Office of the Historian

102.1/7–1846: Telegram

The Minister-Counselor of Embassy in China (Butterworth) to the Secretary of State

Nanking, July 18, 1946—4 p.m.
[Received July 19—7 a.m.]

1160. For Secretary of Treasury from Casaday:34 In recent telegram from US Navy Disbursing Officer, Tsingtao, Adler was asked to request Minister of Finance to expedite immediate release of 2 billion dollars no-rate CNC35 for deposit Navy Disbursing Officer’s account with Central Bank, Tsingtao. Need for these funds stated as urgent.

In an interview with Minister of Finance yesterday I transmitted this request and the Minister replied that in accordance with a recent informal decision by Ministry officials and T. V. Soong, no more no-rate CNC will be made available to US forces and that hereafter CNC will be released to US forces only upon payment by them to the Central Bank of US dollars at the official bank rate of exchange.

This decision was apparently made only a few days ago and the Minister stated he had just turned down a recent army request for 5 billion no-rate CNC and had so informed General Gillem36 through General Maddocks by letter. I have not yet been able to check this with army but will do so when I return to Shanghai tomorrow.

The Minister gave as reasons for this decision (a) the difficult financial position of the Government of which he knew the US Treasury must be fully aware and (b) the fact that no settlement has been negotiated since January 1, 1945. I replied that although I was sure the US Treasury and Government are indeed fully cognizant of the National Government’s difficult financial position, such a step might appear to have been taken rather abruptly and might cause the US armed forces in China considerable immediate inconvenience and embarrassment. To this he made no reply.

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The Minister stated that his Government had not communicated news of the changed policy directly to Washington and I indicated that I would do so at once.

I have informed Commander Stratton,37 in reply to his request, of the Minister’s action.

Repeated to Shanghai as 465. [Casaday.]

Butterworth
  1. Lauren W. Casaday, Assistant Treasury Department representative in China.↩
  2. Chinese national currency advanced by China at no fixed rate of exchange for the use of United States military forces in that country.↩
  3. Commanding General, China Service Command.↩
  4. Roy O. Stratton, Supply Officer, United States Port Facilities, Tsingtao.↩