893.00/12712: Telegram
The Consul General at Shanghai (Cunningham) to the Secretary of State
[Received March 28—5:40 p.m.]
130. First plenary meeting National Economic Council held Nanking March 27th Kuomin reports that among proposals adopted most significant related to distribution of proceeds of American wheat and cotton loan, increase of prices of foodstuffs, exploitation of mineral resources in Yunnan, control of match and coal industries and transitional measure towards adoption of the gold standard. It is estimated that $40,000,000 national currency proceeds of cotton and wheat loan will be available for reconstruction purposes. According to a resolution adopted 40 percent or $16,000,000 will be earmarked for readjustment of national currency and finances and improvement of monetary system. Six million will be allocated for development of aviation and about three million for relief and rehabilitation in Kiangsu. The remaining fifteen million are to be used for development of highways, reconstruction enterprises in the northwest, cotton control, improvement of sericulture, tea, et cetera, and reserve funds.
- 2.
- Another proposal adopted called for increase of prices [of] home-produced foodstuffs. This was referred to Executive Yuan for immediate execution. Proposal provides inter alia for prevention of further influx of foreign flour, rice and wheat, reduction of railway [Page 377] freight on foodstuffs, exemption from transit taxes and purchases by Government of surplus food supplies.
- 3.
- The proposal to have to pave the way for ultimate adoption of gold standard was referred to Monetary Committee of Ministry of Finance for consideration. It provides that central bank be authorized to issue gold bank notes which must be used as legal tender in ordinary commercial transactions. Value to be one-fourth of customs gold unit. Any private individual may present gold or articles made of gold to the bank in exchange for those gold notes. Bank to hold a 40 percent specie reserve against such gold notes which may consist of gold articles or gold. When appropriate time comes all income and expenditure of Government to be expressed in terms of new gold unit.
Repeated to the Legation, copy by mail to Nanking.