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            <text>To: Vichy (Nléhaut)
To: Shanghai
4 July 1944
FRO

No 92

I refer to your telegram no 130-1324.

Your arguments concerning the rise in the cost of living
are insufficient to be effectively used. Base your case only on the
buying - power of the dollar. If the latter is cut to one-fifth its
value and if the cost-of-living average is five times as high in dollars
of current value as in 1943, it follows that the cost of living in francs
must not have varied. It seems absolutely necessary to take into account,
on the one hand, the disorganisation of markets, both local and general,
plus the factor of the growing scarcity of raw materials or goods; and
on the other hand, the losses we may suffer as a result of the time-lag
in the aligning of the official rate of exchange with the rate which
results from the real value of the local dollar with relation to the franc
You must base the rise in the cost of living upon currency having a
much more stable character than the dollar. Nire exact data computed
on these bases, so as to enable us to give good reasons to the Finance
Ministry for your proposed budget for 1945. --TE-- that arguments based
solely on the value of local currency are unusable in practice and have
a value limited by practical considerations.

With reference to your telegram no 135-1376: the data
requested above (emphasizing rise in costs of articles or commodities
of primary importance) will also make it possible to back up our recommend
ation for appropriation of cost-of-living bonuses to the non-officer
native troops and the natives of the Auxiliary Battalion. This
allowance meets with no objection on my part in its principle. I draw
your attention to the fact that Europeans' pay and natives' pay consti-
tute items which are not comparable. Please do not make an issue of it
after this, and take steps to see that arguments of this kind be not
used to affect the morale of the native troops placed under your command.

a - SSA no 127707.
b - The Chinese CRB dollar is meant throughout.
c - SSA no 132564.

Inter 5 July 44 (92)
Rec'd 13-19 July 44
Trans 28 July 44
Resolved Ottawa Aug. 10, 1944.

Examination Unit
National Research Council
August 10, 1944.

File: D-5300</text>
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Word Count: 395</text>
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              <text>1941/1945</text>
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