Memorandum to Theodore Tannenwald, Jr., from James Lanigan

DECLASSIFIED E.O. 12065, Sec. 3-402 State Dept. Guideline, June 12, 1979 THE WHITE HOUSE By NLT- NC NARS, Date 7.17.80 WASHINGTON September 10, 1951 BARRY B.S. ARCHIVES SERVICE RECORDS NATIONAL TRUMAN AND LIBRARY MEMORANDUM GOVERNMENT To: Ted Tannenwald From: Jim Lanigan The information made available at the meeting held in your office on Wednesday, September 5, produced very little in connection with the search for a China Lobby as such. However, certain incidental intelligence concerning corruption and graft within the Chinese Nation- alist clique was made available by the Treasury. The Commerce Department supplied us with a list of United States firms doing business with or connected with the Nationalist Government of China. The most interesting information contained in this list deals with the Yangtze Trading Company of 1 Wall Street, New York. Mr. E. Y. Soong is the manager, and one of the leading stockholders is Louis Kung, son of H. H. Kung. Counsel to this Corporation is Steptoe and Johnson, Washington, D. C. Commerce also supplied us with a list of the China Trade Act Companies and the names of the officials of these companies. disposition The Treasury Department has supplied us with two very interesting memoranda. One of these memoranda describes in some detail the results of an investigation by the Chinese Government in 1942 of $100 million of United States dollar savings certificates. These certificates were redeemed with $100 million of a $500 million credit established by the United States Government for the Chinese Government. The Treasury Department memoranda involves a detailed discussion of the mechanics by which this sale of savings certificates was carried out. Of interest to us, however, is the fact that Treasury investigation has never been able to account for the ultimate disposi- tion of between $40- and $50 million dollars of the original $100 million. The memoranda raises several very serious questions concerning the dis- position of the missing funds which, obviously, warrants further dis- cussion and possibly further investigation. The Treasury supplied an additional memorandum, classified as secret, concerning an alleged gold scandal in connection with the sale of gold made available to the Chinese Government by the United States in 1942. Of the total $500 million credit extended to China in that year, $220 million dollars was made available in the form of gold. Repeated references are made in the memorandum to newspaper reports of the gold scandal at the time the story broke. There is nothing in the memorandum of the Treasury Department to indicate that an SECRET