Memorandum to Elting Arnold from S. Chafkin

Mr. Arnold Sept. 12, 1951 S. Chafkin The Wedemeyer Report's references to Chinese holdings in the U.S. Reference is made to your memorandum of September 7, 1951 request- ing me to prepare a statement relative to advice which you have received indicating "that General Wedemeyer, in connection with his early reports, submitted annexes to those reports listing the holdings of wealthy Chinese in this country" and that "the Treasury and the Federal Reserve Board compiled such data during the war and must have it available in their files." The only report prepared by General Wedemeyer bearing on the subject of Chinese holdings in the U.S. of which this office is aware is the General's report to the President dated September 19, 1947 upon comple- tion of his mission to China. This report appears in the White Paper on China, pages 764-814. On page 770, the following statement on private Chinese assets appears: "Privately-held foreign exchange assets are at least $600 million and may total $1500 million, but no serious attempt has been made to mobilize these private resources for rehabilitation purposes. Private Chinese assets located in China include probably $200 mil- lion in gold, and about $75 million in US currency notes." In an appendix to the report which discusses the financial situation, the following statement appears on page 783 of the White Paper: "Total gold and short-term dollar assets of the Chinese Government and Chinese nationals were estimated at US$949 million on December 30, 1945, the official portion being $835 million; in addition there were private Chinese long-term assets in the United States amount- ing to at least $220 million. The official assets held by the Central Bank of China had declined to $327 million on June 30, 1947, and an additional amount of over $123 million was held in other government banks. Private gold and short-term assets have almost certainly increased very substantially from the estimated figure $114 million at the end of 1945. While some private accounts have been drawn down to finance imports, amounts which more than com- pensate for this decrease have been added through private accumula- tion of gold and U.S. currency in China, and through flight of capital via Hong Kong, and through other means. Gold sales to the Chinese public out of the 1942 Congressional loan amounted to $150 million, most of which is still in Chinese private hands. There are an estimated $50-75 millions of U.S. currency in private hands in China, a substantial part of which is held by Chinese