893.516/639: Telegram
The Consul General at Shanghai (Gauss) to the Secretary of State
[Received July 16—3:30 a.m.]
609. Reference Department’s No. 244, July 13, 4 p.m. Foreign bankers assert that they are not encouraging or soliciting Chinese accounts and that they are continuing to do all that can reasonably be expected by way of discouraging such accounts, Mackay of the National City Bank of New York tells me that a survey of their books shows that since early June the deposits to Chinese savings and current accounts have dropped off approximately 15%.
My inquiry leads me to the conclusion that the foreign banks have not discouraged Chinese savings accounts. Other accounts while not encouraged or solicited may be accepted if regarded as legitimate and the applicants are well sponsored by the bank’s customers.
The recent action of the Chinese Government in freezing for a second time the deposits in Chinese banks has undoubtedly resulted in loss of confidence by the Chinese public and the non-government Chinese banks. Chinese bankers are quoted as admitting that their depositors almost without exception are availing themselves of the provision which permits them to withdraw $500 weekly. Observers state that these withdrawals are being largely hoarded in currency or in merchandise.
Repeated to Chungking, Peiping.