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F
DEPARTMENTAL NO. 2.
Decypher.
Governor, (Hong Kong).
126
24th December, 1940.
D.
11.20 a.m.
25th December, 1940.
R.
10.40 a.m.
25th December, 19. 5725
No. 155.
IMPORTANT.
MUAMMAMINKINIMA
DEC 1940
Following for Treasury from Hall-Patch and Rogers.
Shanghai market extremely weak yesterday on account of persistent reports that support of fapi would be abandoned.
[?Fun....] sold £120,000 in an attempt to disabuse market of this impression but exchange dropped 13/64ths pence and 11/32nds United States cents on the day.
2.
Market has interpreted Mr. Butler's statement in House of Commons December 10th to mean that 25,000,000 currency loan would be used only to support Chinese currency in Free China. Dr. Kung's irresponsible statement concerning a system of exchange control operated from Chungking to the exclusion of Shanghai vide Hong Kong telegram No. 152, has confirmed the market in its view. placed on new currency loan is taken as evidence that British
Restriction to be 26. and Chinese Governments are in fact co-operating in such a plan.
3. Unless action is quickly taken to correct these misconceptions, situation will get out of hand. therefore to suggest desirable action along the following
We venture lines. Chinese Ambassador to be informed at once that you are disturbed by rumours from Shanghai and their effect on exchange market. Further that since you are considering how best grp. ontd.] China, you would like to know from Dr. Kung whether it is the policy of the Chinese Government to withhold support from Shanghai, since continuation of this support was the premise on which previous assistance from London was given and on which you have assumed Chinese currency policy to have been based. would do much to check Dr. Kung in his present plans as he
Such a direct enquiry could scarcely pursue them in face of your implied disagree- ment and opposition of all his advisors.
Repeated to Chungking telegram No. 203, Shanghai telegram No. 41.
[Copies sent to Mr. Waley].
28
DEC
1940
F.O. REGISTRY
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