control the thing could be managed
quite well in spite of its many difficulties.
Mr. Hall-Patch spoke of the difficulties the British
had experienced in working out a charter for the Central
Bank of China. Things were going along nicely and some
knotty problems were being straightened out when the Sino-
Japanese war broke out and upset everything.
In conclusion, Mr. Hall-Patch agreed that stabilize-
tion activities should be conducted along a. broad position,
namely that they should be tied up with Chinese economic
problems.
Hong King,
June 6, 1941.
Regraded Unclassified
Interview with
MR. E, L. HALL-PATCH
(Par Restern Adviser to the United Kingdom Treasury)
Mr. Hall-Patoh requested this second interview to take
place during the present stay in Rong Kong. He opened the
conversation rather abruptly by atating that Mr. Cyril
Rogers was, without a doubt, the beat man the United King-
dom had for dealing with Chinese monetary problems. Rogers:
possessed a wide knowledge of China and its personalities,
which should prove Invuluable. Formerly an exchange
expert with the Bank of England he had also had wide exper-
ience in operating Fund A under the Sino-Anglo Equalization
Agreement of 1939.
Mr. Hall-Patch was determined to find out why Rogers
had been rejected by the Chinese Government as the British
choice for condidate to the new Stabilization Board, Kr.
Fox assured ni- that he was not acquainted with the inside
story and could give no reasons for the rejection. There-
upon Mr. Hall-Patoh doclared warmly that if the Chinese
rejection W&B based on grounds of personal apite, then
"By jove, those beggara have got to be taught a lesson."
Mr. Hall-Paten wondered 1f Rogers might not be persons
non grata with gr. Pox, but that impression was very
quickly removed.
It was openly admitted that Rogers WRB often tactless
and needlessly blunt. do und opposed and "rightly" opposed
Dr. H. H. KUNG, the Minister of Finance, at least twice
each month. Ho had stood up to Dr. Kung and told him off
when It was essential that such be done. Mr. Hall-Patch
holds no nich opinion of in. KUNE, who, he anya, is overly
conceited and wont to infliot upon all and sundary the story
of his life and his descent from Confucius.
If Rogers lan't reappointed that faot will atymy
stabilization operations for it will take the United
Kingdom U to " months to 1 1nd o man adequate to replace him.
It was recomised that Cnina was vital to the Empire's war
affort In to sonae of keeping an enerly occupied, but the
altostion In changling WAS with "the sands running
law". nior these conditions Hogora 10 more valuable than
Regraded Unclassified
- 2 -
(Interview with Mr. E. L. Hall-Patah)
over. Mr. Hall-Patch would give no consideration to the
questions whether it might not be true that Rogers knew the
Chinese government officials too well and had been too
tastless in the past. "China must accept Rogers, and that
Le that."
Mag Kong,
/
9, 1941.
Regraded Unclassified
Interview with
MR. E. L. HALL-PATON
(Par Eastern Financial Adviser to United Kingdom Treasury)
Mr. Wall-Patch opened the conversation by seeerting that
he was quite convinced that the tine had arrived when some-
thing mat be done to stop the leaks in the present Shanghai
free market. Too much money was going to the Japanese, to
speculators of all nationalities, and to some prominent un-
named Chinese. It was revealed that some months ago the
United Kingdom Treasury, feeling that Shanghai was a major
leak through which funds were going to the Tripartite powers,
had prepared an order "to out off" Shanghai from sterling
altogether. only on the strongest protests of Cyril Rogers
and Hall-Patch was the matter deferred. Hall-Patch at this
time flew to Chungking to see the British Ambassador, Sir
Archibald Kerr Clarke-Kerr. During the course of this contact
he stated "Look here, you on't do this. Shanghai my look
like B. mere financial matter and it may start as one, but
it 1a damned well political and no must face that fact." The
Ambassador agreed and cabled his objections to London where-
upon the matter was dropped for the time being,
The situation in Shanghai is extremely complicated and
complex. The Shanghai Municipal Council has resisted and is
resisting Japanese aggression, and over the course of the
last four years it has done not too bad a Job in difficult
ciroumstances. Dreatic measures may disturb the local
situation. Preesing is drastic. If in retaliation Japan
moves against the international settlement what will the
United Kingdom and the United States do? Hall-Patch vas
convinced that the United Kingdom cannot do much at the
present time, "as we have only E couple of musty old cruisers
out here". Ie the United States prepared to move? Presumably
this *ituation will be considered by Washington prior to
reaching a definite decision regarding freezing.
Hall-Patch agreed that the U.S.S.R., now an ally, would
be a deterring element in Japanase counter-action at Shanghai.
The Reda had some Bo submarines and 60 destroyers at
Vladivostok and these, together with the possibility that
its air force could reid Japanese home cities, would make
the Japanese think twice. According to his information how-
ever, tie Per Eastern Red Army was not self-suffioient and
Regraded Unclassified
DC .
Interview with Mr. E. T.. Mall-Patah)
had supplies for only atx wooks active warfara. Hor AId
they have the industrial bunes upon which to draw In the
avent of active hoatilittes in Siberia. It mist be
recognised that not all of the hazards are on our nide
now though obviously much will depend upon the outcome
of the Nami-U,S.S.R. conflict,
Hall-Patch was positive that 1f control measures over
the Stangrai market are introduced they cannot be insti-
tuted by the Chinese for the following roasons:
(1) The foreign exchange allotment system adopted in 1930
broke down due to large market raids and would undoubtedly
break again 1f reintroduced,
(2) Control by Chinese would put the Chinese banks and
bankers in Shanghai on the spot with resultant wholesale
murders and kidnepings by Nanking gangators, Japanese gun-
men, etc.
(3) Control by Chinese would leave the baok door wide open
for "insiders" to take adventage of the situation AB they
have done in the past.
Control measures to be effective depend upon joint
parallel action bythe United States and the United Kingdom.
Only in this way is there a possibility of plugging the leaks.
Joint action must extend not only to the Treasuries of the
two countries but to their banks as well. Parallel action
would necessitate the establishment of a single control
board which was equipped through fast communications to
make quick decisions and to whip their banks into line, If
necessary. A Shanghai representative or agency of the
Control Board mist be set up and the American and British
banks In Shanghai would not ns its agents. l'Ittmate decl=
sions and responsibility must, neverthelsse, be centered in
Washington and London to avoid the onus or for final Judg-
ments locally.
Hall-Patch openly expressed doubt on a number of
matters in regard to control over the Shanghal market.
These may best be summarized as follows:
(1) In the United States Treasury ready? The United Kingdom
Regraded Unclassified
(Interview with Mr. R. L. Hall-Patoh)
Treasury ins had 1ts freesing order drawn up and ready to
apply at e moment's notice. But what of Washington?
There must be no possibility of disagreement in British and
American orders and a single board must be established to
bring action. both into line In the beginning and in subsequent
(2) What of the American banks in China? Hall-Patoh knows
from bitter experience in North China that one particular
American Bank (National City T) did not play ball. In this
case the British had the devil's own time to got Washington
to issue the necessary instructions to the bank's head
office In New York to get it to go along. Mr. Fox assured
Hall-Patch that there would be no further difficulty on
this soore either in Shanghai or in Washington. Mr. Pox
wanted to know what about the Britiahbanks--in particular
what about Grayburn (Hongkong office of the Hongkong Bank),
Henchman (Shanghai offloe of the Hongkong Bank), Huxton
(Mercantile Bank, Shanghai), who had demonstrated in
personal interviews their independence, cockiness, and
even non-cooperation and who have aloud wondered at the
audacity of London issuing orders and trying to control
exchange. Hall-Patch gave every assurance that he would be
responsible for these people and their banks and asserted
that no difficulties would arise if freezing went into
effect.
(3) What of the needs of legitimate Japanese merchants in
Shanghai area? The type thus referred to are the merciants
thatmere in Shanghai prior to 1937 and who have proven
ever since a consistently materating influence. Their
voices have been rowing work as the shouts of the ronin
carpet-baggers, that have followed in the wake of the
Japanese army, have ricon to A orescendo. Their voices
might he extinguished all together If freezing occurred,
It T&A admitted that this was not A valid reason for hold-
Ing up such action.
(4) mat of the Chinese? It la essential that the Control
Board have the rull cooperation of Chinese governmental
leaders and banking officials. There mist be no evasion
Regraded Unclassified
(Interview with Mr. E. L. Hall-patch)
evasion or speculative runs such as were curried out by
prominent private and official leaders In the past. If
the stabilization Hoard -aintains absolute secrecy about
its operations, current and prospective, this will go far
to stop leakages that have occurred in the past. In this
regard Hall-Patch asserted that the Chinese members--
K. P. Chen, Touyee pot and T. M. HGI were excellent oboloee
and above all suspicion. It 1a also recognized that Гроед-
ing itself and supervision by the United States and the
United Kingdom will close other avenues to Chinese manipu-
lators.
(5) What retaliation will Japan and Nanking take? This is
8 political question and the time has arrived to face up to
it. Hall-Patch believed that the Japanese and their puppets
will probably do very little in the event that resoluteness
and a willingness to hit back hard are displayed. It must
be realized that Japanese bank balances and investments in
the sterling areas are now 80 amall as not to constitute a
deterrent to Japan. Hall-Patch wondered about Japanese
bank balances and investments in the United States.
(6) What of sussion through South America? Again in the
event that the United Kingdom and the United States not in
unison this should not constitute a serious problem. The
British Treasury can handle the Argentine quite adequately
and the mited States could probably take care of Brazil.
If this la done the other South American countries will
have to fall in line.
Shanghai,
July 3, 1941.
Regraded Unclassified
29
- THE COMMISSIONAL us - -
- - TO -
TREASURY DEPARTMENT
UNITED STATES COAST GUARD
HEADQUARTERS
WASHINGTON
11 July, 1941.
SECRET
From:
Spagent, Shanghai, China.
To :
Secretary of the Treasury.
The Yokohama Specie Bank is exerting pressure to have the
Shanghai "unicipal Council accept Hanking Puppet Central Reserve Pank
notes for rates and taxes to the extent of 20%. The Council sought
advice from henchman of Hongkons 9ank and Vekay of "ational City, who
net with American and British nembers. I understand the henchesan took
a strong position against yielding and that MeKay was lukewarn. I 5BW
UcKay on the morning of the 9th at his office. He attempted to denon-
strate that accentance would not necessarily be injurious to settlement.
: vigorously coposed this view as bein- but an openin wells, "c"ay
assured ne that his bank would not accept `entral Pank notes under any
conditions unless directly ordered by American government. Asked if
this was the Feneral foreign bankling sentiment, he assorted that it was
and annlied not only to "ankin' currency but to all bloc
have conferred with All three American members of the Council. Ex-
lained the importance of American members taking a firm cosition in
2.16 matter and showing definite leadership. Am firnly convinced that
apan is making this effort to push her notes to mLify the "anking
vericent, that will not press the matter if American members show a
letermin di opposition. A larve volume of late las Faints collected, the
Regraded Unclassified
30
- 2 -
assimilation of which will take same time.
A complete report on Shanghai will be forwarded as
soon as possible. A few tentative observations are being forwarded
through the American Consul General with whom we have frankly re-
viewed the situation.
Signed,
FOX
Regraded Unclassified
- FIRE M 2 CONST SUARE
- - - -
51
TREASURY department
UNITED STATES COAST GUARD
HEADQUARTERS
WASHINGTON
16 July, 1841.
From:
Spagent, Shanghai, China.
To :
Secretary of the Treasury.
The National City Bank has announced the closing of two branches
at Canton and Peicing. You probably have full details regarding this action.
The closure indicates a definite attitude of non-compromise toward Japanese
and yen bloc currencies. I am informed that the closure was partly result-
ant of lack of business with no one entering the bank premises day after day.
Had these branches been willing to accept yen bloc currencies, the action
would probably not have been necessary. The same non-compromising attitude
was also evidenced by National City Shanghai manager, McKay, in discussing
efforts by Yokohama Specie Bank to get the Shanghai Municipal Council to
accept Nanking Central Bank notes in part payment of rates and taxes. Mackay
is asserting that his bank would never accept Japanese sponsored notes unless
ordered to do so by the United States government. At the same time MacKay
attempted to rationalize the acceptance of such notes by the Shanghai Munici-
pality and to minimize the consequences. It is important that American bank-
ing representatives in Shanghai, especially Mackay, maintain an unwavering
and firm attitude in this matter as they exercise a. great influence on Ameri-
can council members, whose position in turn will have a. creat bearing on the
final attitude of the council. I am convinced that the acceptance of the
Nanking notes will not be allowed by the Japanese to become an issue if it
is known that American and British members are fully united in opposition.
Regraded Unclassified
32
- 2 -
Every effort should therefore be made by the Treasury to influence the
position of American banking representatives and to have Britain main-
tain a similar attitude,
Complaints, heard from some businessmen and lawyers, were 000m
firmed by British bankers that American banks were too severe in their
loan and credit arrangements. Also, that local managers had no leeway
as British bankers were under strictest control from New York head of-
fices. When the matter was called to the attention of local managers,
Mackay and Barber, they agreed, stating that it was the fault of too
strict an application of American banking laws abroad. Subsequently,
Mackay denied the allegation, stating that many of the loans made by
British banks, especially the Hongkong Bank, were not in accord with
sound banking principles. The Hongkong Bank carried along many business
concerns even when they were technically insolvent and only war-time
prosperity in Shanghai had saved them. National City, it was claimed,
had accounts of most of the American business concerns worth having. I
did not have the opportunity to examine fully into the merits of various
contentions. However, there seems to be some element of truth in the
charge, and if American business institutions are to take full advantage
of future opportunities for increasing business in Asia, improved facili-
ties for making banking services more readily accessible should be in-
stituted. I have also received the impression that National City has
done an unusually large amount of exchange business, showing a willing-
ness to handle accounts for any nationality or type of operation.
Regraded Unclassified
33
- 3 -
It would seem highly desirable for the Treasury to discuss
with American banks, particularly National City:
1. The desirability of providing ample banking facilities
for legitimate enterprise of American nationality.
2. The desirability of scrutinizing exchange operations
more fully in the interests of Sino-American welfare.
I arrived in Hongkong on the 14th. Confusion in the mails
with letter from Treasury being forwarded to Shanghai a few days ago
which may reach the United States a week from now. I am planning to
leave for Chungking in a few days. Frese, after a profitable two
weeks in the field, is in Hongkong now together with Chen and Pei.
Signed,
FOX
Regraded Unclassified
ADDRESS THE COMMANDANT M. . COAST GUARD
AND REFER is NL
TREASURY department
UNITED STATES COAST GUARD
MARTERS
WASHINGTON
in Amount,
SEC
From:
Spagent, Shanghai,
To :
Secretary of the Treasury.
Message from Mr. Fox
The organizing and Proctioning OF Que Inar! Dete is
cate matter. Aside from the physical difficulties to which recontly
ferred in cable through the State Department, there are There is
unmistakable evidence that everything In
ported to Dr. Kung. Hall Patch reluctantly one to
days for organizing purposes. He is most persistent
I understand Dr. Kung is to be present at the hearths injoin]
ing and will probably make the insuration spends. the
drafting exchange control regulations without Plant Neard.
I understand that it is done to
undoubtedly will be centered in finner
information on exchange control proce ture
markets. T. Kung appears
doing everything I can to support
tunately, Dr. Chi's services have
will be a distinct help. There
to the Central Bank
of
is mid: colitical
some of the benefits USE
criticized by
Regraded Unclassified
- 2 -
general confidence. I understand it is not as well organized and
staffed as other government and private banks. The Board hesitates
to engage in general economic studies regarding suggestions for needed
improvements for rehabilltation. Proper economic studies by foreign
group may be able to effectuate some change. It would seem that with-
out outside influence and pressure there is little hope for improve-
ment. I am not certain of the advisability of joint Anglo-American
help in such an undertaking. It. seems to me that the present uncer-
tainty in Shanchei and longkong occasioned by the recent freezing of
Chinese funds le caused in a large part by yet unofficial appointment
by Treasury of Par Fast administrator or inspector of frozen funds
operating torether with one or two assistants to be stationed at
Shanchas End nosethly Honekong.
The friendly freesing or Chinese funds has been well received.
At present : RU sotinCied with my Tro Tead ere and cossibilities
for the althou siow and atience necessary.
Regraded Unclassified
LIBITS THE COMMISSIONER . ». tain -
MD - NN N.
TREASURY DEPARTMENT
UNITED STATES COAST GUARD
SECRET
WASHINGTON
28 meat, 1%1.
From:
Spagent, Shanghai, China.
To :
Secretary of the Treasury.
At the conference on Saturday with 3. %. "un, I observed
that 0. K. nit was not particularly deferential to his Docellency. The
quiry has disclosed that for the first time the "inister of Finance has
not chosen his own vice-minister. I understand that D. 5. Yui and Y-
Co Koo were appointed by Chiang Kai-shek himself during He %
absence on account of illness and that Madame Kung immediately care to
Chingking on learning of this and has been here ever since. The central
News Agency on August 19th states that 10% T. F. Tsiang, Secretary nen-
eral of the Executive Yuan, at a conference on August 18th for foreign
correspondents announced that the national government on August 13th
formally set up an exchange control committee "to conduct operation of
stabilization fund." The committee is to be composed of fifteen members.
B+ H. Kung will be chairman. 0. K. Yui, the three Chinose hoard members
and JIANHXCHEN, Deputy Governor of Central Bank, are to constitute B
standing committee which is to meet weekly, while the whole committe
morts monthly. Other members of the committee are: General WII TE (315),
Dr. WANG SHIH CHIEH, ATUKAN, Dr. CHANG PO NING, General UTYAOTSOU,
To. T. F. TSIANO, Y. C. KOO, LEE TAO NAN, AND K. K. KNOK. T. N. CREWK,
nager of the Bank of Communications in to be secretary general of the
Regraded Unclassified
committee. Lee's regutation as a member of the stabilization fund's
committee is not of the best. From another very reliable source I
learn that Lee is not to be a member of the committee, but in addi-
tion to those named above, two others are to serve: SUNG HAN TSANG,
GENERAL MANAGER BANK OF CHINA, and WHIENHSINTE, Chairman of the
board of directors of the Bank of Communications. Sometime ago
I learned that Lee is gunning for the general managership of his
bank. I understand that appointments are to be made by the national
government as of August 12th, the day on which the Executive Tuan
meete stabilization board members appointed by Minister of Finance.
At a conference of the board with H. H. Kung and his two vice-
ministers on the 16th, Hall Patch stressed the question of exchange
control, but nothing was said of a committee having been already
ganized. I suspect that the announcement on organizing on the 12th
or 13th is for meeting of actual formation of the committee må to
an attempt to confuse the functions of the committee and the stabl=
lization board. Neither K. P. Chen or I expect much of the condito:
and we have every reason to doubt whether any program or plan has
yet been formulated for handling exchange control. Because of the
political characters of the committee, K. P. Chen healtsten to serve
on it.
(Signed)
FOX
SECRET
Regraded Unclassified
-
I
E
a
TREASURY DEPARTMENT
UNITED STATES COAST GUARD
URGENT AND PERSONAL
WASHINGTON
28 August, 1241.
Spagent, Shanghai, China.
Secretary of the Treasury.
I have received very few replies to many inquiries adding to
difficulties of operations here. I would greatly appreciate an early
deration of the question raised herein. K. P. Chen and I joined
and Hei in Hongkong because of the number of problems raised requir-
tention of the full board. I was particularly disturbed over the
nance of the advantage displayed by operations of the Hongkong and
that bank during the past week. I find that British banks did not
FLY particular advantage. Instead of taking advantage of the oppor-
as the British banks díd, the American banks referred the matter
head office and were advised to exercise extreme caution. Then
45 flood of questions giving the impression that the American
wanted the board to take all the risk. They were for cooperation,
the board to promote one hundred percent of 1t. Can not
do something to get at closer to fifty-fifty basis. The
Le particularly serious because the attitude of the American
levided factor in keeping Shanghai stirred up and uncertain.
called the Treasury's attention before to the American banka'
real occparation. The board during the past week has, in my
in exceptionally good start, particularly through Poi's
and extreme ability, this steadying the Shanghai market
leying a good foundation in foreign exchange control in
Regraded Unclassified
- 2 -
China, During a long session with H. H. Rung Friday, which K. B. Chen
considered the best meeting we have had with him and showed evidence of
confidence in American member, it was pointed out that the board's prev
sent activities really were initiating fixed steps in China's present
exchange control and that it was quite importance for the Chinese govern
ment soon to work out its exchange control regulations. H. H. Kung stat
that 1f the board was ready to turn over its present Hongkong operations
to the agency, it. could turn them over to P. N. Chung, Hongkong manager
of the Central Bank of China, and whose particular claim to fame rests
on being China's official greeter to visitors passing through this
ateway. P. N. Chung is spending the week-end in Chungking with H. H.
Rung. Chung does not know what it is all about and in this parti
matter, H- H. Kung is not in a such fortunate position. The first
of operation has cost the board about one million seven hundred
thoust
U. S. dollars. The board, to avoid criticism, must secon provide to
cover also for cities in Free China. This will not require a. large
amount of distress among stranded American newspaper
such
bells
of the New York Times who appealed to me from Konsang Friday,
It arises from a lack of knowledge of exchange control
activity of the Central Bank of China in handling its
supor
under license sixty and failure of H. H. Kung's fored
add
agency to start operations. The agency has been classi
a
in
It is composed of & mongrel group with & decided polltical
in fully aware of the danger of having the the dreams
continue totake risks involved in carrying on
Regraded Unclassified
SECRET" -
board members have -iven much thought to the problems involved. The
agency, on the other hand, is technically and otherwise not equipped
to handle the situation at the present time. The board plans to turn
to
the Hongkong operations over the agency very soon unless the Treasury
believes the board should continue to function in this field for 8. while.
I should like to hear from you in regard to this matter very axe.
Regraded Unclassified
SECRET
41
TREASURY DEPARTMENT
UNITED STATES COAST QUARD
DQUARTERS
WASHINGTON
29 August, 1941,
From:
Spagent, Shanghai, China,
To &
Secretary of the Treasury.
(Part 2, "Urgent" of August 28)
The board my call a conference in Houghoug with s group
of leading Shanghai business men and bankers in order to place plan
and objectives before thes personally, If 11 is decided to hold
such a conference, I shall recall Taylor from thaughat to Hongkong
for & short period, It is most inconvenient to function effectively
in Chungking, in spite of long hours devoted to task, without a com-
fidential secretary and without other help; even ordinary stenographic
assistance is scarce. Now that the board has started operations,
Frese should return to accounting phases of work. What are the changes
of getting at least one competent person for a short time to observe
conditions in Shanghail It is quite important to have a technically
trained observer in Shanghai and, if possible, one in Bongkong.
I should know at an early date what the attitude of the
Treasury Department would be toward a new application from the Chinese
Government for an additional contribution to the board's fund of fifty
million U. S, dollars or a smaller sum, There is no hurry about this.
Some of the uncertainty here, for which the United States Government
is blamed, in part arises from the alowness in forwulating plans for
exchange control in China, The Finance Ministry relishes the power
which it has through the Stabilization Board, which it tries to dont-
- 1 -
SECRET
Regraded Unclassified
SECRET
nate, and the agency which it does control. The Ministry is not
handling the present task in an intelligent and effective manner,
There is unmistakable evidence of incompetence in the Central Bank
of China, It is a haven for political and other backs. The Bank
of Ohina, on the other hand, appears competent and, among private
commercial banks, commercial and savings banks of Shanghai, and
the Bank of East Asia, appears to stand out, This is not intended
as a complete list.
WEE
SECRET
- 2 -
Regraded Unclassified
- THE . & CRAFT serve
- - 10 as
TREASURY DEPARTMENT
UNITED STATES COAST QUARD
SECR
WASHINGTON
29 August, 1941.
From:
Spagent, Shanghai, China.
To :
Secretary of the Treasury.
(Contimuation of message of 28th)
Conditions in Chungling are extremely difficult. I am
willing to continue on at least until the board is better organized,
but I should be able to count on better cooperation from the Treasury
Department than I have been receiving. I realize the difficulty of
formulating a definite policy or position on many problems, but I
hould at least be advised of the situation. I can then covern my-
self accordingly. I ought to know whether a reply may be expected
8000 on such questions as:
1. Chinese banks in Hongkong are caught in the dilémna
of freezing by United States and Hongkong is being included in the
terling area.
2. will license be granted to competent private com-
banks or can they operate under license 58?
5. Attitude of Treasury towards agency.
4. Is it Treasury's intention to have board relegated
ainor position and have the major role given to agency?
I an anxious to return to Chungling soon to take advantage
acts developed here. An early reply to Hongkeng will be appre-
I an sending mother cable through State 60 as to provide op-
by for reply through regular channel.
FOX
Regraded Unclassified