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TELE RAM TO THE COVERNOR, HONG KONG.
SECRET.
1.
Your telegram No. 77.
17
(No.322).
Following for Rogers from Treasury •
Our 287 para.2 means that under the new arrangements
American banks will quote and doal in official sterling only.
There will be no recognised market for free sterling in to York
and no more free sterling will be credited to Americen account.
2. Paragraph 3 means that as botween the U.S.A.(and
dependencies) and the Sterling Area all transactions will be in
official sterling convertible at official rates or in dollars
obtained from the London Control.
3. Your 77 paragraph 1 apcunos that Chinese holdings of
sterling will be dealt with on the same terms as official sterling
and that Chinese trade conducted on a sterling basis will enjoy
the same advantages as trade between the Sterling Arca and the
U.S.A. This is not do.
4. Sterling received by China and Hongkong from trade and
services rendered to the Empire will be unsaleable to Anorica
direct. It will be free sterling which will not be able to get
on to the New York market but which may be exchangeable in
Shanghai for U.S. dollara provided from official or private
Chinese holdings.
5. The rice in New York quotation for free otorlin io due to
U.S. banks and merchants attempting to cover outstanding
commitments in free sterling before the market dries up. Your
trading position with U.3.A. will depend to some extent upon
whether you continue to link the Chinese dollar to sterling or
try to control it through the U.S. dollar, using your own dollar
resources for this purpose.
6. Please reconsider urgently your conclusions and
expectations or ask for still further explanations if necessary.
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