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De cypher.
DEPARTMENTAL NO.2.
Mr.Broadmead (Shanghai) 8th November, 1940.
D.
W/T 702
R. 10.13 a.m.
10th November, 1940.
No.977.
Where did
hey gat. this!
Where
indeed?
ssssssssss
Following is a repetition of Nanking telegram No.30 of November 6th to me.
(Begins) Your telegram No.68 Saving (containing Foreign Office telegram No.1151) received November 4th.
I was unable to obtain the interview with the Vice-Minister for Foreign Relations to-day owing to financial conference in session since November 1st
2. The Vice-Minister confirms the intention to open new bank "in about a month" whether the treaty has been signed or not.
The Bank of Communications building here has been taken for the head office. He says that the capital will be 200 million dollars against which they hold 150 million dollars in foreign exchange but cannot state the proposed amount of note issue. Notes are ready but entirely different from the previous Central Bank notes in appearance.
3. He deprecated the idea that the new issue would compete with Fapi or be linked with the yen as in North China, though admitting that the Japanese had pressed for this. Notes would be linked with Fapi unless and until further heavy depreciation occurs when "relief measures would be taken". Taxes etc. would have to be paid in the new currency. Hua Hsing notes would be withdrawn and it was hoped also to get military_yen (amount of which in circulation he estimates to be 30 million) and eventually of Federal Reserve Bank notes.
4. I emphasized the danger of introducing a new currency when all trade exchange was practically at a standstill owing to the Japanese banks, and monthly deficit known to be considerable. He replied that the new currency being well secured should have stabilizing effect and reduce speculation in military yen.
Also said that from November 1st the
Japanese goods hitherto imported-free as "pacification (previously military) stores" will now pay duty to a special office to which Chinese observer will be attached and that native customs insurances will be revived. (Ends).
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[Copies sent to Mr.Waley].
ERS.
14/11
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T.&3 rowley
Sir J. Benen
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