893.51/6–1245: Telegram
The Ambassador in China (Hurley) to the Secretary of State
[Received June 12—10:50 a.m.]
969. Information directly from the Minister of Finance is that the decision to raise the price of gold to CN$50,000 per liang (one-thirty-second of a kilogram) was arrived at in his conversation with the Generalissimo on the evening of June 7. Instructions were sent out to the banks early next morning. So far as we can determine there has been no scandal and the Minister declares there will be none.
Until the morning of June 8, the “price” for gold deposits had been CN$35,000 per liang which rate had been in effect from March 30. This price represents the amount of Chinese currency required as [Page 1105] deposit against delivery of gold after 6 months. Sales of gold for “delivery when available” were ordered discontinued by the government banks on May 28.
According to the Minister of Finance, the price of CN$50,000 was arrived at by a rough calculation of the present worth, at current interest rates, of a right to receive one liang of gold 6 months hence, the present black market price of gold for spot delivery being taken at about CN$100,000. As reported in Commercial Daily News, black market gold price rose from CN$90,000 per liang on June 7 to a high of CN$128,000 in the afternoon of June 8. On June 9, gold transactions on black market at Chungking varied from CN$105,000 to CN$111,800 per liang.