Page 67
INDEXED
F
344622 3460 JUL
привер
LIMITED DISTRIBUTION
в
20
Decypher.
The Governor (Hongkong)
1st July, 1940.
D.
12.25. p.m.
2nd July, 1940.
R
8.06. 2.0.
2nd July, 1940.
No. 81.
IMMEDIATE.
bbb bb b
Secret.
CP
Your telegram No. 322.
Following for Treasury for
His clear from the Quotations that the refice is to the telegram enclosed in Mr. Hall Patch's letter of 293 June
("A" within)
Rogers.
copy has been sent 15 Mr.
gaps in information received make it difficult to appreciate the full implications of the new measures.
Delays and mutilations in telegrams and wales 4 Room 44.
B.
4/6
1. I assume that "American accounts" means only accounts American banks and subjects i.e., excludes accounts of American agencies of non-Empire and non-United States concern. Presumably covering operations of black markets in Shanghai and elsewhere will be permitted through such agencies in New York.
2. Since words in paragraph four "will be unsaleable to America direct" imply sterling coinage sold indirect to America. I should be glad to know through what channel this will be possible.
8. I should be glad] to know the significance of "official or private Chinese holdings" in paragraph 4.
In
4. On the assumption that there will be no change in the procedure for transferring sterling from Empire to China and Hongkong it seems that free sterling must fall to a very low level and be subject to widespread and impredictable fluctuations. these circumstances policy probably would be to attempt to main- tain Chinese currency midway between sterling and United States dollar. Difficulties of the Chinese currency would be greatly aggravated especially as stabilization fund has only sterling resources. I should be glad of your views about future of exchange fund and also to know to what dollar resources you refer in paragraph five.
NOTE BY COMMUNICATIONS DEPARTMENT:
[Copies sent to Mr. Waley, Treasury].
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