893.516/632: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received July 9—9:10 a.m.]
432. Following is Embassy’s translation of circular note from the Foreign Office, dated July 1, received July 5:
“The Ministry of Foreign Affairs presents its compliments to the American Embassy and has the honor to state that it has received a communication from the Ministry of Finance stating:
‘A report has been received that foreign banks have taken advantage of the enforcement of the present method providing for limitation of withdrawals of deposits in the municipality of Shanghai to absorb deposits and that in 2 or 3 days as much as 20 to 30 million dollars of deposits have been withdrawn from various Chinese banks.
The aforementioned method is, in view of the widespread habit of withdrawing deposits and competition for the purchase of foreign exchange, an emergency measure for settling the financial market and for assisting in the stabilization of foreign exchange. This is beneficial to both Chinese and foreign trade. The banks of the various friendly nations should naturally continue to render assistance on the basis of the cooperative spirit followed since the outbreak of the August 13, 1937, incident of accepting no new deposits and of selling no foreign exchange to speculators, in order to maintain the financial markets and further friendly relations. Please consult the diplomatic representatives of the various nations concerned in regard to the transmission of instructions to the banks of their respective nationalities in Shanghai uniformly to refuse deposits in legal tender notes so as to manifest assistance in the matter.’
Apart from addressing separate communications to those concerned, the Ministry of Foreign Affairs in inditing this third person note for the Embassy’s information has the honor to request that the Embassy act in the matter and transmit a reply.”
Repeated to Peiping and Shanghai.