Indianapolis Times, Indianapolis, Marion County, 10 April 1947 — Page 4

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War-Time Money Deals Between U. §., China Must Be Cleared Before New Grants Are Made

i By PETER EDSON ; NEA Staff Writer

WASHINGTON, April 10—Only a long series of confabs between U. 8. and Chinese financial experts will be able to work out a settle- _ ment of the tangled war-time money deals between the two govern‘ments. Also to determine how much or what kind of further ald this

"gountry can extend to Chiang Kai-shek.

The total of U. 8. aid to China was close to $3 billion. This is|

roughly the equivalent of the postwar loan to the United Kingdom. Settling with the Chinese will be very hard because there is a new cast of characters all around. Mr. Truman has replaced ‘President Roosevelt, John Snyder has replaced Mr. Morgenthau as Secretary of the Treasury, Gen. Mar-~ shall has replaced Cornell Hull as Secretary of

Mr. Edson -Btate. Gen. Marshall was in Chungking as U. S. Ambassador and at the time he carried “in his pocket” authority for a further $500 million Export-Import bank loan, if the

Chinese would reorganize their government. Present head of the Export-Import bank is William Mec-

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‘ Chesney Martin Jr, former president of the New York stock exchange. On the Chinese side, most of the officials in Washington now were not here when the war-time deals were made, T. V, Soong is now Chinese Premier. Dr. K. V. Welling-

W.|lton Koo is now Ambassador to

Washington, Settlement for all the complicated deals of war time will presumably have to be made by him and his staff of counsellors.

. Accounting Difficult We have seen how China handled $200 million worth of gold advanced her as part of a $500° million loan agreement between Mr. Morgenthau and T. V. Soong. Accounting for the remaining $300 million of this credit is difficult be~ cause Chinese embassy officials in Washington say they have no knowledge of the details. And American officials don't have too close an accounting. In general, this $300 million can be covered in three main divisions. ONE: Biggest item was $200 million which was used for the purchase of U. 8, silver certificates. In simplified form, the deal worked out something like this: The Chinese bought U. 8, silver certificates in New York. In China, the. government then sold bonds, payable in U, 8. dollars in New York at a later date. Most of these bonds were made payable after 10 yelrs, but a few were made convertible earlier. These bonds were designated by lottery drawings. Banks Bought Bonds Only banks and the wealthier Chinese bought these bonds. The Chinese government took Chinese

it spent the money for prosecuting the war. : The Chinese purchaser ‘bought

. (the safety of a deposit in New York.

Also, he bought a hedge against inflation.

A Chinese law now: prevents the holding of U 8. dollars in China. When the time comes to cash in the bonds, the Chinese government will: therefore pay off in Chinese currency, at the rate then in effect. Chinese Will Lose If the rate at the time of purchase was 20 Chinese dollars for one U, S.-dollar, and the rate at the time of maturity is 12,000 Chinese dollars for one U. 8. dollar, the bond holder will be paid off in inflated dollars and will really lose nothing. The loser will be the Chinese government. This was one of China's most serious mistakes in trying to manipulate its currency to improve its financial siiuation. SECOND: Approximately $50 million of the U. 8. loan to Chins went for the purchase of bank notes. This was the cost of running the printing presses and associated expenses in keeping China supplied

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dollars in payment, and of course | ‘Bank, with $55 million credit to!

hosiery industry.

CAMPAIGNERS—Lazure L. Goodman (left), Indianapolis, and Henry Morgenthau Jr., former secretary of the treasury, express satisfaction over the progress of the $170 million campaign of the United Jewish Appeal to aid Europe's 1,500,000 homeless and destitute Jews. Mr. Goodman, of National Associated Mills, Inc., here, is chairman of the campaign being conducted in the national

—And Then Sa a There Were Three Loyalty Bill : Two people started to Methodist : ; hospital under police escort today, WASHINGTON, April 10 (U, P,). [but three arrived.

—Chairman Edward H. Rees of the| Patrolman John Farrell and Alex-

ander Sabo were parked at New house civil service committee today yo. of near Alabama st. at 6 a. m.

introduced legislation to keep dis- when a car pulled up beside them. loyal persons off the federal pay-|The driver, John Burkhart, Greenroll, field, asked them to escort him ! and his wife to Methodist hospital. | He sald the legislation was nec- Less than a block away the police essary because he felt President peard Mr. Burkhart sounding his Truman's recent executive order to horn. They stopped and found the check the loyalty of federal workers car then had three passengers, Mr. was weak and ineffective. and Mrs. Burkhart and an infant His bill would make all federal Police emergency and a City hosemployees and appliacnts for 80V- pital ambulance arrived and turned ernment jobs subject to a loyalty New York st. between Alabama and | investigation by the FBI. It would Delaware sts. into a maternity ward {also set up a five-member loyalty for several minutes. Mrs, Burkhart review board ‘in the civil service/and son were then taken to commission to’ pass on ‘the FBI's|Methodist’ hospital. investigations. . The board would have the power | UNION PLANS FORUMS to direct the discharge or prevent| BEDFORD, Ind, April 10.—Plans the hiring of any person found to|for public forums in which importBe disloyal to the government. All [ant foreign and domestic matters it need find is that “reasonable will be discussed at meetings open grounds” exist for belief that a per- [to the public have been outlined son is disloyal. by the Central Labor Union here.

Men's others. Told to Cutt Price

WASHINGTON, April 10 (OU, P). —Men's clothing retailers have beefi warned by their chief spokesman to cut prices or risk loss of public confidence. President W, O. Swanson of the National Association of Retail Clothiers and Furnishers said men’s clothiers could cut prices and still sell “vast quantities of merchandise.” “We must be frank with the public and ourselves and admit that generally our profits in 1045 and 1946 were abnormal,” he said. “. , , A degree of profit can be eliminated in favor of constructive public relations.”

TEL AVIV SUBURB SEARCHED

JERUSALEM, April 10 (U, P.).-| Strong formations of British soldiers cordoned off the Jewish suburb

of Benei Braz in East Tel Aviv be- | A

fore. dawn today and supported by armored cars launched a search for

underground leaders. .

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with the, trillions of paper money with which she financed the war.

Printed iA U. 8.

Much of this paper money was printed in the United States, and flown over the Hump. Nobody knows how much of this paper money is now in circulation. Much of it is worthless, another big loss over which the U. S. had no control. THIRD: Only the remaining $50 million—in round numbers—went for anything tangible. This was spent for cotton textiles and other consumer goods which the Chinese people desperately needed and out of which somebody apparently got some real benefit, There were other tangled U. S.-

Chinese financial deals during the War. UNRRA aid to China totals $530 million, of which $350 million has now been delivered and $180 is still to go. Deliveries will be completed about June. Of the total, 72 per cent was paid for by U. S. contributions.

Loans Total $217 Millien Authorized Export-Import bank loans to China, made for specific projects up through 1946, total $317 million. Of this amount, only $163

million has: been disbursed, and $93 million has been paid back.-

That leaves China $69 million in debt to the Export- Import

be drawn on. China has kept up| interest payments on these loans, to! mantain her standing. But now China is looking longingly at the adidtional $500 mil-| lion post-war credit earmarked for, her by the Export-Import bank.

1 , No New Leans

Present indications are that no loans from this credit will be made until the state department is satisfied as to the soundness of China's palitical and financial conditions, and until some settlement is made on other obligations, Meanwhile Chiang Kai-shek debates 'a tough problem—whether to blow the $400 million treasury surplus he has treasured through the war in an all-out war against the Communist armies, or strengthen his financial position and bid for more outside aid. It is against these uncertain conditions that the question of further American aid to China must be weighed, if the Truman doctrine of support for countries opposing communism is to be made global, and not just confined to Greece and

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